First off, guess who made this statement about raising the debt ceiling:
That was Senator Barack Obama in 2006 explaining why he was voting against raising the debt ceiling.
Now guess who said this, including the statement that "increasing the debt is the last thing we should be doing":
That was Senate Harry Reid in 2006 explaining why he was voting against raising the debt limit, and that was back when the national debt was less than $10 trillion!
As we have recently seen, when we are about to reach the debt ceiling and when sane people oppose raising the debt ceiling, we are told that if we do not raise it, we will "default" and the good faith and credit of the U.S. Government will be severely damaged. We are also told that we need to raise the debt ceiling to pay for debt incurred for spending that has already been authorized.
Our tax revenue is more than enough to pay the interest on the national debt. This is true now, and it was true the previous times we raised the debt ceiling. Senator Mike Lee made this point during debate on raising the debt limit:
Economist Peter Ferrara:
When you open your monthly bill from Visa V -1.30% or Mastercard, have you ever thought of telling the credit card company you cannot possibly pay even the minimum balance due, and you are going to have to default on the debt, unless the company immediately increases your credit limit? What do you think your creditor would tell you if you did? Would you expect to get the increase in your credit limit that way?
Imagine if a financial counselor told a man who was deeply in debt and who had once again maxed out his credit cards that he should go get more credit cards.
The crux of the issue is that not raising the debt ceiling would force the government to cut spending and to prioritize spending in order to have enough money to keep making payments on our debt. Shortly before Boehner and McConnell agreed to both increase spending and raise the debt ceiling last week, Dr. Norbert Michel said,
Economist Veronique de Rugy said the following regarding the previous battle over raising the debt ceiling:
Just because future spending has been "authorized" does not mean we cannot reduce the amount of the authorization or cancel it altogether. Sane people who balance their checkbooks each month call that setting priorities and living within your means.
There have been several occasions over the last 40 years when the government waited three to four months before increasing the debt ceiling after the debt ceiling was reached, and the world did not end on any of those occasions.
To get some idea of just how bad the Bipartisan Budget Agreement of 2015 is, I quote from an analysis of it written by 11 financial experts:
The Debt Ceiling Cometh: Another Chance to Rein In Spending
Debt-Ceiling Myths | National Review Online
Blank Check: What It Means to Suspend the Debt Limit
Debunking debt ceiling myths
The Facts About the Debt Ceiling
Failure To Raise The Debt Ceiling Will NOT Bring About Federal Default
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. government can’t pay its own bills. . . .
Increasing America’s debt weakens us domestically and internationally. Leadership means that "the buck stops here." Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
I therefore intend to oppose the effort to increase America’s debt limit.
Increasing America’s debt weakens us domestically and internationally. Leadership means that "the buck stops here." Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
I therefore intend to oppose the effort to increase America’s debt limit.
That was Senator Barack Obama in 2006 explaining why he was voting against raising the debt ceiling.
Now guess who said this, including the statement that "increasing the debt is the last thing we should be doing":
If my Republican friends believe that increasing our debt by almost $800 billion today and more than $3 trillion over the last five years is the right thing to do, they should be upfront about it. They should explain why they think more debt is good for the economy. . . .
They should explain this. Maybe they can convince the public they’re right. I doubt it. Because most Americans know that increasing debt is the last thing we should be doing. After all, I repeat, the Baby Boomers are about to retire. Under the circumstances, any credible economist would tell you we should be reducing debt, not increasing it. Democrats won’t be making arguments to support this legalization, which will weaken our country. Weaken our county.
They should explain this. Maybe they can convince the public they’re right. I doubt it. Because most Americans know that increasing debt is the last thing we should be doing. After all, I repeat, the Baby Boomers are about to retire. Under the circumstances, any credible economist would tell you we should be reducing debt, not increasing it. Democrats won’t be making arguments to support this legalization, which will weaken our country. Weaken our county.
That was Senate Harry Reid in 2006 explaining why he was voting against raising the debt limit, and that was back when the national debt was less than $10 trillion!
