Not Raising the Roof

You know how not raising the debt ceiling will bring about an economic apocalypse, not so says Senator Pat Toomey (R-Pa.) :

On last Sunday morning’s talk shows, Treasury Secretary Timothy Geithner once again implied that, if the debt limit is not promptly raised, the United States will default on its debt and the resulting catastrophe will be the fault of congressional Republicans.

But Secretary Geithner knows that congressional delay in raising the debt limit will in no way cause a default on our national debt. If Congress refuses to raise the debt ceiling, the federal government will still have more than enough money to fully service our debt. Next year, about 7 percent of all projected federal government expenditures will go to interest on our debt. Tax revenue is projected to cover at least 70 percent of all government expenditures. So, under any circumstances, there will be plenty of money to pay our creditors.

Moreover, as the Congressional Research Service has noted, the Treasury secretary himself has the discretion to decide which bills to pay first in the event that a cash flow shortage occurs. Thus, it is he who would have to consciously, and needlessly, choose to default on our debt if the debt ceiling is not promptly raised upon reaching it. It takes a lot of chutzpah to preemptively blame congressional Republicans for a default only he could cause.

To be sure, absent an increase in the debt limit, the resulting sudden, drastic spending cuts would be very disruptive and undesirable. That is why I have always argued that we should raise the debt limit once we have adopted the needed spending cuts and budgeting reforms. But disruptive and undesirable spending cuts are not the same thing as a catastrophic default on our debt.

For my part, I say, “Don’t raise the debt ceiling.”  I say this in part because I’m part of a younger generation. If we say the debt ceiling raised, it will signal that congress will simply kick the debt can down the road, as long as possible. Probably, until most of the baby boomer politicians are retired and my generation will be left holding the bag.

I have no confidence in the Democrats in Washington to approach this issue of debt reduction with any seriousness. They have shown none. You cannot fill this debt hole by repealing the Bush tax cuts on those earning more than $200,000 a year. My generation will have to pay astronomical tax rates to cover the profligacy of the self-indulgent irresponsible generation of political leaders  that came before us. 

Of course, we could make far less drastic changes over time, but this has been the case for the past fourteen years and each year, the lobbyists and the demagogues have succeeded in forestalling action in the name of compassion. My generation and the ones coming after it have had their economic future ransacked. The politicians in the Senate and the White House are unwilling to come forth with a serious plan to stop the madness. So, that being the case, I would prefer the madness stop them.

Yes, there will be pain, difficulty, and sacrifice as a result of sudden massive budget cuts. But, in a twist my left wing friends might appreciate, at least the misery will be distributed more equitably. In fact they might even call failing to raise the debt ceiling, generational justice.  The shocks won’t fall solely on generations that found themselves tens of thousands of dollars in debt before they cast their first ballot. Some of it will be incurred by the generations of political leadership and voters who created massive entitltements and haplessly ignored obvious demographic realities that required these programs be reworked.

It’s time to get serious aboud the budget and heretofore, The Democrats haven’t shown willingness to do so, and I hold out no hope that they will. Indeed Treasury Secretary Geithner shows a continuation of the Democratic policy of fear-mongering in the face of difficult fiscal realities.

That being the case, why delay? Now is as good a time as any for the day of political reckoning to come: the day when big government at last runs out of other people’s money.

Read more at Adam’s Blog