A Los Angeles Times editorial on May 23, naturally accompanied by a dour photo of House Speaker John Boehner, stated as if it's an indisputable fact that the August 2011 debt deal raised the ceiling by "enough to last until the end of 2012 or early 2013." A Saturday AP report by Ken Thomas and Jim Kuhnhenn so filled with distortions that it's virtually unreadable asserted, again as if it's a no-doubt fact, that hitting the limit is "more than eight months away," putting the ceiling-busting date at about January 31, 2013. Just a few of many other examples with late-December or later assumptions baked in are here (to be fair, this one frames it as a Geithner estimation), here, and here.
The real numbers, combined with the experience of the past two years, indicate that there is a good chance not only that we're not going to be that lucky, but that the government could even hit the ceiling before Election Day.
As of Thursday, May 24, the national debt stood at $15.712 trillion, only $682 billion away from the legislated limit of $16.394 trillion. What follows are three ways of looking at the odds of hitting the debt ceiling in either October or November -- not around December 31 or "more than eight months" from now:
- Last year's monthly deficits -- From May through November 2011, Uncle Sam ran total deficits of $660 billion. This year, April came in with a surplus, but largely because of $32 billion in April-related spending that didn't hit the books until May. $15.712 trillion plus $692 billion pushes the national debt to $16.404 trillion -- assuming that the economy doesn't deteriorate further.
- Last year's national debt increase -- The government is able to increase the national debt "off-budget" in a variety of ways, so one can't stop after looking at reported deficits alone. From May 24 to November 15, 2011 (during which Geither engaged in and then fully unwound his maneuvering to avoid hitting the ceiling which culminated in the late-August debt deal), the national debt increased by $688 billion (readers can confirm this by using the interactive tool found here), more than the increase needed to hit the limit this year. From this angle, it appears that an economy performing more poorly than expected might cause the government to hit the limit by the end of October.
- The 2010 national debt increase -- The government took even less time (From May 24 to October 26) to increase the national debt by more than what it would take hit hit the ceiling this year.
The immediate response to all of this might be that Treasury Secretary Geithner has the flexibility to again move money around and engage in other maneuvers to delay the ceiling hit for some time. But for three months? And far more importantly, why should we assume that he will engage in delaying tactics if he thinks it's advantageous to his boss's reelection not to?
Finally, the notion that the economy might have a worse summer than the previous two is hardly inconceivable given the turmoil in Europe, this year's consistently higher gas prices over a longer term, the slowdown in hiring we've seen during the past two months, and the continued phenomenon of people who could be working exiting and staying out of the labor force because as they see it there's no work (or in some cases, no work worth having) out there.
The press at least owes its readers a "government officials say" or "economists believe" qualifier before their blithely presumptive statements that the federal government won't hit the debt ceiling until near the end of 2012 or later, preferably accompanied by a caution that it could come earlier. It certainly is not etched in stone, and establishment media shouldn't be pretending that it is.
Cross-posted at BizzyBlog.com.