THE RESET: Debt limit looms as next fiscal cliff

December 11, 2012 - 3:34 PM
Fiscal Cliff Disconnect

President Barack Obama speaks to workers about the economy during a visit to Daimler Detroit Diesel in Redford, Mich., Monday, Dec. 10, 2012. The scene playing out on Capitol Hill is a familiar one as lawmakers with competing ideologies wage an 11th-hour battle to avert a predictable crisis. This one comes just a year after an equally divided Washington nearly let the country default on its loan obligations, a debt-ceiling debate that contributed to the electorate's deep lack of faith in their elected leaders and a drop in the nation’s credit rating. (AP Photo/Paul Sancya)

We now know what's on the other side of that menacing year-end "fiscal cliff." Another cliff.

While White House and Republican congressional leaders labor behind closed doors to cut a deal to steer clear of the first cliff — mandatory tax increases and spending cuts due to hit in early January — another treacherous economic precipice looms.

It's when the government will again bump up against the congressionally-set debt ceiling.

The debt limit has been a growing source of acrimony between presidents and opposition parties.

As a senator, Barack Obama voted against a 2006 debt-limit request by President George W. Bush, calling it "a sign of leadership failure." Bush won that one.

The last debt-limit standoff came in August 2011 and the drawn-out gamesmanship cost the U.S. a first-ever credit downgrade.

The current statutory limit on the government's borrowing authority of $16.4 trillion will technically be reached in late December, but likely can be put off until mid-February through accounting maneuvers.

Obama has asked Congress for authority to raise the debt limit without prior approval. But Republicans seem unlikely to give up that bargaining chip.

"Republicans know that they have the debt ceiling that's coming up right around the corner and the leverage is going to shift as soon as we get beyond this (fiscal cliff) issue," says Sen. Bob Corker of Tennessee. And he's a Republican who's sympathetic to Obama's plan to raise taxes on the wealthy.

President Ronald Reagan holds the modern record. He raised the debt limit 18 times and once complained of "conservative Republicans who are playing games. ...We must have that bill or government checks will start bouncing."

President George H. W. Bush raised it four times, Bill Clinton four times, the younger Bush seven times and Obama, so far, four times.

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