Monday, July 18, 2011

“No man knows the day or the hour.”

Washington is currently borrowing about 43 cents out of every dollar it spends, and is close to maxing out its credit limit.

Current law says Uncle Sam cannot borrow more than $14.3 trillion. A few months back, the Obama Administration demanded that Congress increase the national credit line by $2.5 trillion by May 16, or else, it warned, the United States would default on its debts, causing an “economic Armageddon.” ($2.5 trillion is just enough to aver the need for another debt hike until after the 2012 election.)

When May 16 came and went, and nothing happened, the Obama team set a new “Armageddon” date: August 2.

Unfortunately, a lot of folks in Washington and Wall Street – including some who should know better — seem to be taking this new deadline at face value. While it’s true that, at some point, the government will hit the ceiling and have to reduce spending by about 40 percent, exactly when that day will arrive, nobody knows for sure. And don’t believe anyone who tells you he does know. “No man knows the day or the hour.”

Maxed Out Day could be August 2. It could be August 22. Or it could be in September. The exact date really depends on whether the President is willing to tap certain reserves available to him, or decides to force a political crisis.

I cannot tell you when Maxed Out Day will be. But I can – and will — prove to you that August 2 doesn’t have to be it. Before I do so, here are three key numbers to remember:

1) We are projected to take in between $170 billion and $200 billion in August, in revenues.

2) We will likely spend about $300 billion in August.

Therefore, we face a gap of somewhere between $100 billion and $130 billion.

So what will happen, come the August 2 deadline?
Find out here

Dean Clancy is FreedomWorks’ Legislative Counsel and Vice President, Health Care Policy.

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