Obama to Ask Congress for $1.2 Trillion Increase in Debt Limit

President Barack Obama will ask Congress this week to increase the federal debt limit by $1.2 trillion, which administration officials say would avoid the need for further increases before the 2012 elections. The increase would set the federal debt ceiling at $16.4 trillion.

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The increase would be the final allowed under the budget agreement reached in August after the government came close to default, with Congress deadlocked in debates that held up legislation until the day of the deadline. On August 2, Obama signed legislation codifying the agreement, and has since obtained two increases totaling $900 billion.

The August budget agreement largely preempts any partisan debate over federal deficits and debt that Obama’s requests to raise the debt ceiling might otherwise have touched off in Congress.

Though the Republican-controlled House could try to block the proposed increase in the debt limit, the Senate, with a Democratic majority, is unlikely to go along. Even if both houses of Congress voted to block the increase, Obama could veto the legislation.

Four House Democrats have introduced a bill that would eliminate the statutory cap on the public debt entirely. “There’s no reason to have a debt ceiling at all,” said one of the four, Representative Hank Johnson of Georgia. “It doesn’t restrain spending, since the spending has already been committed. It just threatens our credit, and it weakens our country.”

Under the current budget law, Obama could have requested a larger increase in the debt limit if Congress had passed a constitutional amendment to require balanced budgets, or if the deficit-reducing recommendations of a joint committee had become law. However, the amendment was not approved, and the committee could not agree on any proposals.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com