President Obama's Treasury Secretary Timothy Geithner has embraced the “Buzz Lightyear” strategy to overcome the fiscal and debt crisis known as the “fiscal cliff”: to infinity and beyond. Geithner told host Al Hunt on Bloomberg TV's Political Capital on November 16 (see video at link below) that he favors elimination of the statutory debt limit. "It would have been time a long time ago to eliminate it. The sooner the better." The move would place no upper limit on how much Congress and the White House could spend and borrow, effectively making the Disney Toy Story character's catch phrase national debt policy.
The so-called “fiscal cliff” — though technically separate from the national debt limit imposed by Congress — is a measure adopted by Congress that would automatically increase taxes and impose tiny spending cuts January 1, 2013. It was created in the wake of a 2011 negotiation between the White House and the Republican-controlled House of Representatives as the statutory debt limit neared. According to the Washington Post, “The fiscal cliff is the combination of federal spending cuts and tax increases that are scheduled to shrink the federal deficit to $641 billion from $1.1 trillion in the current fiscal year, a decline of $487 billion in one year. Tax increases account for $478 billion, or 98 percent, of the deficit reduction.”
And that kind of deficit reduction is not acceptable to the Obama White House, as well as to establishment economists who predict a recession if the nation drives off the fiscal cliff. The minor spending concessions by Democrats in the summer of 2011 — which avoided far larger spending cuts that would have taken place as a result of failing to increase the national debt limit — apparently still stings the Obama White House.
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Photo of Timothy Geithner: AP Images