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Once again this week, like he does whenever his worldview is challenged, Barack Obama tossed “hope and change” under the bus and embraced his “never let a crisis go to waste” strategy. “I cannot guarantee that those [Social Security] checks go out on August 3rd if we haven’t resolved this issue,” the president told CBS News anchor Scott Pelley, “because there may simply not be the money in the coffers to do it.” The president was referring to the ongoing battle over raising the debt ceiling, and this statement was, quite simply, an easily refutable lie. Yet it is a lie which has gone largely unchallenged by the mainstream media, which is leading an all-out effort to paint Republicans as the intransigent entity in these negotiations.
The truth? As Cato Institute Senior Fellow Michael Tanner points out, the U.S. Treasury estimates that they will collect approximately $203 billion in the month of August. During that same month, interest payments on the debt will total $29 billion. In other words, there will more than enough money to meet our interest obligations, as well as payments for Social Security, Medicare and military salaries. The real problem is that the government is scheduled to spend $307 billion the same month, leaving a shortfall of $104 billion.
Does this mean Grandma and Grandpa get stiffed on their Social Security? Only if Treasury Secretary Tim Geithner makes a conscious decision to do so. A 1985 Government Accountability Office (GAO) statement confirms that “the Secretary of the Treasury has the authority to determine the order in which obligations are paid should Congress fail to raise the statutory debt ceiling and revenues are inadequate to cover all the required payment.” In other words, Tim Geithner would be forced to prioritize his spending decisions.
And therein lies the essence of the gulf between the two political parties. While Republicans and Democrats are both ostensibly committed to deficit and debt reduction, it is Democrats and Mr. Obama who insist that “revenue increases,” aka higher taxes, must be part of the equation. Republicans refuse to go along, not because they’re interested in “protecting the rich” as Democrats claim, but because most of them believe that raising taxes puts Congress right back in its comfort zone of never having to prioritize spending decisions. They contend the lack of fiscal discipline, which raising taxes enables, is precisely why the country has amassed $14.4 trillion of debt. They also contend one other thing: the 2010 election was a referendum on the Democrats’ fiscal irresponsibility. One for which they got “shellacked.”
Democrats on the other hand, take great comfort in the fact that the president’s class-warfare rhetoric, recently illuminated by his determination not to “compromise your kids’ safety so some corporate-jet owner can get a tax break,” resonates with a substantial portion of Americans. Democrats also refuse to make any changes in Medicare, believing it gives them the upper hand on the issue heading into the 2012 election. They believe their success in capturing a long-time Republican seat in New York’s 26th congressional district as a result of their “Medi-scare” campaign, is a template for re-capturing the House. Adding to their intransigence is the belief that the media-abetted stories of utter devastation on August 2nd, characterized as “catastrophic economic consequences that would last for decades” by Geithner, or “real nasty consequences” by IMF head Christine Lagarde, will cause Republicans to capitulate.
Perhaps it already has. A new proposal by Senate Minority Leader Mitch McConnell would give president Obama unilateral power to raise the debt ceiling with no strings attached. The strategy here, which consists of a three-step debt ceiling increase in increments of $700 billion, $900 billion and $900 billion, would be to force Democrats to vote in favor of raising the ceiling three times, along with whatever spending cuts they decide to make. At the same time. Republicans could avoid voting for tax increases. This plan would coincide with the remainder of the president’s term in office. McConnel claims his intent is to “do the responsible thing and ensure the government doesn’t default on its obligations.”
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