What the Debt Ceiling Means to Obama and Congress
President Obama has had one very noticeable contribution to this country since he’s assumed office: a crushing $16.4 trillion debt. As Politico reports, this is “up about 60 percent from the $10 trillion Obama inherited when he took office in January 2009.” They call it “the single biggest blemish on Obama’s record.”
In light of this staggering debt, the upcoming debt ceiling fight is bound to be charged. This time, though, Obama must be willing to take some of the blame. You can’t fix a problem when you refuse to acknowledge its existence; astonishingly, Obama continues to do just that with his excessive spending.
As if we needed any reminder, the article states that “Obama was able to splinter his deeply divided Republican opponents over the issue of tax cuts for the wealthy.” But they also opine that a “similar fate might await the president and his Democratic allies if he brokers a deal with the GOP that requires massive spending and entitlement cuts.”
Where’s the incentive for liberals to budge on spending? Politico suggests that the “combination of the coming debt ceiling deadline and the new deadline for keeping automatic spending cuts from kicking in” may pressure the left enough.
But to be sure, debt ceilings and spending cuts authorized by the law don’t mean a great deal to those who feel they have license to do whatever they please. It may sound good for politicians to say they want to pay bills on time — and they may be able to do so — but unfortunately, that statement is rarely followed by a promise to cut spending.
In July 2011, during the debt limit debate that was brewing at the time, Obama said, “We need to reach a compromise by Tuesday so that our country will have the ability to pay its bills on time, bills like Social Security checks, veterans’ benefits and contracts we’ve signed with thousands of American businesses.”
The President may make a similar statement this time around, but again, he continues to fail to see the root cause of pushing up against the debt ceiling again. In 2011, Heritage explained:
The federal government is rapidly approaching its debt limit because it spends too much, which yields ongoing and massive budget deficits. Washington is borrowing at a staggering rate. The budget deficit is projected to remain at around $1.5 trillion in 2011, following a deficit of $1.3 trillion in 2010. At nearly 10 percent of GDP, these represent the largest budget deficits since World War II, far eclipsing the previous record deficit of 6 percent of GDP set in 1983.
And here is how grave the problem was then:
Given that Washington will spend $3.7 trillion in 2010, a projected $1.5 trillion deficit for 2011 means that government borrowed nearly 40 cents of every dollar that it spent. This is the equivalent of financing the entire discretionary budget—which includes defense, homeland security, international, transportation, education, veterans’ health, housing, justice, natural resources, environment, and community development spending—with borrowed funds.
This past November, Sen. Harry Reid (D-NV) made clear that the debt ceiling would be raised “if it has to be raised,” by $2.4 trillion after the first of the year. Reid also said, “They tried it before – ‘We’re going to shut down the government, and we’re not going to raise the debt ceiling.’ If they want to go through that again, fine. But we’re not going to be held subject to something that was done as a matter of fact in previous administrations.”
The fact is, though, as Heritage explains, that the government won’t default on its debt payments immediately as a result of hitting the debt ceiling since tax revenues are still coming in, which means “the consequences of reaching the debt limit are quite different from the consequences of a “government shutdown” as a result of the inability of Congress and the President to agree on spending levels for government agencies.”
Nevertheless, the central problem remains that the federal government must reform entitlements to reduce spending dramatically. Congress should begin these discussions now. Heritage adds:
The traditional extraordinary measures will not last long, so Treasury may need a new, unconventional, last-ditch budget tool—prioritizing spending so outflows match inflows—and Congress may need to act quickly to make it all legal. The Full Faith and Credit Act introduced by Senator Pat Toomey (R–PA) in the last Congress would be a good place to start.
The left may likely try to use the debt ceiling talk to try to raise taxes again, and will also likely remain obstinate to real spending cuts. Conservatives should not fall for the left’s political gimmicks in the coming debt ceiling debate.