US Government Debt Different - Finance Department - University of ...

Jeremy Kreisberg & Kelley O’Mara (Under the Supervision of Professor Howell Jackson)in February 2013 without a further increase to the debt limit. 357Concurrently, major budgetary changes will take place at the endof 2012 without congressional action. The expiration of the Bushtax cuts, which is projected to increase revenues by $3.7 trillion overthe next decade, is set to take place on December 31, 2012. 358 OnJanuary 2, 2013, sequestration cuts from the Budget Control Actwill trigger $1.2 trillion in deficit reduction over nine years, dividedbetween defense and non-defense programs. 359 This combinationof wide-scale tax increases, substantial cuts to defense, and anotherpotential gridlock over the debt limit may provide an impetus for allsides to negotiate a long-term deficit reduction plan.311On May 15, 2012, Speaker John Boehner voiced his willingness toleverage this upcoming debt limit increase, stating, “[w]e shouldn’tdread the debt limit. We should welcome it. It’s an action-forcingevent in a town that has become infamous for inaction.” 360 Boehnerannounced, “When the time comes, I will again insist on my simpleprinciple of cuts and reforms greater than the debt limit increase.This is the only avenue I see right now to force the elected leadershipof this country to solve our structural fiscal imbalance.” 361 Boehner’swords prompted Secretary Geithner to respond, warning that “[t]hiscommitment to meet the obligations of the nation, this commitmentto protect the creditworthiness of the country, is a fundamentalcommitment that you can never call into question or violate.” 362Geithner expressed his hope that Congress can resolve the next debtlimit increase “without the drama and the pain and the damage theycaused the country last July.” 363357Id. See Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2012-2022 (January 2012) (available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/01-31-2012_Outlook.pdf).Notably, CBO baseline assumptions for FY2013 projectdeficit spending at 16%, and CBO’s alternative fiscal scenario project deficit spending at26.8%. These projections fall far short of the 41% of deficit spending observed in August2011.358Jeanne Sahadi, Bush tax cuts: The real endgame, CNN Money, Nov. 28, 2011, http://money.cnn.com/2011/11/28/news/economy/bush_tax_cuts/index.htm.359Id.360John Boehner, Speaker of the House, Address on the Economy, Debt at the Peter G. PetersonFoundation 2012 Fiscal Summit (May 15, 2012) (available at http://www.speaker.gov/speech/full-text-speaker-boehners-address-economy-debt-limit-and-american-jobs).361Id.362Erik Wasson, Geithner warns Boehner not to play with next deal to increase the debt ceiling,TheHill.Com, May 15, 2012, http://thehill.com/blogs/on-the-money/budget/227393-geithner-warns-boehner-not-to-play-with-debt-ceiling-again.363Id.