Last week the fight between Congress and the White House was over $38.5 billion in spending cuts — roughly the gross domestic product of Lebanon.
Now the fight turns to raising the debt ceiling, set right now at $14.3 trillion.
The debt limit will have to be increased by $1.9 trillion just for the US government to make it from May to the end of 2012. That’s more than the combined GDPs of Lebanon, Syria, Israel, Iraq, Kuwait, Qatar, Egypt, UAE, Saudi Arabia, and Iran.
The fight is already shaping up to be nastier than the last. The spending cuts Republicans will be demanding be attached to a bill raising the debt ceiling will be far bigger than $38.5 billion. And while a government shutdown was serious , defaulting on US debt – which could happen as soon as July – could mean Social Security and veterans benefits cut, a collapse of the stock market, home prices plummeting, tax hikes, a curtailing of Medicare, Medicaid, student loans, and much more.
On Good Morning America we took a look at what the pending fight over raising the debt ceiling might mean to you:
On Wednesday President Obama will “lay out in detail his approach for deficit reduction going forward,” Senior White House adviser David Plouffe told Christiane Amanpour on THIS WEEK Sunday. President Obama believes “that it has to be a balanced approach, it has to be serious, it has got to put us on a firm fiscal trajectory that the country needs to grow economically.”
Plouffe indicated the president’s proposal would include spending cuts; “we can't take a machete, we have to take a scalpel, and we're going to have to cut, we're going to have to look carefully.” It will also include savings from Medicare and Medicaid, and tax increases on upper income Americans.
Plouffe told Fox News Sunday that the president’s “budget for this year says for upper income Americans, he does believe that they need to contribute to the deficit reduction in this country.”
Is it possible to get tax increases? Plouffe noted that House Speaker John Boehner, R-Ohio, “said in an interview that he's not going to take revenues off the table. But there's a bipartisan group of senators in the Senate where clearly they are talking about revenues. So, I think the president's belief is this has to be a balanced approach. And if f we do that, we can get deficit reduction in the country.”