Just a day after losing their supermajority in the Senate, Democrats called for a $1.9 trillion increase in the U.S. debt limit. Why on earth would they do that, you ask? It's very simple. They want to raise the debt ceiling enough to fund the obligations of the U.S. treasury up to and beyond the mid-term elections in November. They think you will forgive and forget.
Politico reports:
Upping the ante just a day after losing their 60th Senate seat, Democrats moved Wednesday to seek a $1.9 trillion increase in the federal debt ceiling and give the Treasury adequate borrowing authority past November’s elections and into next year.
Republicans were caught off guard by the scale of the increase which follows a $290 billion short-term debt increase approved prior to Christmas. “That’s just escapism of the worst sort,” Sen. Judd Gregg (R.,N.H.) told POLITICO. But Democrats countered that their only alternative would be to give-in to a Republican strategy of forcing multiple smaller debt ceiling increases, designed to bleed them politically before November.
This perception was reinforced by a meeting Tuesday between Treasury Secretary Timothy Geithner and Senate Republican Leader Mitch McConnell (R-Ky.). By going now with the higher $1.9 trillion target, Democrats are making a high-stakes gamble that the party can pull together once more to put the debt ceiling issue behind them for this election year.
In addition to losing the Senate seat in Massachusetts to Republican Scott Brown, it is
not at all clear that all the Democrats are on board with the heavy lift.
Democrats will soon have just 59 votes, once the Massachusetts victor, Republican Scott Brown, takes his seat. The timing of that transition is not yet certain, but Baucus indicated that he now expects the debt fight will spill into next week.
Beyond this transition, the more immediate problem for the White House is pulling together about a dozen fiscal moderates, one of whom—Sen. Evan Bayh (D—Ind.)—voted against the much smaller $290 billion increase in December.
The lead player remains Senate Budget Committee Chairman Kent Conrad (D-S.D.) who has participated in on-going White House talks but said Wednesday evening that he still lacked the assurances needed to back such a larger long term debt increase.
The Republicans are in a unique position to effect some real change here. Senator John Thune (R-SD) has an idea that may help the Democrats secure the needed votes.
Kill TARP:
Sen. John Thune, R-S.D., introduced an amendment to the House-passed debt ceiling increase currently before the Senate that would end the Troubled Asset Relief Program. Thune's amendment would prohibit the Treasury Department from making any further commitments of TARP funds and would mandate that all returned funds be used to lower the national debt.
"The Senate will be voting to raise statutory debt limit to a staggering $14 trillion, making this an ideal time to practice real spending restraint by ending TARP," Thune said in a news release.
On Christmas Eve, the Senate voted 60-39 to increase the debt ceiling by $290 billion to $12.394 trillion. There is now a measure before the Senate that would raise the debt limit by another $1.9 trillion, this time to $14.294 trillion.
Recently, the Congressional Oversight Panel for TARP released their January Oversight Report, and the panel noted that although TARP authority ends Oct. 3, any funds committed by that date but not yet spent can still be spent under TARP past the deadline.
That's a premium idea, Senator Thune. And a good start. I'll wager that Scott Johnson will like it, too.
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