U.S. faces mid-October deadline to raise debt limit

[alp227]

Source: Washington Post

The United States is set to run out of borrowing authority in mid-October, leaving the government at a high risk of not being able to pay for Social Security checks, military salaries and other operations, the Obama administration said Monday.

The announcement, which comes at the early end of what many in Washington were anticipating, creates a new crisis point in the nation’s protracted fight over the size and role of government.

Republicans are demanding significant new spending cuts in exchange for increasing the nation’s $16.7 trillion debt limit, with some GOP lawmakers insisting on a delay or the scrapping of President Obama’s signature health-care law.

Obama, meanwhile, says he will not negotiate on the debt limit, the government’s legal cap on borrowing.

Read more: http://www.washingtonpost.com/business/economy/us-faces-mid-october-deadline-to-raise-debt-limit/2013/08/26/e38c0ad8-0e87-11e3-8cdd-bcdc09410972_singlePage.html

[DallasNE]

1. The Timing Really Surprises Me

September 30th is when corporations have to pay their quarterly estimated income taxes and their quarterly Social Security/Medicare taxes. Many wealthy individuals also file quarterly taxes. So I am surprised that 2 weeks later the government runs out of money.

But Boehner's spokesman is nuts when he claims nothing has been done about the debt and deficit. The deficit Obama inherited was roughly $1.3 trillion and the budget year ending September 30th is estimated to be $600 billion. Bringing it down this fast has caused GDP numbers to come in under 2% so any additional cuts would likely turn that negative, throwing the country into recession. The other thing Boehner's spokesman forgot about is the trade deficit and that has also been coming down nicely thanks largely to the increased domestic oil production. http://www.tradingeconomics.com/united-states/balance-of-trade

One issue with the trade balance is when Boeing makes deliver of aircraft abroad it boosts the export value and in a slow month the export number is weak. That is why the June number is good and the July number not so good. But the trend line is on the mend.