Should the US raise its debt ceiling for the 11th time in 11 years? That's what Treasury Secretary Timothy Geithner and Republican Speaker of the House John Boehner are grappling about at the moment. As Karen Maley explains, Geithner says the US risks default without an increase, while Boehner counters that the American people won't tolerate an increase in debt without substantial spending cuts. What makes this debt ceiling debate different from previous jostles is the sheer size of the debt. As this graph from Business Insider illustrates, US GDP has outpaced the debt ceiling, but the two are close to intersecting, bringing about that magical 100 per cent debt-to-GDP milestone from which the task of avoiding default is seen by some as almost impossible.
The ceiling currently stands at $14.29 trillion and Geithner says there's about $335 billion worth of "headroom". At the earliest, the US will run out of borrowing space on March 31, but the Treasury Secretary says D-Day is most likely to sit somewhere between that date and May 16. He adds that even if the US were to adopt the sort of measures Boehner is advocating, it would delay the need to raise the debt ceiling "by no more than two weeks". It was only a month ago that the Republicans successfully forced the Obama administration to extend the Bush-era tax cuts for the rich to allow the same to be done for the poor. It begs the question, where was Boehner's desperation to tie deficit swelling legislation to spending cuts when tax cuts for the wealthy were on the table?