Posted on 01/19/2011 6:48:07 AM PST by SeekAndFind
As Congress prepares for a vital debate over debt, deficits, and government spending, there is reason to be concerned that the GOP is engaging in a bit of unilateral disarmament.
Over the weekend, several Republican spokesmen, including House majority leader Eric Cantor and House Budget Committee chairman Paul Ryan, indicated that they would, in fact, support increasing the nation’s $14.3 trillion debt limit when it comes up for a vote in March. Of course, they also said that they would use the vote as “leverage” to demand spending cuts. But how much leverage is there likely to be if they have already conceded the final vote? After all, a threat only works if the other side believes that you will act on it.
Of course the Obama administration is already warning of Armageddon if Congress doesn’t raise the debt ceiling. Certainly it would be a shock to the economic system. The bond market could crash. The impact would be felt at home and abroad.
But would it necessarily be worse than the alternative?
While Congress has never before refused to raise the debt ceiling, it has in fact frequently taken its time about doing so. In 1985, for example, Congress waited nearly three months after the debt limit was reached before it authorized a permanent increase. In 1995, four and a half months passed between the time that the government hit its statutory limit and the time Congress acted. And in 2002, Congress delayed raising the debt ceiling for three months. It took three months to raise the debt limit back in 1985 as well. In none of those cases did the world end.
More important, what will be the consequences if the U.S. government fails to reduce government spending? What happens if we raise the debt ceiling then continue merrily on our way spending more and running up ever more debt?
Already Moody’s and Standard & Poor’s have warned that our credit rating might be reduced unless we get a handle on our national debt. We’ve heard a lot recently about the European debt crisis, but, as one senior Chinese banking official recently noted, in some ways the U.S. financial position is more perilous than Europe’s. “We should be clear in our minds that the fiscal situation in the United States is much worse than in Europe,” he recently told reporters. “In one or two years, when the European debt situation stabilizes, [the] attention of financial markets will definitely shift to the United States. At that time, U.S. Treasury bonds and the dollar will experience considerable declines.”
Moreover, unless we do something, federal spending is on course to consume 43 percent of GDP by the middle of the century. Throw in state and local spending, and government at all levels will take 60 cents out of every dollar produced in this country. Our economy will not long survive government spending at those levels.
If the debt ceiling is not increased, the Treasury can prioritize interest and debt payment to avoid a default and essentially put the government on a stringent pay-as-you-go basis. Would that involve extreme cuts in government spending? Certainly. But it could be done, if it had to.
If Republicans hold tough on the debt limit, they will have the public strongly on their side. According to the most recent Ipsos/Reuters poll, fully 71 percent of Americans oppose raising the debt ceiling. In fact, that number didn’t change even after people were told that “not raising the debt limit would damage the U.S. sovereign debt rating, which is like our credit rating: it would seriously damage our credibility abroad, would make it much more difficult for us to borrow in the future, and would likely push up interest rates.”
In the long-run, a limited increase in the debt ceiling might be negotiated in exchange for significant structural budgetary reforms designed to limit future government spending. But there is no reason for Republicans to surrender preemptively.
— Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.
Country needs some tough love bestowed upon it, to have any chance of recovering.
Cantor is a puppet of wall street, and his forcing outers to vote for TARP proved that, pause his wife works with and for some of those thieves.
GOP leadership is already sending all the wrong signals.
They are getting ready to fold like a three-dollar card table.
If the GOP cannot hold the line on the debt ceiling, then they are not serious about cutting spending. This is an inevitable step that must be taken. The longer we delay, the more painful it will be. People who say “But we just can’t!” really don’t understand the situation we’re in.
Somebody please 'splain to me the definition of the word "limit", because my dictionary seems to have it all wrong.
>> GOP leadership is already sending all the wrong signals. They are getting ready to fold like a three-dollar card table.
Only the naive among us expected otherwise.
Anyone who has observed the recent history of the Stupid Party is not surprised.
Should our representatives behave correctly and not raise the debt ceiling, this would place our representatives into a behavior of exactly what an average American family must do to remain viable. Our representatives must consider themselves something other than an average American family. Remaining viable does not appear to be the intent of our representatives should they once more raise their voices in support of being nonviable by placing more debt on the people. Such a house of cards will blow away at the first hint of any small wind eventually....imho
You were supposed to get the politically true definition and past it over the erroneous one. I suggest you print it up and do it yourself.
Limit. n. 1. Meaning a way point on a destination. A previous place. 2. Used by anti-government bitter clinger terrorists as part of an indecipherable party ideology language( see ‘Constitution, Bill of Rights, etc.’)
January 19, 2011
Will the Republicans Really Cut This Time?
By John Stossel
1/19/2011
The Republicans promise less intrusive, less expensive government. But will they deliver? In the past, they have said they would shrink the state, but then they came into power and spent more. Consider George W. Bush’s eight horrendous years: The budget grew 89 percent — from $1.86 trillion to $3.52 trillion.
I am growing ever more fearful that the pubbies will cave on this crucial issue.
There is NO need for compromise on this. Do NOT raise the debt ceiling. The world will not collapse.
[If the GOP cannot hold the line on the debt ceiling, then they are not serious about cutting spending.]
Exactly! The GOP will soon reveal themselves. Either they are with us, or they are with the progressive/socialists/communists/Democrats/whatever they are calling themselves these days.
Nothing - and nobody - is “too big to fail”. It’s time to take our economic medicine. We will survive.
Colonel, USAFR
Why would the bond market feel it? Sen Toomey today on Fox said we have plenty of cash coming in...all we have to do is pay the bonds first.
This would force cuts everywhere else. But the idea that we would default as the first option is wrong. Most likely we would suspend services.
Let’s just go back to pre-bush spending.
How about stopping the money going to muslim countries that hate our guts? Pakistan alone is getting huge amounts.
While were at it,can the government stop all the tv ads.
They’ll cave. It’s too far gone.
Ray Bradbury’s fear has become reality, we have become a nation of morons.
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