Merry Christmas Federal Government
Santa in the Mirror
It was no secret who Santa was for the federal government. Santa came in the form of a Senate vote that raised the debt ceiling for federal spending by $290 billion. This new limit was the scaled down version of the $1.8 trillion that was originally sought. Lawmakers saw a protracted battle coming for the higher amount to be approved and opted for a scaled down temporary fix to get out before the holidays. The $290 billion increase will keep the government going until at least February when another increase in the trillions will be necessary to bridge the feds until the end of 2010.
How they Voted
The vote was 60-39 in favor of the increase almost exclusively down party lines. Debt limit increases only require a simple majority in the Senate: 51 votes. Republicans agreed to a Christmas Eve vote only if all senators voted. This was a strategy employed by Republicans to put the Democrats on record for voting in favor of the increase. The increase raises the debt ceiling from $12.1 trillion to about $12.4 trillion and was necessary because the $12.1 trillion ceiling was about to be breached.
The Ironic Backdrop
There are a few bits of financial irony associated with the latest increase in federal spending. One point of dramatic tension is with the economy in general. The American people continue to struggle under the weight of a sluggish economy. Credit for home loans and other needs remains very difficult for the average citizen to procure. The Senate voting to give the federal government more credit seems out of line with the people’s current circumstances. Secondly, American citizens have been told by the government to tighten their belts and ride out the storm until calmer economic conditions return. This flies in the face of continually increased federal spending. Finally, President Obama is expected to address fiscal restraint and propose plans to reduce federal spending. Those proposals will be a tougher sell in light of the increased spending limits associated with the federal deficit.
The only upside to increased debt for the federal government is the political opportunity it presents to Republicans. Republicans are expected to position themselves as the reasonable good guys when they introduce legislature to curb federal spending. The GOP is expected to push for tighter caps on discretionary spending and other perceived abuses. These abuses will be painted as mostly a spending crazy Democratic problem. The target is to accomplish significant Republican gains in the mid-term November elections.
Good News for the Average Joe
One of the good things to come out of this financial dilemma and its associated political struggle is a quick solution. Democrats will work hard to bridge the remaining $1.5 trillion as quickly as possible. They do not want spending increases to be on the forefront close to the November elections. The average citizen will benefit from a fully functioning and financed federal government. They will also benefit from the spending restraints put into place that both Republicans and Democrats are sure to push through. A leaner and more fiscally responsible federal government benefits everyone.