John Brummett in his article “Pryor’s words drift in gentle breeze,” Arkansas News Bureau, April 24, 2011 asserted:
Raising the debt ceiling is essential to paying our debts and keeping the national and world economy functioning. Spending cuts must be made in the future, not by reneging on debt from the past. It is disingenuous to join these issues.
John Brummett in his article “Dear visa, my debt ceiling is capped,” April 25, 2011, Arkansas News Bureau, he notes:
Nine times in the last decade the federal government has crept near its debt ceiling and Congress has voted to raise it.
Tea party types say they intend this time to tie their votes to raise the debt limit to actual and concurrent spending reductions.
But this is no equation. You absolutely owe your debt. Quite separately, it’s up to your future behavior whether you can fashion spending reductions to gain control of tomorrow’s debt so that you don’t have to keep dealing with these kinds of untenable financial and political situations.
Our legal debt limit is $14.3 trillion. We are at $14.1 trillion and counting. A lot of fast compounding is going on. We’ll reach the limit about May 16.
Politically, this is what is likely to happen: Conservatives playing to the tea-drunken grandstand will engage in yet another round of brinkmanship, braying about spending reductions and casting at least one vote — for next year’s campaign literature — against raising the ceiling.
Then they will cut a deal in the last hours that could have been consummated more responsibly weeks before, thus avoiding uncertain and damaging signals to global financial markets that prompted Standard & Poor’s to start talking about downgrading the United States’ credit rating.
There even is talk in credible circles that conservatives will let the deadline pass, and choose to wait for the visible beginnings of calamity, before coming around.
That would be even more irresponsible than the minority vote cast in 2006 against raising the debt ceiling by a young liberal Democratic senator from Illinois.
Yes, Barack Obama did that. He ought to be ashamed. In a way, he deserves the irresponsibility that bedevils him now.
But at least his vote didn’t have real consequences, being merely hollow and demagogic.
It didn’t hurt anything except, that is, the young senator’s credibility in the unlikely event he ever became president and encountered a tea party revolution. And who could have dreamed of either of those things happening?
Jeffrey Scribner wrote the excellent article “Let’s not increase the Debt Ceiling,” www.LewRockwell.com, April 22, 2011. Here is a portion of that article:
Deficit spending has not prevented a recession. Moreover, there is reason to believe that not extending the debt limit will actually be good for the economy. Government spending will be curtailed. Some government services will also be curtailed. This provides fertile ground for more free enterprise solutions, more little companies, more employment in the private sector and more GDP growth. Why should we believe those who say increase the debt ceiling or suffer a recession?
Using the FY 2010 numbers above we can see that in order not to create more debt, Congress would have to hold spending, including debt service, to $2,162 Billion. Congress would have to cut $1,294 Billion from FY 2010 spending levels to do that. Where would you cut?
We can fund Social Security and Defense without borrowing. However, the first call on available funds would have to be servicing the current debt. We might have to change Medicare and Medicaid along the lines suggested by Paul Ryan and we would have to be very careful about everything else. Wouldn’t this be a good thing? Just think, after a few years, Congress might actually start to think about surplus budgets to pay down debt and gain spending flexibility from lower debt service costs.
Finally, since Congress will never cut spending enough to balance the budget, it is necessary to force that action via refusal to increase the debt limit. There is no time like the present to do this.
April 22, 2011
Jeff Scribner [send him mail] is President of ASI Enterprises, Inc., an investment bank serving small and medium sized businesses.
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Part 3
ABC’s Barbara Walters talks to WISN 12’s Patrick Paolantonio about her special tonight on the upcoming royal wedding.
The Daily Hatch 