Image: The National Debt Clock
Mark Lennihan  /  AP
New York's National Debt Clock is seen on Feb. 1.
updated 2/4/2010 7:14:52 AM ET 2010-02-04T12:14:52

Facing a politically excruciating vote, House Democratic leaders are counting on new budget deficit curbs to help smooth the way for a bill allowing the government to go $1.9 trillion deeper into debt over the next year — or about $6,000 more for every U.S. resident.

The debt measure set for a House vote Thursday would raise the cap on federal borrowing to $14.3 trillion. That's enough to keep Congress from having to vote again before the November elections on an issue that is feeding a sense among voters that the government is spending too much and putting future generations under a mountain of debt to do it.

Already, the accumulated debt amounts to $40,000 per person. And the debt is increasingly held by foreign nations such as China.

Passage of the bill would send it to President Barack Obama, who will sign it to avoid a first-ever, market-rattling default on U.S. obligations. Democrats barely passed it through the Senate last week over a unanimous "no" vote from GOP members present.

To ease its passage, Democrats attached tougher budget rules designed to curb a spiraling upward annual deficit — projected by Obama to hit a record $1.56 trillion for the budget year ending Sept. 30 . The new rules would require future spending increases or tax cuts to be paid for with either cuts to other programs or equivalent tax increases.

If the rules are broken, the White House budget office would force automatic cuts to programs like Medicare, farm subsidies and veterans' pensions. Current rules lack such teeth and have commonly been waived over the past few years at a cost of almost $1 trillion.

Skeptics say lawmakers also will find ways around the new rules fairly easily. Congress, for example, can declare some spending an "emergency" — a likely scenario for votes later this month to extend jobless benefits for the long-term unemployed.

And, indeed, there already are exceptions to the new rules, such as for extending former President George W. Bush's middle-class tax cuts past their expiration a year from now. That would add $1.4 trillion to the federal debt over the next decade.

In agreement with Obama's budget earlier this week, there is no exception for taxpayers in the two highest tax brackets whose marginal rates are due to rise by 3 percent or 4.6 percent to a pre-Bush maximum 39.6 percent next January.

But some new White House initiatives, such as doubling the child care tax credit for families earning less than $85,000, also would have to live within the rules, as would continuing subsidies for laid-off workers to buy health insurance — unless lawmakers make another exception.

The so-called pay-as-you-go rules have been a mantra with conservative "Blue Dog" Democrats in the House, who insisted they wouldn't vote to raise the debt ceiling without them.

"We don't have a choice," said Rep. John Tanner, D-Tenn. "We are on an unsustainable march toward a fiscal Armageddon."

Obama's budget projects the government's debt doubling to $26 trillion over the next decade. It offers few solutions for seriously closing the gap other than promising to appoint a bipartisan commission to come up with a plan to address the problem.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Obama budget banks on red ink

  1. Closed captioning of: Obama budget banks on red ink

    >>> in washington, president obama unveiled his budget proposal for the coming year. the numbers are huge, stagger, in fact, $3.8 trillion in total federal spending. and another all-time record budget deficit , $1.6 trillion. this assumes taxes will go up by a trillion dollars over the next ten years through the expiration of the bush tax cuts on families making more than a quarter million a year. today's budget sets aside $100 billion for creating jobs. with us tonight for more on what it all means, our chief white house correspondent chuck todd . we say the numbers are staggering, there's very little to compare them against. what kind of context should be attached to this?

    >> well, first of all, this is the beginning of the process, not the end. this is the president's proposed budget. as we know, it's congress that decides how to appropriate money, and how congress receives this. and they will nitpick at a lot of these proposals. you talked about, you have the expiration of those so-called bush tax cuts . there won't be a vote on those, that's going to get a heated political rhetoric started to talk about those tax cuts quite a bit. there is a tax deduction that will come up for vote. you have proposed cuts in the manned space program of nasa which could become a political hot potato in the state of florida , when you talk about jobs and that state is a politically relevant state. as for these deficit projections, these are just that, projections. it's assuming the economy is continuing to recover. if it does not, these deficit projections that we see today, 1.6 billion this year, 1.3 billion next year, those numbers could go way up. if health care doesn't passion, because this budget assumes health care will pass, that's another $150 billion that will be tacked on to the deficit. there's a long way to go before we know what these exact numbers are going to look like, and what congress ends up passing.

    >> another story we'll be talking about for months to come. chuck todd at the white house for us tonight. thanks.

    >>> even as washington struggles to

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments