As the U.S. government’s borrowing approaches its statutory limit, the House of Representatives has a decision to make: does it support raising that limit so that the government can continue borrowing? Some warn of disastrous consequences if the limit is not raised, such as government shutting down or suffering a drop in its credit rating. Below, Americans for Limited Government’s Bill Wilson says this is a moment of decision for three players: Speaker John Boehner, Majority Leader Harry Reid, and President Barack Obama. Either we go along as we have, or we use this moment to make serious change.
Use Debt Ceiling Increase to Cut Spending by $800 Billion
This is where we are. With the national debt topping $14 trillion, it stands at 95 percent of the Gross Domestic Product, which is almost a full year of all goods and services the entire economy can produce. As it approaches the $14.294 trillion debt ceiling, incoming House Speaker John Boehner has a decision to make. Attaching $100 billion of spending cuts to that vote may sound nice, but it isn’t one-tenth enough of what needs to be done.
Instead, House Republicans should use that leverage to extract at least $800 billion of across the board cuts, bringing the budget to 2007 spending levels of $2.7 trillion. Then if lawmakers wished to keep entitlement and defense spending where they currently are, they would have to find about another $200 billion of cuts or so to make from the discretionary budget. And then after that, keep cutting until the budget is balanced, no more debt needs to be contracted, and the debt can finally begin to be paid off.
The way to begin to do that is to attach the $800 billion of spending cuts to the debt ceiling increase legislation. That includes ending the bailouts, “stimulus”, and selling government ownership of Fannie Mae and Freddie Mac. The House will have done its job and increased the debt ceiling to help refinance current debts. Then Harry Reid and Barack Obama will have the choice to make: Accept the spending cuts or block the debt ceiling increase and default. The burden will be on them, and the blame will be on them should they fail to raise the debt limit. Those are the terms of the American people.
The alternative is to just kick the can and raise the ceiling without any cuts or too little cuts attached, and watch as the debt becomes larger than the entire economy this year or next. As the Federal Reserve becomes the government’s top lender, printing hundreds of billions of dollars just to refinance the debt. And, as the national credit rating is eventually downgraded. The dollar will continue to sink, interest rates will have nowhere to go but up, and the ultimate collapse that occurs will be on the heads of every politician who refused to cut spending when they had the chance.