In keeping with the government’s tradition of voting on things they don’t want us to hear much about, Congress voted on Christmas Eve (when it would be least likely to get reported in the press) to raise the debt ceiling to $12.5 trillion dollars, with another expected increase to $14 trillion dollars in February, 2010.
What is the debt ceiling? It’s the maximum, never to be crossed, line-in-the-sand that the government must absolutely, no matter what, never ever go above.
Unless they want to.
So, the “debt ceiling” is more like a “debt suggestion” I guess. What’s the point of calling something a ceiling when you can just vote to remove it?
Sometimes a ceiling is also known as a spending cap.
Congress has a cap on how much taxpayer money they can spend to help Fannie Mae & Freddie Mac pay mortgages that went into default.
Correction, they did have a cap, until they voted to remove that too on Christmas Eve.
So why would Congress, under the cover of Christmas Eve, vote to raise the debt ceiling and remove the caps to cover mortgage losses? I imagine that is something you would do if you were expecting significant additional losses in 2010.
The cap on Fannie and Freddie was set at $400 billion…and they had only consumed $100 billion of it so far. So clearly, Congress doesn’t even think the $300 billion would be enough to cover upcoming losses, and they don’t know how much will be enough, so they just removed the caps completely.
We are in for a wild ride in 2010. Time to dig in deeper and brave the coming storm.