Reuters is reporting that U.S. Treasury Secretary Tim Geithner formally requested that Congress raise our $12.1 trillion debt limit:
"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations," Geithner said in a letter to Senate Majority Leader Harry Reid that was obtained by Reuters.
You’d think we could get by with less than $12.1 trillion in debt but we’re on track to surpass that figure by October. While stock-market bulls cheered at Friday’s employment numbers, our growing national debt is quite worrisome to me. It’s also disturbing that the government is encouraging more consumer debt with the Cash for Clunkers program.
I’m no Anatole Kaletsky – I do not believe governments should borrow their way out of economic problems. National and consumer balance sheets (including my own) must improve in the interest of long-term economic stability. Preparing for rainy days isn’t fun or glamorous but it’s the smart thing to do.
The government’s attitude towards recessions seems to be “throw money at it until it stops.” But we need to hunker down, save, reduce deficits, and let the economy naturally settle at a level which allows for future growth.
Let’s not inflate a new debt bubble in the name of short-term economic growth.