Congress voted yesterday to raise the US debt ceiling by a staggering $1.9 trillion — putting every man, woman and child in the country $6,000 deeper in the hole — as Wall Street tanked because of debt problems in Europe.
The House of Representatives — trying to act well before the November elections, because lawmakers fear a backlash — approved a debt ceiling of $14.3 trillion.
The figure amounts to an increase of roughly $6,000 for every US resident, and brings the accumulated debt total to $40,000 per person.
“This debt is being piled on the backs of our kids and grandkids with no relief in sight,” said House Minority Leader John Boehner (R-Ohio).
Republicans criticized the aggressive spending measures Democrats have taken to blunt the impact of the deepest economic downturn in 70 years.
“They took out a monster loan that is not paying off,” said Rep. Pete Sessions (R-Texas).
Economists sounded the alarm, saying the debt hike could negatively impact interest rates and hit an already battered economy in the gut.
Financial markets were roiled by concerns that Greece might default on its obligations, and that massive amounts of new debt in Portugal and Spain would not be bought by investors.
Those fears, combined with disappointing job figures at home, sent the US markets reeling — with the Dow Jones industrial average falling 268 points. Critics of the growing deficit also worry about the US government selling so much debt to China.
And the topper?
The debt-ceiling hike yesterday would only do enough to keep the government’s balance sheet in check for roughly another year, as the nation borrows more than 40 cents for every dollar spent on critical service programs, including defense.
The measure, which passed the Democratic-controlled House by a razor-thin margin of 217-212, was tailored to keep the party’s congressional members from casting unpopular spending votes again before the fall midterm elections. The bill will now go to President Obama for his signature.
Democrats who backed the measure said it was the only way to keep from defaulting on the nation’s obligations, which would have been unprecedented. “If the United States defaults, investors will lose confidence that the US will honor its debts in the future,” said Rep. Jim McGovern (D-Mass).
But in a clear sign of concern about the fall elections, 37 Dems from conservative-tilting districts cast “no” votes.
Democrats primed the pump to pass the bill with a sweetener, changing budget rules to create a new “pay as you go” system in which any new tax cuts or spending hikes are covered by equivalent new spending slashes or levies.
Sessions said, “In place of real fiscal discipline, it offers a phony pay-as-you-go rule that is more loopholes and exceptions and does nothing to tackle our government’s long-term structural deficit.”