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The Debt Limit

Graph of Failure
The Debt
Limit Barricade

Posted on July 23,2011

The analogy to Custerís Last Stand isnít far off the mark. Custer left himself in a vulnerable position with no avenue for retreat. Thatís about where the Republicans are as this is being written. Who is right and who is wrong doesnít come into the discussion over the debt limit. Democrats win big if the debt limit isnít raisedÖ

The Republicans have staked out a position that is not defendable. I will explain.

That debt limit represents the total deficit that can be incurred by the Federal Government. For 60 out of the past 79 years we have blown past the debt limit, so our total debt is not the failure of any one administration. Sure, there may or may not have been good reasons for extending that limit, but working in the background was a debt that continued to grow. That debt has grown into such a high number that just paying the interest on it makes up a sizable portion of what we take into the treasury.

The challenge for the Congress is to stop deficit spending and start paying down the debt. As for that ceiling, it will have to be increased for now. The damage of not raising it far exceeds the damage of extending it, at least in the short run. That is where the Republicans have made their mistake. That limit will have to be extended to prevent chaos and both political parties realize the absolute necessity of raising it.

If the debt ceiling is not raised, as stated by conservative commentators, there will be enough income to pay for the interest on the debt. There will also be enough income to pay Social Security, Medicaid, Medicare, and the Military. After that it really gets sticky because not enough money is left to pay other necessary governmental agencies Ö We have our food inspectors, Center for Disease Control, all of those highway projects that are ongoing, postal service, research and development at our colleges, universities, and more. At the bottom of the pile are the millions of employees that depend upon those different expenditures. This situation is the result of spending more than we take in and as a result we have to borrow to pay the bills.

A lot of individuals would be hurt by not raising that debt limit. Most states will also suffer if their Federal dollars are held up.

Increasing the debt limit is only a symptom of a structural problem that must be solved. We have got to stop spending more than we take in. One approach is an amendment to the Constitution to force the Congress to balance the budget. That measure alone would prevent us from digging our indebtedness hole any deeper. To pay current debts, we need more revenue than we are collecting at the present. But new revenue must come from growing the private sector where jobs are created. Increase the job rolls and automatically you have increased revenues.

Stifling our producers with additional taxes is a recipe that guarantees slower growth. We need a healthy job market. A healthy job market would give us the opportunity to wind down redundant agencies and make-work government programs. Those people laid off from programs that have been ended must have private sector jobs to turn to. The Republicans have not offered a path for reducing government through any means other than draconian cuts that would result in a lot of people out of work. Using the debt limit as a back-stop is not a reasonable stake in the ground to tie to.

However, Republicans would get a lot of support for a balanced budget amendment, reducing spending, and reducing taxes. But threatening the country by failing to raise the debt limit is a foolhardy gambit. And, we donít need the drama or the bad press from threatening so many people who already depend on established government spending.

With a majority in the house, there is no reason why the Republicans canít suppress spending or prevent new taxes. They could also use good judgment in their oversight duties to help reign in rogue programs and departments. Additional taxes on our already over taxed wealth creators would be disastrous.

Democrats, contrary to conservative talking heads want a successful America. It is the difference in how to go about it that differentiates Liberals from Conservatives. Liberalism seeks absolute control to guide the society instead of allowing for individual control. Conservatives believe in individualism. Conservatives allow for ambition so that the benefits of that ambition can benefit the rest of us. Liberals stifle that ambition by trying to control it. The recent case of the kid who was cited for having a lemonade stand without a license is an example. The Liberals were not against the kid selling lemonade, they just wanted to control it. The license process would lay out all the details on how the kid should operate the stand Ė result, the kid closed the stand down. The same result happens with larger businesses. Some pay up some close and some take their business to other countries.

In spite of their good intentions, Liberals always, not sometimes, incur more debt than they can pay and the result is what you see across America. Liberalism is great until it runs out of money Ė which is always the result.

My sense tells me that we should raise the debt ceiling until we can figure out a reasonable path to getting our house in order. The only stipulation I would make is no new taxes. Letís pay what we owe and not burden Americans any further.

Robert welcomes your comment to this or any other of my commentaries.

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