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$14 Trillion Fiscal Challenge Faces GOP

(WASHINGTON) -- Representative John Boehner, Photo Courtesy US House of RepresentativesA stern test of fiscal discipline almost immediately faces Republicans who took control of the House of Representatives last week with vows to cut federal spending.  Congress is set to raise the country’s debt limit yet again.

The debate is already raging over what to do. Neither option -- refusing to raise the debt ceiling and risking a fiscal crisis versus relenting and risking alienating voters who entrusted the GOP to tighten the purse-strings -- is politically attractive.

Republican Senator Tom Coburn said in a Washington Examiner op-ed Friday “If Republicans vote to raise the debt without insisting on spending cuts, whatever credibility we may have will be gone.”

But Representative John Boehner, the likely new Speaker of the House, told ABC’s Diane Sawyer Thursday that there are “multiple options” for how to deal with the debt limit.  “Increasing the debt limit allows our government to meet its obligations,” he noted. “And I think that there are multiple options for how you deal with it. But for our team, I think we’re going to have to demonstrate that we’ve got to have reductions in spending. The government’s spending more than what we bring in. We can’t afford it.”

At this point experts say it appears Congress will have to raise the debt ceiling  early next year. The national debt is fast approaching the limit of $14.29 trillion.

Raising the limit is easier said than done.  Just look at the last time Congress voted to increase it. Last February, the Senate vote fell strictly along party lines, with all 60 Senate Democrats supporting the raise and all 39 Senate Republicans opposing it. Come next year, the Democratic majority in the Senate will have shrunk to 53.

If Congress were to refuse to increase the debt limit, the consequences could be severe for the global financial system. Think of the debt ceiling like the limit on your credit card. If you max out, your life doesn’t automatically shut down, but you do have to find other means of funding, such as borrowing cash from family and friends or selling belongings. The government, for instance, could continue operating with cash on hand or cash coming in. Or it could can postpone or delay paying certain obligations, such as payments to contractors. But resorting to moves like that sends an unnerving message to the rest of the world.

While election momentum might be on the side of Republicans, history is on the Democrats’ side. No Congress has ever voted against approving an increase in the debt ceiling.

Copyright 2010 ABC News Radio

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