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Taking Up the Debt Ceiling War
Posted By Arnold Ahlert On January 3, 2013 @ 12:55 am In Daily Mailer,FrontPage | 24 Comments
The tax battle is over. Democrats, President Obama and their media cheerleaders succeeded in getting a nervous and divided Republican Party to acquiesce to a bitter bargain. They allowed taxes to rise, while getting almost nothing in return in terms of spending cuts, other than vague promises to be fulfilled sometime in the future. Given the tenor of the times — with entitlement mentality run amok, our spendthrift president’s reelection in November, and the certainty that anything short of capitulation would have been framed by the media as a Republican-created debacle — perhaps it was the only reasonable course of action Republicans could take right now. In the upcoming and far more serious battle over the debt ceiling, Republicans must unify for the simplest of reasons: either they extract serious spending cuts from Democrats and the Obama administration in exchange for raising the debt ceiling — or the nation is headed for fiscal collapse.
Republicans desperately need to educate Americans about our current trajectory. In the last four years, the national debt has increased by more than $5 trillion, including $2.1 trillion of additional debt accumulated since August 2011, when the debt ceiling was raised from $14.3 trillion to $16.4 trillion. Thus, a mere seventeen months later, America technically went bankrupt again on New Year’s Eve. This means that until further credit is authorized by the House in the form of raising the debt ceiling – again – Treasury Secretary Tim Geithner will have to move money around in federal accounts, a process he claims will buy us about two more months before technical bankruptcy becomes genuine bankruptcy.
Now one might think that our runaway freight train of deficit spending would have chastened our elected representatives. One would be completely and utterly wrong. Despite the great fiscal cliff “victory” being touted by Democrats and their media enablers, the Congressional Budget Office (CBO) revealed that the heart of that victory, raising taxes on wealthy Americans, is little more than emotional boob bait for the masses: as a result of the deal, $3.9 trillion will be added to the national debt over the next ten years, bringing us up to more than $20 trillion.
Unfortunately and incredibly, this is small potatoes compared to America’s unfunded obligations. Christopher Cox, former chairman of the House Republican Policy Committee and the Securities and Exchange Commission, and Bill Archer, former chairman of the House Ways & Means Committee, reveal the true scope of America’s problem in a Wall Street Journal article. “The actual liabilities of the federal government–including Social Security, Medicare, and federal employees’ future retirement benefits–already exceed $86.8 trillion, or 550% of GDP,” they write.
Yet the most important part of the article addresses the reality of taxation. “When the accrued expenses of the government’s entitlement programs are counted, it becomes clear that to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually…Some public officials and pundits claim we can dig our way out through tax increases on upper-income earners, or even all taxpayers. In reality, that would amount to bailing out the Pacific Ocean with a teaspoon,” they warn (italics added).
In response to this reality, our intrepid president and his party have brought their teaspoons to the battle. Even as the fiscal cliff deal was on the cusp of being made, Obama insisted that the one atom of relative sanity, the spending cuts mandated by sequestration, conveniently kicked down the road for another two months, were a bridge too far. “We’re using an axe instead of a scalpel,” he contended. For perspective’s sake, it should be noted that the total amount of spending scheduled to be “axed,” absent the further whittling that will more than likely occur when the political class inevitably reprises its lament regarding “draconian cuts,” comes to $1 trillion over ten years.
Such unseriousness, courtesy of reckless Democrats and, in some respects, spineless Republicans, is precisely what brought the nation to the brink of insolvency. If one compares the minuscule level of cuts deemed “draconian,” with the gargantuan and growing level of spending that is somehow “manageable,” as long as the “rich” pay their “fair share,” only one logical, if painful, conclusion can be reached:
Despite their past culpability, either Republicans stand firm, take control of the federal spending debate immediately and endure the coordinated and massive attacks that are sure to accompany any effort to bring the nation’s spending addiction under control, or the country will face dire consequences.
Such attacks have already begun. Huffington Post columnist Jason Linkins refers to debt ceiling “hostage takers” who are “dangerous psychopaths, full stop.” House Democrat Whip Steny Hoyer (D-MD), who must have missed the memo regarding over-the-top language, referred to Republicans seeking to leverage the debt ceiling as “somewhat like taking your child hostage and saying to somebody else, ‘I’m going to shoot my child if you don’t do what I want done.’” Sen. Max Baucus (D-MT) chairman of the Finance Committee, was less incendiary, but equally unrealistic. “It’s anachronistic,” he said. “We’ve already voted on spending and revenue, and so the debt ceiling is just a confirmation of what we voted on.”
Baucus is disingenuous at best, and an outright liar at worst. Over the course of the last three and a half years, House Republicans have sent budget proposal after budget proposal to the Democratically-controlled Senate. Every one of them has died without a vote. Despite being required by law to do so, the Senate has not only failed to pass a budget in those same three and a half years, they failed to even draft one in 2011 or 2012. The House also passed a bill in October to avoid the fiscal cliff, and Democrats not only tabled it, but sent out Chuck Schumer to warn Republicans that any attempt to reform the tax code in 2013 would be completely resisted, because the idea is “obsolete.” Democrats have been so irresponsible, even MSNBC’s Joe Scarborough noticed. Senate Democrats are “negligent” and “cynical” because “they don’t want the American people to know what their priorities are,” he contended.
Democrat priorities are painfully obvious. They wish to grow the size and scope of government, and the costs of doing so are irrelevant.
As far as the president is concerned, the Constitution may be irrelevant as well. On New Year’s day, Obama warned Republicans that he intends to raise the debt ceiling unilaterally. “I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills, they have already racked up through the laws they have passed,” he said.
He continued. “Let me repeat, you can’t not pay bills that we have already incurred,” he said. “If Congress refuses to the United States government the ability to pay these bills on-time, the consequences for the entire global economy would be catastrophic–far worse than the impact of a fiscal cliff. People will remember back in 2011, the last time this course of action was threatened, our entire recovery was put at risk. We can’t go down that path again.”
U.S. News and World Report editor-in-chief Mort Zuckerman illuminates the president’s preferred path. “If you constantly live beyond your means by increasing your credit card balance and bank borrowing, eventually your debt rises to a level where all you are doing is paying the interest on your credit cards and loans…This is what is facing the United States. Unless we make changes, by 2055 interest costs will be the only thing that the United States will be able to pay for with available revenues and resources,” he writes.
And that’s assuming we make it that far. Any remaining daylight between now and the ultimate day of reckoning is predicated on the reality that the rest of the world still believes American is not a deadbeat nation. Americans have virtually no clue how fast things can change once investors lose confidence in our ability to get our fiscal act together. In 2012, the interest alone on the current level of debt was almost $360 billion — financed at record-low interest rates. If rates return to their historic norms, those payments could double in a New York minute. Adding more debt would raise them still higher. In other words, America could be facing a future where more than a trillion dollars is spent — on absolutely nothing other than interest. Yet somehow any attempt by Republicans to draw a line in the sand amounts to hostage-taking of children by dangerous psychopaths engaged in anachronistic and obsolete endeavors.
That’s the kind of rhetoric to which Republicans will be subjected in the coming two months. If they have an ounce of integrity left, they will come to realize that taking a rhetorical beating may be difficult to endure. But that is far better than acting as willing accomplices in bankrupting the nation.
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