Bartlett: Debt Limit Will Hurt the Treasury
Bruce Bartlett writes:
On Monday, Treasury Secretary Tim Geithner notified Congress that the public debt limit will become binding within two weeks and Treasury will no longer be able to borrow additional funds. Nevertheless, Congress is taking its time on raising the debt limit, with some lawmakers still saying they will not vote for an increase under any circumstances. This is a clear shirking of their responsibilities, the nation’s finances, and the well-being of every American.
Members of Congress opposed to increasing the debt limit are like people who give their credit cards to a friend, telling them to buy whatever they like. Then they refuse to pay the bill in order to punish their friend for overspending. But their friend still has whatever was bought with the credit card and the only ones being punished are the shareholders of the credit card company, whose profits will be lower because one of its cardholders is fundamentally dishonest.
At the risk of belaboring the obvious, the federal budget deficit didn’t just suddenly arise solely because of actions taken by Democrats over the last two years. As a recent report from Pew makes clear, the bulk of it results from a recession that began in December 2007 and actions taken by Republicans when they were in power: huge tax cuts, two unfunded wars, and new spending programs such as Medicare Part D. Furthermore, Republicans themselves admit that even if their budget plans were enacted in every detail and spending is slashed, the government would still run deficits of more than $5 trillion over the next 10 years; that is what would result from the budget drafted by Rep. Paul Ryan, which all but 4 Republicans in the House voted for on April 15.
For the record, these are the deficits that House Republicans officially support (fiscal years): 2012: $995 billion; 2013: $698 billion; 2014: $489 billion; 2015: $431 billion; 2016: $478 billion; 2017: $407 billion; 2018: $378 billion; 2019: $415 billion; 2020: $405 billion; and 2021: $391 billion.
To vote for $5 trillion in additional deficits – not to mention all of the legislation that got us to today’s deficit – and then oppose allowing the Treasury to borrow funds to cover the lost revenue from tax cuts and the spending Congress enacted into law is nothing but reckless grandstanding.
It’s reckless because failure to raise the debt limit not only threatens a default that could potentially roil the entire world financial system, but would potentially deprive federal workers of their salaries, deny payments to businesses for goods and services sold to the federal government, renege on Social Security benefits to retirees, and shortchange savers who depend on interest income.
