Debt Reckoning: Destroying Myth Of Government Default
Budget Policy: Even if we don't raise the debt ceiling, enough revenue will still come in to the Treasury to pay our interest, our bonds and essential services. The government will not shut down- only its ability to borrow.
Like the fiscal cliff, the dangers of hitting the debt ceiling, while dire, are not necessarily fatal.
It would, however, concentrate the minds of the American taxpayer wonderfully and force Washington to do what American families do every day around the kitchen table - take the paycheck and pay the bills in order of priority. Pay the gas company and the electricity provider and forget that big-screen TV.
It may be time for Republicans to adapt the philosophy of former White House chief of staff Rahm Emanuel and not let the debt-ceiling crisis go to waste. It's time to destroy the myth that hitting the ceiling will cause the government to shut down and force the U.S. to default on its debt. It should force us to cut spending until we conjured up a sane fiscal policy.
There has been much fear-mongering from President Obama on the issue, and no small amount of hypocrisy from the spender in chief. This is the president who once voted against raising the debt ceiling when George W. Bush was in charge and said the comparatively modest debt the Texas Republican ran up while fighting the war on terror in a post-9/11 world was "unpatriotic."
In March 2006 when Obama was a U.S. senator, he had no problem voting against a stand-alone debt-limit extension. The final vote was close - 48 against the increase to 52 in favor of it.
But back then, he was deeply upset about the then $248 billion deficit. Now he seeks an unlimited credit card - the power to raise the debt limit unilaterally any time he needs to.
Just a few short years ago, Obama said "This rising debt is a hidden domestic enemy" and that "interest payments are a significant tax on all Americans - a debt tax that Washington doesn't want to talk about."
Candidate Obama condemned Bush for adding $4 trillion to the national debt over eight years, calling it "irresponsible" as well as "unpatriotic."
Hitting the debt ceiling will in effect be a de facto balanced budget amendment, forcing the government to prioritize its bills and pay out only what it takes in. But it will not force the U.S. to default on its debt or leave granny without her monthly Social Security check.
As the Washington Examiner's Mark Tapscott notes, the facts, as reported by MarketWatch and the Bipartisan Policy Center, are that we could still meet our core obligations:
• The federal government takes in about $200 billion in revenues each month.
• Interest on the national debt is around $30 billion.
• Social Security costs roughly $50 billion.
• Medicare and Medicaid cost about $50 billion.
• Active-duty military pay costs about $2.9 billion.
• Veterans affairs programs cost about $2.9 billion.
Calling the last debt battle in 2011 a "catastrophe" that led to the lowering of the nation's credit rating and stalled economic recovery, the president who has received six debt-ceiling increases as he added more debt than the first 42 presidents combined, recently told the nation's business leaders:
"If the Congress in any way suggests they are going to tie negotiations to the debt ceiling and take us to the brink of default once again as part of a budget negotiation ... I will not play that game because we've got to break that habit before it starts."
We are not on the brink of default, and the only game we should stop playing is the one of spending more than we take in.