Government ContractorsGovernment Contractors

ABOUT | REGISTER | ADVERTISE | SUBMIT NEWS | AGENCIES | COMPANIES | RESOURCES
  • No products in cart.
  • Getting Started

    Basics of Government Contracting

    • Getting Started (HOME)
    • What Is Government Contracting?
    • Basics of Government Contracting
    • Government Agency Profiles
    • Types of Contracts
    • Identifying Your Audience
    • How To Win A Contract – The Basics

    Discussion Forums

    • Discussion Forums (Home)

    What Do You Want To Know?

    We will do our best to provide you with the information, resources, and courses you need.
    • Tell Us What You Want To Learn

    GovCon Business Resources

    • Business Resources (Home)
    • Accounting and Taxes
    • Banking, Capital, Loans
    • Business Development / Sales
    • Capture Management
    • Proposal Management
    • Contract Management
    • Human Resources
    • Legal and Compliance
    • Technology and Software
    • Marketing

    Courses and Learning Resources

    • Education (Home)
    • View All Courses
    • Create A Course
    • Create A Webinar
    • Books
    • Bootcamps

    Networking and Events

    • Networking (Home)
    • How To Network Effectively
    • Upcoming GovCon Networking Events
    • All Events (Calendar View)
  • Education

    Government Contractor Courses

    • VIEW ALL COURSES
    • How To Create Successful B2B and B2G Webinars (Course and One On One Consulting)
    • LinkedIn for B2B and B2G Networking 101
    • Search Engine Optimization for Government Contractors 101
    • Small Business Marketing To The Government 101
    • Social Media 101
    • E-mail Marketing 101

    Third-Party Courses

    • A Contractor’s Guide to Doing Business with the Department of Homeland Security (Federal Publications Seminars)
    • A Guide to Accounting and Billing Systems (Federal Publications Seminars)

    Teach - Share Your Knowledge

    • Create A Course
    • Create A Webinar

    Attend A Bootcamp or Training

    • Bootcamps

    Books for GovCon Professionals

    • Books (Home)
  • Federal
  • State & Local
  • Industries

    Industries

    • Industries (Home)
    • Aerospace and Defense
    • Architecture, Engineering, Construction
    • Computers and Communication Services
    • Facilities Management
    • Hardware and Software Providers
    • Professional Services

    Latest Industry Articles

    • Harris Corporation and L3 Technologies To Merge Into L3 Harris Technologies

    • Google Will Not Bid for Pentagon’s $10 Billion Joint Enterprise Defense Infrastructure cloud, or JEDI

    • General Dynamics Awarded $481 Million for Continued Development of U.S. Navy’s Next Ballistic-Missile Submarine

    • Defense Spending Includes $162 Million For Portsmouth Naval Shipyard In Maine

    • Naval Medical Logistics Command Awards Leidos Contract to Study Health Impact of Undersea Operations on Submariners

    • Gulfstream Awarded U.S. Air Force Fleet Support Contract

    • General Dynamics Ordnance and Tactical Systems Awarded Contract for U.S. Army’s Ground Mobility Vehicle Program

    Get Involved In Government Contractors

    We want to grow the Government Contractors community. To do that, we need you! Review the options below, and select the opportunities that best meet your interests.
    • Register To Become An Author or Thought Leader on Government Contractors
    • Create A Course
    • Create A Webinar
    • Create A Podcast or Netcast
    • Post An Event
    • Contact Us To Discuss Your Interests
  • Federal Contracts

    Pre-Solicitation Contracts

    • Imports And Systems Inspection Regulatory Compliance And Enforcement (SIRCE)

    • Operation of the San Diego Job Corps Center

    • Pre-Solicitation Bids (Home)

    Active Bids

    • Adapting USAID Democracy Rights and Governance Assistance to Better Address Global Trends

    • Active Bids (Home)

    Awarded Contracts

    • Universal Enrollment Services (UES) Bridge Award

    • Awarded Contracts (Home)

    Cancelled Bids

    • SAMHSA Public Engagement Platform (PEP)

    • Large Electronic Medical Record (EMR) system

    • Puerto Rico Army National Guard (PRARNG) State Child and Youth Program Resilience Training for Teens I

    • Special Operations Forces Personal Equipment Advanced Requirements (SPEAR) Soft Armor Ballistic Inserts

    • Cancelled Bids (Home)
  • Networking & Events

    B2G Networking Resources

    • How To Network Effectively
    • How To Create A Successful B2G Event
    • How To Create A B2G Webinar

    Upcoming B2G Events

    • Drupal GovCon
    • Greater Washington Government Contractor Awards™ Finalist Reception
    • The Greater Washington Government Contractor Awards™

    Event Categories

    • GovCon Networking
    • Conferences
    • Webinars
    • Awards
    • All Events (Calendar View)

Debt Ceiling Debate Shows True “Deficit” Is Among Democrats And Republicans

by Michael Hackmer, CEO and Founding Partner, Government Contractors / Monday, July 11, 2011 / Published in Federal Budget, Government Shutdown
President Obama, as well as congressional Democrats and Republicans, are trying to show the American people they take the nation’s financial health seriously.

