For the past few months, Secretary of the Treasury Timothy Geithner has been warning Congress about the country’s imminent arrival at the $14.3 trillion national debt ceiling, casting a dark cloud over our nation’s capital.
Geithner foresees doom and gloom if our legislature neglects to raise its spending limit, claiming that such a failure would cause the country to default on its debt and have “catastrophic economic consequences that would last for decades.” Indeed, Geithner’s alarm has an almost apocalyptic feel to it, even featuring an end date like all good doomsday prophecies.
Aug. 2 is when the devastation supposedly begins, as the Treasury is set to run out of accounting tricks by then. While the clock ticks towards the big date, pundits and politicians are debating whether these frightening reports are justified. Will the economic apocalypse arrive on Aug. 2 if Congress does not raise the debt ceiling? Or, is this doomsday date just as inaccurate as Family Radio’s recently failed prediction of the Rapture?
Sadly for the secretary, the facts point to the latter case. While it is true that our nation would be in deep trouble if it were to default on its debt, such a scenario seems unlikely given the vast amount of tax revenue the federal government collects each year.
Washington is projected to rake in $2.2 trillion in taxes this year, which leaves nearly $2 trillion to spend after making $244 billion in debt interest payments to its creditors. Thus, as long as the government slims its expenses down to this $2 trillion magic number, it will not default. Currently spending $3.8 trillion in 2011, adopting such a strategy would certainly necessitate big cuts. However, the slashes would be nowhere near the cries of anarchy that opponents will make. In fact, the Feds operated on an inflation-adjusted $2 trillion budget only 11 years ago.
Thus, it is clear that the government has sufficient resources to start making a dent in the debt — it simply needs to gain the political will to make the necessary cuts. Indeed, all this chatter about raising the debt ceiling distracts from the real root of the problem: excess government spending.
As the debt debate rages on in the upcoming weeks and months, we must remember that the ceiling is only a symptom of our nation’s ailment, not the illness itself.
Rather, the problem is our government’s spending addiction. Common sense dictates that cutting expenditures when in debt is the right route to a sound fiscal policy. Unfortunately, politics is not a sensible game. Instead, too many of our politicians are hell-bent on raising the debt ceiling, paradoxically believing that raising spending is the first step to lowering spending. History, however, proves them dead wrong.
Our current political situation is by no means the first time Congress has neared the debt limit, nor is it the first time it has proposed raising it. Rather, the ceiling has been lifted a whopping 74 times since 1962, with 10 of those times occurring in the last decade. From these daunting statistics, it is clear that Congress has not taken its spending limit seriously, viewing it rather as a small speed bump in its debt-drunk drive to bankruptcy.
Meanwhile, the bills have only piled up with no signs of reversal. Some believe the debt could reach an incredible 85 percent of gross domestic product by the end of the year and would skyrocket to an unprecedented 800 percent by 2050 if current trends continue. Though the risk of defaulting may send chills down our congressmen’s spines today, this danger will only become real if they continue to put off the problem for a future date when we actually cannot pay the bills.
Thus, it is clear that our government must get serious about tightening its belt. The manner to do so is certainly not to raise the debt ceiling, which history has only proven to encourage further spending. After all, “doing the same thing over again and expecting different results” is Albert Einstein’s definition of insanity. Rather, fiscally responsible congressmen should respect the debt ceiling’s purpose by refusing to raise it once again.
Recently, Congress has exuded such respect, with a vote to raise the limit by $2.4 trillion having overwhelmingly failed on the House floor last week. However, this small success seems fleeting. Secretary Geithner and President Obama’s scaremongering will likely ensure the ceiling to be raised again before August.
If only our congressmen would ignore President Obama’s alarmist rhetoric and instead listen to the levelheaded reasoning of Senator Obama, who voted against a debt ceiling raise in 2006.
The fiscally sensible senator proudly opposed raising the limit back then, declaring that “the fact that we are here today to debate raising America’s debt limit is a sign of leadership failure.” My thoughts exactly, Mr. President.
Casey Given is a co-founder of Students for Liberty on campus.