“I won’t play that game.” That was President Barack Obama a few weeks ago, referring to the previous round of negotiations over raising the nation’s debt limit.
He has already begun his campaign to sell the public on the notion that raising the debt limit is vital to the nation’s economic recovery and failure to do so will be a calamity. His Amen Chorus of Democrat politicians will echo this again and again in the weeks ahead, dutifully reported by the “mainstream” media, as if Obama’s assertions were irrefutable facts. They aren’t.
Every day, the U.S. Government takes in about 60 percent of the funds it needs to pay its bills. It borrows the rest, either from outside investors, such as the Chinese, or by printing money, all of which must be paid back.
What does failure to raise the debt limit mean? First, it means the government cannot borrow any more money. This does not mean it will “default” on its current debt, as Obama & Company will imply. There will be enough cash on hand to service the current debt. The government will also be able, for a time, to pay most of its bills to run itself; however, without new infusions of cash it will begin to be unable to run everything. It will be forced to cut back on non-essentials.
There is a better way to decide which spending can be dispensed with and it can be done not hastily, but deliberately and in advance. This is where the Republican majority in the House of Representatives can finally use leverage with Obama. It should develop a budget bill that spells out specific cuts to be made, from very big issues such as Medicare and Medicaid, to less big ones such as cutting duplicative programs spanning several departments. The result should go forward to the Senate. It would be constructed so that for every dollar the debt ceiling is raised, one dollar of spending cuts would be enacted. The one would be tied to the other. Thus, if the Senate amended the bill to eliminate some of the cuts, the House would reduce the debt ceiling by an amount equal to the value of the cuts the Senate had eliminated. In short, no spending cuts, no debt limit increase.
Obama will be betting that his usual full-time campaign mode will persuade the nation (in addition to fawning reporters) that he can save us all, if only those nasty Republicans can be shamed into giving him what he wants. What he wants of course is not only an open-ended debt limit raise but no limits on spending of any kind. How will it be paid for in future? As he has shown us, he thinks higher taxes are the way to go.
Raising taxes on “millionaires” is one thing; raising them on the average workers is another. On January 1 the payroll tax cut of the last two years ended. It was not part of the deal passed by Congress and signed by Obama last week. Thus, every American worker and his/her family is seeing an immediate paycheck reduction. When people get less for the same amount of work, they aren’t happy. When things go well generally, presidents tend to get the credit; when they don’t, they get the blame. Let’s see if Obama’s new campaign litany falls on willing ears or deaf ones.