President Obama and the Democrats are issuing dire warnings that the U.S. may default on its debts if the debt ceiling is not increased. This is a false threat. If the debt ceiling is not increased by August 2, it is highly unlikely that even one member of Congress would vote to stop paying on debt owed. They would not dare to be seen as voting to stiff other countries on money owed them by the U.S. Defaulting on our debt is a red herring argument Democrats are using to force people into thinking our only choices are raising the debt ceiling or raising taxes by closing tax loopholes. In actuality, once the debt ceiling is reached, it will come down to a choice of either raising taxes or finding areas to cut spending. Democrats don’t want to admit that cutting spending is a realistic choice. They are too dependent upon the votes of people who expect handouts.
Treasury Secretary Timothy Geithner, the architect of TARP, who helped get us into this financial mess by racking up our debt level with billion dollar bailouts, claims there will be “catastrophic damage across the U.S. economy and global economy” and a “double-dip recession” if the debt ceiling is not increased. But when the U.S. reached the $14.3 trillion debt ceiling on May 21, there was barely a ripple in the stock market. Instead of the sky falling, the market for U.S. debt barely budged, and Treasury bond rates stayed relatively the same. The U.S. has until August 2 when the money physically runs out to make a final decision. Why should one of the primary persons responsible for getting us into this financial crisis be trusted to recommend how to get out of it? If anything, Geithner should be permanently banned from any position in finance.
This manufactured debt ceiling crisis is nothing new. When a previous $4.9 trillion debt limit was reached in 1995, Congress refused to raise the debt ceiling and nothing happened. The sky did not fall and we did not default on our debt.
Obama himself voted against raising the debt ceiling in 2006. He explained his vote at the time, “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”
Obama has failed to explain why 2011 is any different than 2006. If anything, it is even more irresponsible now to increase the debt ceiling since spending has dramatically increased. If the debt ceiling is increased, it will increase our debt to an unaffordable 100% of GDP within a decade. The debt is now over 14 trillion, a 70% increase since 2006. That is $45,300 each for every person in the U.S. Government has expanded by 36% since 2007, a reflection of Obama’s term in office. We are currently at the highest levels of deficit spending since World War II, and we are not even at war. The government is borrowing nearly 40 cents of every dollar that it spends.
There will need to be $1.5 trillion in cuts made in the 2011 budget in order to stay within the existing debt ceiling. The Democrats are claiming that seniors dependent upon Social Security and Medicare will be hurt by cuts. Obama has just threatened that Social Security checks may be withheld beginning August 3. In reality, making cuts to those entitlements does not require hurting those who really depend upon them. Cuts could be made that would only affect younger generations that have not planned to be reliant upon them in their later years. Our older generations currently receiving benefits, or who are about to start receiving them and have planned upon them being there, would still have those entitlements in their current form. The Democrats won’t tell you this, because it pulls the rug out from under their sky is falling argument.
Think tanks like the Heritage Foundation have proposed realistic ways to reduce the costs of Social Security, Medicare, healthcare, transportation, education, and many other areas in government.
Congress called Obama’s bluff this year when he called for a debt ceiling increase without any accompanying spending cuts. The House voted it down 319-97, and the Senate did not even bring it up for a vote.
So far, Republicans are mostly standing strong, refusing to accede to Democrat threats over the debt limit. Republican Senators are proposing a balanced budget constitutional amendment, which Senator Jim DeMint (R-SC) says is a requirement before voting on raising the debt ceiling. Rep. Mike Pence (R-IN) has introduced a constitutional amendment to limit the size of spending in relation to GDP. Unfortunately, Republicans have not always been this principled about the debt limit. Former president George W. Bush proposed increasing the debt ceiling in 2006 and most Republicans voted in favor of it.
There must be spending reductions and spending caps put into place to prevent this from happening again in the future. This predicament is not about running out of money, it is about runaway spending. More regulations and taxes will not resolve this. Taxes will only enable the runaway spending to continue. The Heritage Foundation now only ranks the U.S. ninth in the world for economic freedom, due to factors like high rates of government spending, regulations and taxes. Geithner has it backwards; it is raising the debt ceiling that will send the U.S. in the direction of economic collapse. There needs to be a change in societal attitudes regarding the responsibilities of government. Government cannot survive if we continue the bankrupting, wasteful and outdated programs that have been implemented over the years.