Today, in the Wall Street Journal, David Rivkin and Lee Casey set forth a compelling argument that the notion that the federal government will default on its debt is a myth. And that myth is motivated by the left's desire to cover up the real issue in the debt ceiling debate: the need to cut federal spending. Obama, his administration, and the media would have us believe otherwise, and they have perpetuated three ideas to support their views:
The first is that Congress's failure to raise the debt ceiling-the amount of money the federal government is authorized to borrow at any given time-will cause a default on the national debt. The second is that federal entitlement programs are constitutionally protected from spending cuts. The third is that the president can raise the debt ceiling on his own authority.
They explain that, according the 14th Amendment, "the validity of the public debt of the United States, authorized by law... shall not be questioned," which "prevents Congress from repudiating the federal government's lawfully incurred debts."
Long story short, the 14th Amendment ensures that "a failure to raise the debt ceiling - to prevent new borrowing - does not and cannot put America's creditors at risk." Creditors must be paid. Furthermore, this is perfectly feasible since the federal government rakes in about $200 billion in tax revenue per month, "which is more than sufficient to service existing debts."
Bloomberg columnist Caroline Baum continues:
Because the income taxes withheld from most of our paychecks each month exceed the interest the Treasury owes on its debt outstanding. In November, for example, the Treasury's interest expense totaled $25 billion. That compares with tax receipts of $161.7 billion. The ratio of receipts to interest expense varies from month to month, but what comes in more than covers what goes out in debt service.
Rivik and Casey's second point is particularly interesting, and it is that there is a difference between the federal government's "debts" and its "obligations." The expenses incurred by Medicare and Social Security are not debts, but obligations. In fact, one Congress cannot even pass legislation barring a future Congress from making cuts to these programs. Moreover, Congress has no legal or constitutional obligations to pay for entitlements.
Their third and final argument is that the President cannot use Section 4 of the 14th Amendment to unilaterally raise the debt ceiling. Rather, the 14th Amendment grants Congress the "power to enforce, by appropriate legislation, the provisions of this article." They add, "any effort by the chief executive to borrow money without congressional action would be every bit as injurious to our constitutional system as presidentially ordered taxation."
The President may use the debt ceiling debate as a means of raising taxes again without cutting spending, and if he does, he will only contribute to the what was the root cause of the debt crisis in the first place - excessive spending.
Last time we reached the debt limit, our CEO, Mike Needham, said:
Before we begin considering the events surrounding an increase in the debt ceiling, we must put one dangerous and politically motivated rumor to rest. The simple act of refusing to raise the debt ceiling would not cause America to default on its public debt.
Reaching the debt ceiling would not be catastrophic, nor would taking the time to couple raising the debt limit with common-sense policy changes aimed at getting our fiscal house in order. What would be catastrophic is a continuation of the status quo.
Now is not the time for rhetoric, strategic ambiguity, or empty promises.
Americans deserve an honest debate, and they expect their elected officials - especially the president - to rebut false and reckless claims, even if they are made by his ideological peers.