So much so, they are scrambling to reach an agreement on raising the nation’s debt ceiling — the legal limit that Congress may owe — by August 2.

Of course, let’s not confuse what is taking place here. The U.S. government is not in danger of defaulting on its debt payments, as some allege. Failure to raise the debt ceiling just means the government cannot borrow more than roughly $14.3 trillion. We owe, at present count, approximately $14.289 trillion, which is the sum total of our national debt (Click to see the U.S. National Debt Clock). Without an increase in the debt ceiling, we would not be able to borrow more money and would need to get by on just what we take in as revenue.

What does that mean, exactly?

To put it in context, in 2011, the U.S. government will collect over $1 trillion in individual and corporate taxes (it collects money from other places as well, such as payroll taxes). Meanwhile, the government will pay over $240 billion on interest payments to the debt. That leaves a difference between tax revenue and debt payments of about $800 billion.

Now, $800 billion sounds like a lot of money. But that is all that is left to fund just about everything else the government does.

So, unfortunately, the challenge is not avoiding a default on our debt obligations, but rather our ability to borrow another $1 trillion (give or take) to cover the additional spending that exceeds what the government takes in as revenue (See Office of Management and Budget [OMB] Table S-3 and budget). This money is needed to fund discretionary spending items (such as the U.S. military) and maturing treasuries. Social Security receives its funding through payroll taxes, which is another source of revenue for the U.S. government.

This means that the issue facing the president and Congress is really less about defaulting on debt and more about ensuring the government can continue to spend on entitlement programs and other spending priorities such as our overseas military operations, education, border patrol and the like.

Right now, to help reach an agreement that will allow the debt ceiling to be raised, President Obama and Democratic and Republican lawmakers are trying to piece together ways they can generate some savings — both in the short term and long term.

What is being discussed? And how does this situation potentially affect government contractors?

Based on what has been released to the public, here are some key items:

  • While the government will not default on its debt, if an agreement is not reached and legislation authorizing the debt ceiling increase is not approved by Congress and the President, the government will have to begin withholding payments. This will affect government contractors and civil servants at the start, with an impact similar to a shutdown. (Take a look at GovWin’s Contractor Government Shutdown Prep Resources.) If no agreement is reached and the debt ceiling is left alone, the pinch could expand to other areas. For example, funding for military operations would be affected. And though Social Security has a revenue source of its own, there is always the potential that payments to retirees will be affected.
  • Over the last few days, changing the way inflation is calculated — the Consumer Price Index (CPI) — has gained substantial momentum. The idea is that by tightening the formula for inflation and altering the consumer price index, citizens won’t be compensated as much when prices rise. Right now, many in Congress believe citizens are being compensated too much for rising costs. By changing the way inflation is calculated, lawmakers can lower the rate of inflation. This could save tens of billions of dollars over the next 10 years. A drop in the budget bucket, to be sure.
  • Another idea is to reduce benefits to retirees by $112 billion over 10 years. This will not affect government contractors. Most likely, any cuts to retirement benefits will be phased in over time. On paper, this is also is a small reduction that will have minimal impact on the deficit.
  • Last week, the White House indicated a willingness to reduce approximately $4 trillion in spending over the next 10 years and raise the debt ceiling so Congress and the President would not need to address it again until after the 2012 elections. This would likely mean a new debt ceiling of between $16 and $17 trillion. It remains to be seen if such a raise will be acceptable to Congress without substantial spending cuts.
  • Democrats have remained opposed to reducing the deficit on the backs of seniors and others. This means a strong potential for cuts to government contracts as a potential tradeoff to reductions in Social Security spending.
  • Over the weekend, Republicans declined to accept any tax increases as favored by the Democrats, and are holding to approximately $2 trillion in spending cuts over the next 10 years. That deal has been rejected by President Obama, who earlier today said that Republicans needed to agree to a balanced deal that includes tax increases and spending cuts, saying it was time to “eat our peas” and pass a debt deal.

Where are we headed?

As congressional leaders of both parties and President Obama continue to work on a deal to raise the debt ceiling, the scope of the budget challenge cannot be understated. The total budget deficit over the next 10 years is projected to be over $9 trillion. While there must be a starting point, the cuts currently outlined will not address the nation’s financial quagmire.

