The Federal government has a debt problem so far out of control; a planned early 2013 need for a debt increase has changed.

“At the recent pace of debt growth, the U.S. will reach its statutory limit some time in October — just as Americans go to the polls.

The government has ways to stay below the current ceiling of $16.394 trillion for a few months, giving lawmakers a grace period to reach another last-minute deal. Treasury Secretary Timothy Geithner has said that deadline is early 2013.

But the recent slowdown in economic growth bodes poorly for federal tax receipts. Any pickup in the rate of debt accumulation could pull forward that drop-debt deadline and shift the debate from a lame duck session of Congress into the even more fraught environment of a presidential election.”

Should Obama decide to give billions to Europe to save Socialism on that Continent we will have a further tanking of our economy.    Imagine the politics of approving a debt increase during the last four weeks.   We are in trouble as a nation. This should be a major issue by those of us on the ground, in the grass roots.  We need to keep the pressure on our Washington representatives—no new debt—cut spending.

October Surprise? Debt May Hit Limit Before Election

By JASON MA, INVESTOR’S BUSINESS DAILY, 6/15/12

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At the recent pace of debt growth, the U.S. will reach its statutory limit some time in October — just as Americans go to the polls.

The government has ways to stay below the current ceiling of $16.394 trillion for a few months, giving lawmakers a grace period to reach another last-minute deal. Treasury Secretary Timothy Geithner has said that deadline is early 2013.

But the recent slowdown in economic growth bodes poorly for federal tax receipts. Any pickup in the rate of debt accumulation could pull forward that drop-debt deadline and shift the debate from a lame duck session of Congress into the even more fraught environment of a presidential election.

If the government is seen as dysfunctional in another debt standoff, the public will likely hold President Obama more liable than Republicans, said Nathan Gonzales, deputy editor of the Rothenberg Political Report.

“There’s potential for disproportionate blame on the president vs. the Republicans in the House,” he said.

Voters could easily turn on Republicans, Democrats, or both, potentially upending who will control the White House and Congress.

So far this fiscal year, the debt has grown an average of 0.834% a month, putting it on track to hit the limit in late October. Since the start of the Obama administration, the monthly average has been even higher, topping 0.9%.

Unless the day of reckoning comes sooner, lifting the debt ceiling will be among the year-end tasks that lawmakers must somehow accomplish. Also on the difficult to-do list will be reaching a budget agreement that steers the U.S. away from the so-called fiscal cliff of steep tax hikes and automatic spending cuts, largely stemming from last summer’s debt ceiling deal.

Without Capitol Hill action, the fiscal cliff will slam the economy next year. The Congressional Budget Office has warned it could send the U.S. back into recession. Uncertainty over how the cliff will be resolved may even be slowing growth right now by discouraging Americans from spending, investing and hiring.

The stakes are getting higher. Fitch last week reiterated its warning that the AAA credit rating the U.S. enjoys would be downgraded next year if there is no “credible” deficit-reducing plan. Paired with last year’s Standard & Poor’s downgrade, a Fitch cut would add more chaos in financial markets and raise U.S. borrowing costs.

But the fiscal cliff’s tax hikes and spending cuts won’t kick in until the start of 2013 at the earliest. The debt total, on the other hand, changes daily, adding extra uncertainty. On June 13, debt subject to the limit totaled $15.695 trillion.

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Marten Purdy

An unexpected, dramatic last-minute event which potentially alters the outcome of an election. The term dates to the 1980 presidential campaign, in which Jimmy Carter planned, for October of that year, an operation to rescue American hostages held in Iran. Carter was lagging behind in polls and a successful rescue, an “October surprise,” would likely have shifted the momentum to his side. The attempt failed, however, and Carter lost the election. Some have suggested that the Reagan campaign deliberately sabotaged the effort in order to bolster his candidacy.

December 16, 2012 at 8:42 am

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