Debt and Default

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It's always seemed, from the beginning of this debate, nearly self-evident that it is not true that a failure to increase the debt limit equates to default. We obviously have enough revenue to pay our debt service, despite the lies from the Democrats. Almost every Democrat has repeated this absurd lie, and yet many people still haven't caught on.

I say it is nearly self-evident because all you need to know is that our revenues (over $2 trillion) are more than half our expenses (over $3 trillion), and that debt service is not nearly half our expenses ($164 billion in FY 2010; as we have no budget for FY 2011, because the Democrats didn't want to pass it an election year, I am unsure of the actual FY 2011 figure, but it's probably still well under 10 percent of revenues).

Therefore, we have more than enough money coming in to pay for our debt service, and we are in no danger of being forced into default come August 2. It's very clear, and very obvious.

It's bizarre that seasoned newspeople like Bob Schieffer don't even understand it. He was completely outclassed by Michele Bachmann a couple of weeks ago in this exchange:

BOB SCHIEFFER: Congress will soon decide whether to raise the debt ceiling, which has to be done in order for the government to borrow the money to pay the bills that are coming due. ... would you really vote against raising the debt ceiling and allow the government or force the government to begin defaulting on its debts?

REPRESENTATIVE MICHELE BACHMANN: Well, first of all it isn’t true that the government would default on its debt because very simply the Treasury secretary can pay the interest on the debt first and then from there we have to just prioritize our spending. ...

SCHIEFFER: Congresswoman, I have to take issue with what you say that ... the government would be able to pay its financial obligations. Experts inside and outside the government say that if we don't raise the debt ceiling, we face the United States having to default on its financial obligations. ... Are you saying these are scare tactics or are you saying that's not true ... how can you say that?

BACHMANN: It is scare tactics because, Bob, the interest on the debt isn't any more than ten percent of what we're taking in. In fact, it's less than that. And so, the Treasury secretary can very simply pay the interest on the debt first then we're not in default.

Of course, Bachmann was absolutely right, and the math is so completely clear, and Schieffer embarrassed himself and his network.

Default, I've been telling people, is a choice. If we do not raise the debt limit, and we default, it is only because President Obama chose to default. It is because he put other priorities ahead of paying the debt service. You can blame the Republicans for blocking an increase in the debt limit, sure, but Obama still has a choice ... and I'd turn right around and blame the Democrats for increasing spending -- and therefore, the debt -- more than any time since the second World War.

And that's really the point: we've tried many ways to get the government to reverse its spending habits. We've tried electing a fiscally conservative President with a Democratic Congress; we went with all Democrats, then put Republicans under a Democratic President; we tried electing all Republicans; then all Democrats again. All we learned is that at best, the deficit decreases during good times, sometimes even to the point of a surplus, but that spending continues to rise, and given our economic policies, we cannot count on the good times to continue.

So I'm fine with forcing massive federal spending cuts, if that's what it takes (and yes, I realize the cuts would be massive: almost all discretionary spending would be cut, we'd have to bring home almost all our troops, cut all spending on education and HUD and health and transportation, yadda yadda yadda ... sounds great to me). Call it draconian or evil or heartless or unwise; I don't care. Children often say the same thing when their parents take away their credit cards. Obama recently talked about managing the government's financial affairs like families do, but he wasn't talking about any families I know: they do not go out and get more credit cards or increased limits every time their credit cards run out. They prioritize spending. They, for the most part, pay the bills first (or do tithes or charity first, and then the bills, depending on their convictions), and then they divy up what is left over.

Obama and the Democrats, and, yes, many Republicans too, act like spoiled, entitled, children who believe any limits on their spending are unfair and unjustified and just who do we think we are, anyway?

Well, even the worst parents often wise up and take action, even if it's a bit late, and they cut those cards and make their kids get jobs to pay off the balance. Yes, Mr. President, let's act like responsible families: I urge Congress to refuse to up your limit, and to take away your credit cards, and to force the government to live within its means for once.

Frankly, I might even be OK with raising taxes if it corresponded with scheduled reductions in the debt ceiling; that is, if the government were forced to use that money to pay down the debt. As that's unlikely, I won't be supporting any tax increases, let alone debt ceiling increases.

If the Republicans held the line on this, I might actually be proud of my party's congressional delegation in DC, for the first time in quite awhile.

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<pudge/*> (pronounced "PudgeGlob") is thousands of posts over many years by Pudge.

"It is the common fate of the indolent to see their rights become a prey to the active. The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime and the punishment of his guilt."

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This page contains a single entry by pudge published on July 7, 2011 10:51 PM.

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