As we have recently seen, when we are about to reach the debt ceiling and when sane people oppose raising the debt ceiling, we are told that if we do not raise it, we will "default" and the good faith and credit of the U.S. Government will be severely damaged. We are also told that we need to raise the debt ceiling to pay for debt incurred for spending that has already been authorized.
Our tax revenue is more than enough to pay the interest on the national debt. This is true now, and it was true the previous times we raised the debt ceiling. Senator Mike Lee made this point during debate on raising the debt limit:
If we fail to raise the debt limit, it would bring about some problems, and bring about significant shortfall in revenue for government, but that is different from a default. A default is what happens if we don’t pay the interest as it accrues on our national debt. That’s not going to happen. We have more than enough revenue coming in each month to cover that sum. ( Debunking debt ceiling myths )
Economist Peter Ferrara:
When you open your monthly bill from Visa V -1.30% or Mastercard, have you ever thought of telling the credit card company you cannot possibly pay even the minimum balance due, and you are going to have to default on the debt, unless the company immediately increases your credit limit? What do you think your creditor would tell you if you did? Would you expect to get the increase in your credit limit that way?
That is the same silly, illogical argument that your President Barack Obama is peddling to the entire country, to considerable success, given the fundamental breakdown in this generation’s ability to handle self-government. Not raising the debt limit does not mean defaulting on the national debt, any more than not increasing your credit limit means you can’t pay your monthly credit card bill, and must default on that.
As the outstanding federal debt becomes due, it can simply be paid by newly issued debt, without violating the debt limit, as the total outstanding debt would not change. President Obama’s own budget estimates total net interest on the national debt for this year currently totals $223 billion. But his budget also estimates total federal income taxes for this year at $1.7 trillion, or $1,700 billion. So just as you use a small portion of your monthly earnings to pay your credit card bill, current federal tax revenues are more than enough to pay the current interest due on the national debt. So not increasing the national debt does not mean defaulting on the national debt. . . .
But President Obama says Congress must raise the debt limit just to pay the bills we already owe. But if you gain a credit limit increase on your credit card, and you charge still more, is that paying the bills you already owe? Or is that racking up still more bills?
Similarly, raising the debt limit so the federal government, with nearly $17 trillion in national debt (more than our entire economy), can borrow still more does not involve paying the bills we already owe. It means racking up new bills to be paid in the future, by our kids. At best, if the increased borrowing is used to pay current federal bills owed, that involves deferring payment of current obligations, not paying what we already owe.( Failure To Raise The Debt Ceiling Will NOT Bring About Federal Default )
As the outstanding federal debt becomes due, it can simply be paid by newly issued debt, without violating the debt limit, as the total outstanding debt would not change. President Obama’s own budget estimates total net interest on the national debt for this year currently totals $223 billion. But his budget also estimates total federal income taxes for this year at $1.7 trillion, or $1,700 billion. So just as you use a small portion of your monthly earnings to pay your credit card bill, current federal tax revenues are more than enough to pay the current interest due on the national debt. So not increasing the national debt does not mean defaulting on the national debt. . . .
But President Obama says Congress must raise the debt limit just to pay the bills we already owe. But if you gain a credit limit increase on your credit card, and you charge still more, is that paying the bills you already owe? Or is that racking up still more bills?
Similarly, raising the debt limit so the federal government, with nearly $17 trillion in national debt (more than our entire economy), can borrow still more does not involve paying the bills we already owe. It means racking up new bills to be paid in the future, by our kids. At best, if the increased borrowing is used to pay current federal bills owed, that involves deferring payment of current obligations, not paying what we already owe.( Failure To Raise The Debt Ceiling Will NOT Bring About Federal Default )
Imagine if a financial counselor told a man who was deeply in debt and who had once again maxed out his credit cards that he should go get more credit cards.
