07.14.2011 0

Crazy Debt Talk

Senate Minority Leader Mitch McConnellBy Robert Romano – If congressional Republicans never had any intention of using the increase in the $14.294 trillion debt ceiling as leverage to extract big spending cuts from the Harry Reid-led Senate and the Obama Administration, they had ample opportunity after the 2010 elections to say so.

They could have just said, “That’s crazy talk!” and left it at that. Fiscal conservatives may have still called for the debt ceiling to be used in exchange for cuts, but other avenues would have been pursued to bring the nation’s fiscal house in order.

Instead, Republican leaders, emboldened by the decisive result of the 2010 elections, stoked the embers for this idea and really were the ones who got the ball rolling.

After the election, Senate Minority Leader Mitch McConnell told Fox News’ Brett Baier that the debt ceiling “will not be [raised] without some strings attached, if it happens, because they’re going to have to seriously address spending and debt.”

McConnell added, “The American people want it, they expect it. That was a big issue in yesterday’s election.”

Later on, House Speaker John Boehner, speaking to the Economic Club of New York, said, “Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase. And the cuts should be greater than the accompanying increase in debt authority the president is given. We should be talking about cuts of trillions, not just billions.”

The American people have since rallied to the idea. According to Gallup, a 51 percent majority of Americans, including 52 percent of Independents and 57 percent of Republicans, are more concerned about the debt ceiling being raised without big cuts than they are of the risk of an economic crisis if it is not raised.

That means, in spite of the talking heads and big corporate lobbies pushing for a no strings attached increase in the nation’s credit limit, Republicans have been winning this debate. Not even the White House’s fear mongering and shameless class warfare has penetrated that much.

All told, only 22 percent supports increasing the debt ceiling at all, including just 18 percent of Independents. Meaning, the only real mandate to increase the national debt is among the establishment class.

Yet, despite having the American people on their side in this fight, Republicans are already signaling surrender from their previous demands to cut spending in exchange for a debt ceiling increase. Were they bluffing?

Consider a plan by Senator McConnell that would essentially give Barack Obama unilateral authority to raise the debt ceiling without any congressional involvement. The proposal, apparently hatched in concert with Senate Majority Leader Harry Reid, would allow the White House to borrow up to $2.5 trillion more unless two-thirds of both houses of Congress say no.

But nothing in the plan obligates Obama to actually sign legislation that actually cuts spending at all. Obama would only have to submit his idea of offsetting spending cuts. So, it’s just political theater. The American people get a bill for $2.5 trillion, and Congress gets a piece of paper from Obama — that means nothing.

To use a football analogy, this is the equivalent of the Republicans being in the red zone, Third and Goal, and McConnell wants to punt. He doesn’t even want to try for a touchdown on the third down, let alone attempt a field goal on the fourth should his team fail to score.

Dismayed supporters of the popular Cut, Cap, and Balance Pledge, including Americans for Limited Government President Bill Wilsonfired off a letter on July 13 to McConnell: “We cannot accept granting President Obama $2.5 trillion in new debt with no enforceable reform requirements. Doing so is not in America’s best interest and would increase the possibility of an even more serious debt crisis.”

The fiscal predicament facing the nation is indeed dire. We are quickly approaching the stage where the debt will become so large it cannot possibly be repaid. Wilson emphasized this point in a statement noting, “the debt will still rise to $26 trillion by 2021, with annual gross interest payments well over $1 trillion by then as interest rates return to their historic norm of 5 percent.”

That’s important because right now, the government only takes in a little over $2 trillion in revenue.

Meaning if Congress cannot find a way to balance the budget soon, debt service alone will soon become so gargantuan there will be little revenue left over for anything else. The only crazy talk is suggesting that Congress can afford to kick the can one more time from reining in this Leviathan.

Robert Romano is the Senior Editor of Americans for Limited Government.

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