Whether Congress approves a scaled-back set of spending cuts totaling $2 trillion (favored by Republicans) or a combination of cuts and tax increases totaling $4 trillion (favored by Democrats), the national debt will still likely balloon to over $20 trillion in that time period, with interest payments reaching $800 to $900 billion per year by the end of the decade. Revenues will not be able to keep pace, putting future government spending in real jeopardy.

As the debate continues regarding the debt ceiling, government contractors can expect that if cuts in government programs are not a substantial part of the deal that emerges, they will be in the near future.

About Michael Hackmer, CEO and Founding Partner, Government Contractors

Michael Hackmer is the Co-Founder of Government Contractors, as well as the founder of: Social Web Tactics, Catoctin Education, YourTravel.Guide, and CBT Media. Social Web Tactics has three sub-divisions that Hackmer also oversees, including: Time To Brainstorm, Your Webinar Experts, and Your SEO Consultant. As part of Catoctin Education, there is Catoctin College and the Education Blog. Hackmer was born in Boston, Massachusetts, and currently resides in Ashburn, Virginia with his wife and youngest daughter, while his oldest is a student at VCU. To reach Michael Hackmer via e-mail, send to: michaelhackmer@governmentcontractors.co

What you can read next

Government Shutdown - US Capitol Building
$1.3 Trillion Omnibus Bill Deal Signed To Fund Government Through September 2018
Deltek Clarity: Focus on IT Report Unveils Surprises in GovCon IT Spending
Government Contractors - U.S. Capitol Building and Dome
No Government Shutdown: Congress Passes Minibus Spending Bill To Keep Government Running Until December

You must be logged in to post a comment.

Join Today! Get Involved In Government Contractors

  • Register To Become An Author or Thought Leader on Government Contractors
  • Create A Course
  • Create A Webinar
  • Contact Us To Discuss Your Interests

Latest Posts

US General Services Administration - HCaTS 8(a) - Human Capital Training Solutions

HCaTS-8(a): What is the Winning Score?

10:00 am 15 Jan 2020
Copies of the US Federal Budget

Federal Government Collects Record Individual Income Taxes in FY 2018; Still Runs $779B Deficit

2:33 pm 22 Oct 2018
FedFem Awards Honoring Women Owned Businesses in Government Contracting - LeadersNest

LeadersNest Announces the 2018 FedFem Awards Winners

1:55 pm 17 Oct 2018
L3 Harris Technologies

Harris Corporation and L3 Technologies To Merge Into L3 Harris Technologies

1:26 pm 15 Oct 2018
Weather Channel Video Footage of Hurricane Michael Disaster

Hurricane Michael Devastates Communities and Leaves +1 Million Without Power

11:20 am 12 Oct 2018
GovCon CRM and Marketing Automation Solution - Click To Learn More

GovCon Courses, Bootcamps, and Books


Government Contractors has created a section of learning opportunities for govcon professionals, including book recommendations and courses. Through our partnership with Catoctin College, you also can create courses for the govcon community.

Click to see courses and learning opportunities.

Discussion Forums

Government Contractor Discussions Forum

Join in the debate in our GovCon Discussion Forums. We seek to include a wide variety of topics important to b2g professionals. Registration is free. Some threads are "invitation only" due to topic sensitivity / privacy.

Click here to view the GovCon Discussion Forums.

GET OUR WEEKLY GOVCON RECAP

Subscribe to our weekly GovCon Recap. Don't get overloaded by daily emails. Get one recap that covers everything you need.

GETTING STARTED

  • How To Get Started
  • Basics of Government Contracting
  • Government Agency Profiles
  • Types of Contracts
  • B2G Business Resources
  • Federal Contracts
  • Networking and Events
  • Submit A Company Profile

POPULAR COURSES

  • VIEW ALL COURSES
  • How To Create Successful B2B and B2G Webinars (Course and One On One Consulting)
  • Inbound Marketing 101
  • Content Marketing 101
  • LinkedIn for B2B and B2G Networking 101
  • Search Engine Optimization for Government Contractors 101
  • E-mail Marketing 101
  • Social Media 101
  • Small Business Marketing To The Government 101
  • Introduction To B2B and B2G Advertising
  • How The Military Uses Instagram
  • Register / Become A Thought Leader
  • Submit News or Press Release
  • List An Event
  • Advertise
  • Ask A GovCon Expert
  • Contact Us

Web Hosting

  • Commenting and Discussion Forum Policy
  • Contributor Policy
  • Privacy Policy
  • DMCA: Request Content Removal
  • Terms of Use and GDPR Notice

Copyright © 2019 by Government Contractors LLC. All rights reserved.

TOP