Untangling the Spin: Reaching The Debt Limit
President Obama and his team argue that if the US reaches the debt limit, the government will default, wreaking havoc on markets and monetary relationships across the globe.
Not surprisingly, they’re wrong. As Senator Pat Toomey points out, the government has the tax revenues to easily fund interest payments. If we reach the debt limit, significant and immediate spending cuts would have to happen, but the government would not immediate default on its debt. The Heritage Foundation agrees, saying, “Keeping the debt ceiling at its current level would not, in and of itself, risk default on the debt.”
Americans have already seen through faulty liberal logic and support a more responsible course. According to a Reuters poll on the debt limit, 71% oppose increasing the borrowing authority. This overwhelming majority demonstrates the widespread demand that Congress deal with the government’s reckless spending.
Congress must make immediate and substantive cuts in spending and start behaving responsibly before it raises the debt limit.
Certainly, we should pay our debts and we benefit from lower interest rates because we do. Senator Pat Toomey intends to introduce legislation to esnure we don’t default. Here’s his logic:
In fact, if Congress refuses to raise the debt ceiling, the federal government will still have far more than enough money to fully service our debt. Next year, for instance, about 6.5% of all projected federal government expenditures will go to interest on our debt, and tax revenue is projected to cover about 67% of all government expenditures. With roughly 10 times more income than needed to honor our debt obligations, why would we ever default?
Read more from Senator Toomey: How to Freeze the Debt Ceiling Without Risking Default.
This kind of clear thinking deflates liberal scare tactics. Consider Derek Thompson, writing in The Atlantic:
What happens if we don’t raise the debt limit? Economic catastrophe happens. Partial government shutdown, interest rate spikes, job losses, a possible double dip recession. Nobody knows, though, because the U.S. has never officially defaulted on its debt.
Thompson equates not raising the debt limit with defaulting on debt. They are not the same thing. These scare tactics aren’t a good way to conduct debates on substantive policy issues.
Americans are better served by a responsible approach to policy, including consideration of how to rein in federal spending and reform the process in a way that empowers Americans, not big-government special interests.