The crux of the issue is that not raising the debt ceiling would force the government to cut spending and to prioritize spending in order to have enough money to keep making payments on our debt. Shortly before Boehner and McConnell agreed to both increase spending and raise the debt ceiling last week, Dr. Norbert Michel said,
Congress will soon have to decide whether to raise the $18.1 trillion debt limit, or face the possibility that the U.S. Treasury may have to prioritize its obligations. There are many factors to consider, but bringing the world economy to its knees because the U.S. fails to issue Treasury securities is not one of them. Free enterprise, in the U.S. and abroad—can function—and has functioned—without massive amounts of government debt and spending. Markets will ultimately function better without massive amounts of government debt because there will be fewer distortions and more private capital available. ( U.S. Treasury Debt Is Not the Foundation of the Global Economy )
Economist Veronique de Rugy said the following regarding the previous battle over raising the debt ceiling:
Myth 1: Failure to increase the debt ceiling is insanity. Unless we increase the debt ceiling, the U.S. government will default on its debt.
Fact 1: The federal government has other options. If the debt ceiling is not increased, the Treasury Department can make interest and debt payment its first priority to avoid a default. Then it can essentially put the government on a stringent pay-as-you-go basis.
The Obama administration warns of an economic armageddon if Congress doesn’t raise the debt ceiling. It is called “insanity” not to take the simple step of allowing the government to borrow more money. Treasury Secretary Timothy Geithner has warned that if we don’t increase the debt ceiling the U.S. would default, resulting in a bond market crash with disastrous impacts felt at home and abroad.
Really?
Technically, if the debt nears its statutory limit, the Treasury Department cannot issue new debt to manage short-term cash flows or manage the annual deficit—the government may therefore be unable to pay its bills. But in the real world things are different.
First, if the debt ceiling is not increased it doesn’t mean the federal government will have to repay the entire debt at once. The government just won’t be able to increase its borrowing. Americans understand the difference between not being able to borrow more money and defaulting on one’s mortgage. . . .
If Congress refuses to raise the debt ceiling, the federal government will still have more than enough money to fully service the debt. This year, for instance, about 6.1 percent of all projected federal expenditures will go to interest on the debt, and tax revenue is projected to cover about 60.1 percent of all government expenditures. With roughly 10 times more income than needed to honor its debt obligations, why would the government ever default? ( The Truth About the Debt Ceiling )
If Congress refuses to raise the debt ceiling, the federal government will still have more than enough money to fully service the debt. This year, for instance, about 6.1 percent of all projected federal expenditures will go to interest on the debt, and tax revenue is projected to cover about 60.1 percent of all government expenditures. With roughly 10 times more income than needed to honor its debt obligations, why would the government ever default? ( The Truth About the Debt Ceiling )
Just because future spending has been "authorized" does not mean we cannot reduce the amount of the authorization or cancel it altogether. Sane people who balance their checkbooks each month call that setting priorities and living within your means.
There have been several occasions over the last 40 years when the government waited three to four months before increasing the debt ceiling after the debt ceiling was reached, and the world did not end on any of those occasions.
To get some idea of just how bad the Bipartisan Budget Agreement of 2015 is, I quote from an analysis of it written by 11 financial experts:
Rather than taking meaningful steps to address the growing debt, the Bipartisan Budget Act (BBA) of 2015 is a colossal step in the opposite direction. This deal does nothing to reduce the size or scope of government over any period of time. . . .
The BBA busts through the BCA spending caps by $80 billion over two years. To add insult to injury, the agreement further proposes an additional $147 billion in “emergency spending” under the well-abused OCO (Overseas Contingency Operations) loophole. Never mind that the Budget Control Act provided for more than $2 trillion in spending for defense and non-defense discretionary programs and agencies.[2] It seems that for Congress it is never enough. . . .
The federal budget is on a dangerous trajectory and immediate corrective action is required. The U.S. national debt is at $18.1 trillion. According to the Congressional Budget Office (CBO), if the government remains on its currently planned course, it will spend $7 trillion more over the next 10 years than it will receive in taxes, piling on even more debt. ( Analysis of the Bipartisan Budget Act of 2015 )
The Debt Ceiling Cometh: Another Chance to Rein In Spending
Debt-Ceiling Myths | National Review Online
Blank Check: What It Means to Suspend the Debt Limit
Debunking debt ceiling myths
The Facts About the Debt Ceiling
Failure To Raise The Debt Ceiling Will NOT Bring About Federal Default
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