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Debt ceiling, America could do without

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For once and for all, take the debt ceiling away and let the President do the job.

Treasury Secretary Jack Lew tried a low key approach today to cajole Congress into a bipartisan approach to the debt ceiling. Nobody wants to go down this road again, but here we are about to run out of money because we have something called a debt ceiling.

“Treasury chief asks for bipartisan approach to debt ceiling
Published February 03, 2014

Jack Lew testifies during his confirmation hearing on Capitol Hill in Washington before the Senate Finance Committee.AP2013

Treasury Secretary Jack Lew dialed back from dire-sounding prepared comments on the country’s fiscal health Monday, and instead called for a bipartisan approach to dealing with the looming debt ceiling deadline.

Lew, speaking at the Bipartisan Policy Center in Washington, said 2014 might not be the year for a major debt deal. Instead, he said success in the short and medium-term have bought some time to deal with the country’s long-term debt problem.

Instead, Lew lobbied for a bipartisan approach.”

But, if you understand it right, the debt ceiling is an arbitrary limit.

Consider this:

“According to the 14th Amendment of the Constitution, ‘The validity of the public debt of the United States, authorized by law ... shall not be questioned.’”

America can pay its bills with or without the debt ceiling. However, it would be swinging in a noose that it created for itself.

“Definition of 'Debt Ceiling'

What we need to do is develop a track record for being able to work together, to develop some trust across the aisle, and if we can get some of the other things that I’ve mentioned (immigration reform, infrastructure investments) done this year and over the next 18 months, that would be an excellent foundation for tackling some of the harder problems as we go forward,” Lew said during the question-and-answer period.

“The maximum amount of monies the United States can borrow. The debt ceiling was created under the Second Liberty Bond Act of 1917, putting a "ceiling" on the amount of bonds the United States can issue. As of the end of July, 2011 the debt ceiling was set at $14.3 trillion.

Also known as the "debt limit" or "statutory debt limit."

Investopedia explains 'Debt Ceiling'

Before the debt ceiling was created, the President had free reign on the country's finances. In 1917, the debt ceiling was created during World War I to hold the President fiscally responsible. Over time, the debt ceiling has been raised whenever the United States comes close to hitting the limit. By hitting the limit and missing an interest payment to bondholders, the United States would be in default, lowering its credit rating and increasing the cost of its debt.

There has been controversy over whether the debt ceiling is constitutional. According to the 14th Amendment of the Constitution, "The validity of the public debt of the United States, authorized by law ... shall not be questioned." The majority of democratic countries do not have a debt ceiling, with the United States being one of the exceptions.”



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