Kevin Price
Principles for dealing with the debt ceiling
By Kevin Price
On August 2nd the United States will become a debtor nation if it does not raise the debt ceiling. The result will be a dramatic increase in the cost of paying the interest on the debt, which already consumes more than 20 percent of the federal budget each year. Many economists are suggesting that this cost could consume an additional ten percent of the budget if the debt ceiling is not raised.
The GOP had the opportunity to cut the budget in earlier negotiations, but was only able to slice a mere $80 million from the government pie. Their failure to demand cuts when it could have made a difference has set the stage for our current crisis. Today, Republicans are taking a hard line when it comes to the debt ceiling. The GOP is now lining up alongside the American people as if they too are victims of the debt situation. The reality is, they have helped to create it. They are not victims of the budget process — they are collaborators. Now they are going to make the situation worse by forcing the US to fall into debtor status.
This situation is extremely volatile and the best principles need to be applied, these include:
© Kevin Price
July 20, 2011
On August 2nd the United States will become a debtor nation if it does not raise the debt ceiling. The result will be a dramatic increase in the cost of paying the interest on the debt, which already consumes more than 20 percent of the federal budget each year. Many economists are suggesting that this cost could consume an additional ten percent of the budget if the debt ceiling is not raised.
The GOP had the opportunity to cut the budget in earlier negotiations, but was only able to slice a mere $80 million from the government pie. Their failure to demand cuts when it could have made a difference has set the stage for our current crisis. Today, Republicans are taking a hard line when it comes to the debt ceiling. The GOP is now lining up alongside the American people as if they too are victims of the debt situation. The reality is, they have helped to create it. They are not victims of the budget process — they are collaborators. Now they are going to make the situation worse by forcing the US to fall into debtor status.
This situation is extremely volatile and the best principles need to be applied, these include:
- The GOP must say "no" to a tax increase. The US already has the second highest tax rates of any industrialized country in the world. Unless it is the goal of government to force businesses to leave the United States, tax increases cannot be a part of the package.
- The Republicans cannot transfer authority to the president. The US has developed an Imperial Presidency. Our presidents have drugged us into untold numbers of military conflicts over the last fifty years, yet we have not declared war since World War II. When the Congress voted against bailing out GM and Chrysler, President Bush acted like a Little Caesar and used TARP like a slush fund for his own enjoyment. The Executive Branch agencies and departments daily add new regulations without any Congressional approval. Members of Congress who are advocating a short term solution that allows the president to end this impasse, are only transferring more authority to an already autocratic executive branch.
- There must be a deal on the debt ceiling. If the Congress does not figure out a way to raise it, the cost of borrowing money will go up significantly. The president — and his allies in the media — will clearly make the case that the crisis that follows will be the GOP's fault. The ceiling going up has largely been routine for years — it is the Republicans who are creating this battle and their timing is very poor. They should have fought the debt battle during the budget talks months ago. Instead they are pursuing a dangerous game of chicken and the real losers will be the American people.
- The GOP needs realistic expectations in dealing with Obama. President Obama is an ideologue that believes that government is the solution to our problems and all Americans should have economic "parity." He believes in the redistribution of the wealth and he is as passionate about that as Ron Paul is about cutting government spending. You will not get spending reduced by this president, without massive tax increases, which would be poison to any recovery. The only realistic solution is to do as little harm as possible in getting the debt ceiling raised. But the GOP must get that ceiling raised.
© Kevin Price
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