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Deadline for United States debt default

August 26, 2011 - WASHINGTON DC

Treasury Secretary Timothy Geithner now says it will be Aug 2 before the United States could default on its massive debt. His previous estimate was Jul 8. Experts predict economic free fall if the ceiling on borrowing isn't raised before then. The recent assassination of al-Qaeda leader Osama bin Laden brings into focus his role in the dire economic state of the United States. One analyst asserts that bankrupting the United States was the primary aim of Bin Laden. Another points to the trillions of dollars spent to combat al-Qaeda. The vote on raising the ceiling to increase the borrowing beyond the current limit of US $14 trillion has become a defining issue for the House Republican majority that campaigned in 2010 on promises to dramatically cut government spending and change the way government does business. The Republicans are targeting the country's entitlement programs, such as Medicare and Medicaid, and want more controls on discretionary spending. Democrats want to see combined spending cuts and revenue raisers.

Treasury Secretary Timothy Geithner now says it will be Aug 2 before the United States could default on its massive debt. His previous estimate was Jul 8. Experts predict economic free fall if the ceiling on borrowing isn't raised before then. The recent assassination of al-Qaeda leader Osama bin Laden brings into focus his role in the dire economic state of the United States. One analyst asserts that bankrupting the United States was the primary aim of Bin Laden. Another points to the trillions of dollars spent to combat al-Qaeda. The vote on raising the ceiling to increase the borrowing beyond the current limit of US $14 trillion has become a defining issue for the House Republican majority that campaigned in 2010 on promises to dramatically cut government spending and change the way government does business. The Republicans are targeting the country's entitlement programs, such as Medicare and Medicaid, and want more controls on discretionary spending. Democrats want to seecombined spending cuts and revenue raisers. Counterterrorism expert Daveed Gartenstein-Ross, quoted in a Washington Post report on May 2 about the death of the al-Qaeda chief, asserts that Bin Laden set out to bankrupt the United States. He argues that the United States never bothered to understand and defend against Bin Laden's assault on the economy. The article notes that Bin Laden adopted the same tactic in Afghanistan -- that his campaign against the Soviet 10-year occupation bled the Soviet Union into bankruptcy and collapse. The anti-Soviet campaign taught bin Laden that superpowers fall because their economies crumble, not because they're beaten on the battlefield, he said, adding Bin Laden knew superpowers are so allergic to losing that they'll bankrupt themselves in the effort to win. This was bin Laden's plan for the United States, Gartenstein-Ross asserts. Nobel laureate Joseph Stiglitz acknowledges in the Washington Post article that the decade of loose monetary policy contributed to the credit bubble that crashed the economy in 2007 and 2008, whilegiving the post-9/11 costs a massive role. He estimates that the price tag on the Iraq war alone will surpass US $3 trillion. Afghanistan likely amounts to another trillion or two. Homeland security spending and indirect costs, such as skyrocketing oil prices after the 9/11 attacks and the slow-down in the economy, add more trillions. The Washington Post article lists unpaid-for tax cuts and prescription drug benefits in Medicare while the country was in midst of two wars as other factors helping Bin Laden's quest for US bankruptcy.

Bin Laden&rsquos war against the U.S. economy (Washington Post 3 May 2011)

Treasury Extends Debt Ceiling Deadline and Raises the Stakes (Atlantic Monthly 3 May 2011)

Boehner: Debt ceiling vote not guaranteed (UPI 26 Apr 2011)

Date written/update: 2011-08-26