Brummett:We must increase debt ceiling or disaster will occur (Part 7)

The Debt Limit: Made Simple

This video takes you to the United Estates–a gated community in sunny Florida–to help you understand the impact of Congress decision to annually raise our nations debt limit without addressing the out-of-control spending that keeps us buried in debt.

John Brummett in his article “Dear visa, my debt ceiling is capped,” April 25, 2011, Arkansas News Bureau, he observes:

The first thing I intend to do is join the tea party. Then I’m going to refuse to raise my debt limit. Then I’m going to call the Visa people…

“Thank you, and remember: Vote Palin-Bachmann.”

You are thinking this is absurd. You are right, of course.

But you are not intellectually entitled to call it absurd if you are among the seven in 10 Americans telling pollsters you don’t want the federal government’s debt ceiling raised. You are not intellectually entitled if you are one of these right-wing politicians pandering to this tea-drunken grandstand by threatening to vote not to raise it.

Here is how real fiscal responsibility works: You repay the debt that you have incurred to date. You make spending reductions prospectively by showing sufficient discipline to reduce the future pace at which you incur debt. You dare not let your existing debt go unpaid lest your credit score suffer and you get denied the next time you find yourself in a bit of a pinch and need to finance a refrigerator at Sears.

I think the answer to this is simple. We must have deep cuts in the budget  in order to get enough Republicans on board to raise the debt ceiling. Several Democrats agree with this too.

Reuters reported on June 1, 2011:

More than 150 economists back House of Representatives Speaker John Boehner’s call to match any increase in the debt limit with spending cuts of equal size, according to a letter released by the Republican leader’s office on Wednesday.

The letter will give Boehner an important talking point as he and his fellow House Republicans meet with President Barack Obama at 10 a.m. to discuss the debt limit and other fiscal issues.

“An increase in the national debt limit that is not accompanied by significant spending cuts and budget reforms to address our government’s spending addiction will harm private-sector job creation in America,” the letter said.

Signatories include Nobel laureate Robert Mundell of Columbia University and economists from schools like New York University and Georgetown University, as well as conservative think tanks like the American Enterprise Institute.

The Treasury Department has warned that the country could face a default that could push it back into recession and roil markets across the globe if it does not raise the $14.3 trillion debt limit by Aug 2. Treasury has been tapping federal employee pensions and other funds to pay the nation’s bills since it reached the current debt limit on May 16.

Republicans say they will not back any increase that does not include steep spending cuts and other limits to ensure that debt stays at a manageable level.

Michael Tanner made some great observations in his article “Debt-Ceiling Myths,” National Review Online, May 11, 2011. 

Michael D. Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution. Here is a portion of this recent article: 

Now that Osama bin Laden has been successfully dispatched to the eternal damnation he so richly deserves, Washington is ready to return to the more mundane question of whether the Obama administration will be allowed to spend this country into oblivion.

The next big fiscal fight will be over when and how to increase the debt limit. The administration has been hard at work trying to shape the message and public opinion. Unsurprisingly, much of that message is less than 100 percent accurate. Here are some myths about the debt ceiling and the upcoming debate about raising it:

5. Only Republicans oppose raising the debt ceiling. The media and the administration want to turn this into a partisan fight. The ongoing narrative is that radical Republicans in thrall to the Tea Party want to wreck our finances, while Democrats responsibly want to pay our bills. In truth, a number of prominent Democrats are on record opposing a debt-limit increase without substantial reductions in spending. They include Sen. Kent Conrad (D., N.D.), Mark Pryor (D., Ark.), and Joe Manchin (D., W. Va.). Even Sen. Amy Klobuchar (D., Minn.) normally a reliable liberal vote, has been expressing ambivalence. And the most prominent spending limit liable to be offered as a condition for raising the limit, the CAP Amendment proposed by Sen. Bob Corker (R. Tenn.) is cosponsored by Sen. Claire McCaskill (D., Mo.). The real story is that a small group of extreme liberals wants to keep spending more in the face of bipartisan opposition.

So far, Republicans have not been very good about presenting their message. If they want to win this fight, they are going to have to do a lot more to correct the record.

Below info from ReasonTV:

Some say the world will end in fire and some say in ice.

But in Washington, a lot of people say it will end if we don’t continually raise the debt ceiling.

The statutory debt limit, or debt ceiling, represents the maximum amount of debt the federal government can carry at any given time. The limit was created in 1917 so that Congress wouldn’t have to vote every time the government wanted to increase the amount of debt (which was becoming a more and more frequent occasion). Since then, the Treasury Department has had the authority to issue new debt up to whatever the limit is to fund government needs. Last year, the limit was raised to $14.3 trillion, an amount that is about to reached.

As it approaches, Federal Reserve Chairman Ben Bernanke has said failing to raise the limit would likely mean the U.S. would default on its debt, creating “real chaos” in place of the fake chaos that’s out there now. Treasury Secretary Timothy Geithner has said that failing to raise the limit would be “deeply irresponsible” and and Austan Goolsbee, President Obama’s chief economic adviser, has said that not raising the limit would create “the first default in history caused purely by insanity.”
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