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Treasury Secretary Timothy Geithner warns that America is just 40 days away from Armageddon. Don’t let the scare tactics fool you. Even if the debt ceiling is not raised, the U.S. will not necessarily default on its debt on August 2. It’s difficult to understand how anyone would still see Geithner as an authority on the economy due to his previous gaffes on everything from the “stimulus” to the Dodd-Frank financial overhaul law.
Most credible economists will tell you that keeping the debt ceiling at its current level will not be the end of the world. St. Lawrence University economics Professor Steve Horwitz says that “people imagine a doomsday scenario where we’ve maxed out the credit card and have nothing in the bank account, when in reality we have plenty of tax revenue to pay off interest on our debt.” Even if Congress does not raise the debt ceiling, the federal government still has enough money to ensure that bond holders are paid in full.
Despite our official national debt approaching $14.4 trillion, many in Washington want to simply raise the debt ceiling limit without any spending cuts or reforms. Federal Reserve chairman Ben Bernanke is urging to keep the debt ceiling vote separate from spending cuts debates while claiming that not raising the debt limit would “create fundamental doubts about the creditworthiness of the United States and damage the special role of the dollar.” The truth is that the Federal Reserve running the printing presses on overtime does far more to destroy the value of the dollar. Any economic credibility that Ben Bernanke may have once had has long gone out the window.
We should not be in this position in the first place. A recent FreedomWorks poll conducted by Frank Luntz concluded that 7 in 10 Americans in key swing states strongly oppose any increase in the debt limit. It’s absurd that our national debt has reached $14.3 trillion, let alone that we’re discussing raising the debt ceiling for the 74th time since 1962. The debt limit has gone from less than $1 trillion in the 1980’s to nearly $14.3 trillion. Just seven years ago, Congress raised the debt ceiling to $6.4 trillion, which means the U.S. debt has doubled in less than a decade.
The goal is to get us to a point where spending never exceeds the established debt ceiling. It would be inexcusable for Washington to raise the debt ceiling without changing its spending habits. When will we say: enough is enough? In the Wall Street Journal, the presidents of various limited government groups Colin Hanna, Chris Chocola and Ken Blackwell write that “Republicans in the Bush years and Democrats in the Obama years have proven that we cannot trust them when it comes to spending.“ It’s past time to break the debt ceiling cycle. The continuous cycle of lawmakers increasing the debt limit as needed to finance their everlasting spending spree must end.
We need a responsible approach to the debt ceiling. The “Cut, Cap and Balance” pledge, which is championed by fiscally conservative groups and members of Congress, states that the signer will oppose any “clean” debt ceiling limit increase. These signers pledge to not raise the debt limit without substantial cuts in spending, enforceable spending caps and a congressional passage of a Balanced Budget Amendment to the U.S. Constitution that includes a spending limitation and a super-majority to raise taxes.
Now is not the time to raise the debt ceiling unless all three of these minimum necessary preconditions are met. Vice President Joe Biden has a series of meetings with congressional leaders in efforts to reach a deal on raising the debt ceiling. If the compromise includes only phony cuts—which is very plausible—lawmakers must reject it on principle. The pledge will help to ensure that representatives stand their ground in the debate ceiling fight. No debt limit hike without cuts, caps and balancing the budget. I urge you to sign the “Cut, Cap and Balance” pledge and encourage your representatives to do the same.