Disagreement persists among Nevada delegation as nation hits debt ceiling

By Karoun Demirjian

Monday, May 16, 2011 | 8:31 a.m.

WASHINGTON - Doomsday is today: the federal government’s debt will officially hit its legal ceiling, with Congress nowhere near a resolution on how to raise it.

For months, lawmakers have been in a standoff weighing the practical vs. political implications of raising the debt ceiling. Those like Nevada Sen. Harry Reid and Rep. Shelley Berkley have been warning of the consequences of crashing into the legal limit of what Washington’s allowed to borrow, and the picture looks a lot like a potential government shutdown: public services would stop, the lights would go out on federal offices around the country, and as a bonus, once the U.S. started defaulting on its foreign debts, global markets would crash.

But those like Nevada Sen. Dean Heller and Rep. Joe Heck have remained largely opposed to increasing the government’s ability to borrow unless Congress institutes major reductions to the budget as it stands.

"It’s going to be very, very difficult for me to vote for raising the debt ceiling,” Heller said last week.

So why didn’t you wake up to utter panic and pandemonium today? Well, because Treasury Secretary Tim Geithner says he still has a few legal tricks up his sleeve -- enough to keep the country from feeling the effects of the crash until early August.

But that puts Congress on a clock, not just to raise the debt limit, but also to resolve the fiscal 2012 budget, since that’s where the cuts Republicans are demanding in exchange for increasing the government’s ability to borrow are going to have to come from.

So if cuts are on the horizon, why all this fuss about being able to borrow more? Because while raising the debt ceiling might sound like giving Washington a blank check, that's not the whole picture: it’s also necessary to allow the government to pay off the bills it’s already run up.

There is one other way around it: if the debt limit isn’t raised, Congress could always raise taxes instead to cover the country’s obligations. But that’s not going to sit well with lawmakers, either.

We don’t yet know what will be the ultimate resolution of this game of political chicken, which in itself is not that unique: every few years or so, Congress has to take a debt limit vote, which raises philosophical hackles about national spending, and then they pass it anyway.

If Congress doesn’t approve an increase in the debt limit, it’ll be first time since the country adopted such a ceiling in 1917 that it failed to do so. Back in 1917, incidentally, the debt limit was $11.5 billion, a figure that seems almost cute in comparison to today’s $14.293 trillion limit.