TPM's Brian Beutler is looking ahead, and finds that there's a potential downside to President Obama's jobs proposal, in that it could set the nation up for a second debt-ceiling battle
in the fall of 2012.
A slower-than-expected economy—or a double dip recession—combined with the jobs bill's $447 billion price tag, means the federal government could run out of borrowing authority right about October 2012, according to one worst-case-scenario estimate. The deal to raise the debt limit last month was designed to give the government enough cushion to make it past the election before the parties would have to square off again. But that was before Obama introduced his new jobs plan, and before revised economic forecasts revealed the economy's in worse shape than economists believed earlier this year.[...]
The debt limit law guarantees the administration $2.1 trillion in new borrowing authority, in a handful of increments. It could ultimately provide up to $2.4 trillion -- but only if the new deficit super committee fully meets its $1.5 trillion deficit reduction target, or Congress sends a Balanced Budget Amendment out to the states.
If the administration gets stuck with the lower, $2.1 trillion figure, current economic estimates suggest the a new debt limit bill will have to pass in early 2013, or borrowing authority will lapse, and trigger all the potential cataclysms we barely avoided in August.
For their part, administration officials have looked at this conundrum, and estimate that the debt limit law (known officially as the Budget Control Act) gives the Treasury enough borrowing authority to get through 2012, even if the jobs bill passes in full, although it might require Geithner moving money around to make it last.
Other budget experts, including the Center on Budget and Policy Priorities Richard Kogan and Moody's chief economist, Mark Zandi, see the debt ceiling limit reached in October, 2012. That depends in part, though, on whether the jobs plan passes and manages to strengthen the economy, which would eke out several more months.
But Beutler leaves out the political factor, which is a huge unknown. We do know that the debt-ceiling fight did absolutely nothing to help Republicans politically, except with the sliver of their rabid tea party base. They might not be as eager to engage in that kind of warfare again, a month before the election. Of course, this speculation is all predicated on the idea that the GOP House would pass the $447 billion jobs bill, which in itself might be an unlikely scenario.
However it plays out, the potential for a debt-ceiling fight one month before the 2012 election should not be a cause for fear in the White House, and shouldn't be a factor in how hard they fight for this jobs package.