Stop Raising the Debt Ceiling

http://paul.house.gov/index.php?option=com_content&view=article&id=1868:stop-
raising-the-debt-ceiling&catid=62:texas-straight-talk&Itemid=69

Stop Raising the Debt Ceiling   
     
The federal government once again has reached the limit of its legal ability 
to borrow money, meaning it cannot issue new Treasury debt without action by 
Congress to increase the debt ceiling limit.  As of this month, 
our “official” national debt- which doesn’t include the staggering future 
payments promised to Social Security and Medicare beneficiaries- stands at 
$14.2 trillion.

The debt ceiling law, passed in 1917, enables Congress to place a statutory 
cap on the total amount of government debt rather than having to approve each 
individual Treasury bond offering.  It also, however, forces Congress into an 
open and presumably somewhat shameful vote to approve more borrowing.  If the 
new Republican majority in the House of Representatives gives in to 
establishment pressure by voting to increase the debt ceiling once again, you 
will know that the status quo has prevailed.  You will know that the simple 
notion of balancing the budget, by limiting federal spending to federal 
revenue, remains a shallow and laughable campaign platitude.

It is predictable that Congress will once again merely delay the inevitable 
and raise the debt ceiling, after the usual rhetoric about controlling 
spending, making cuts, and yes, raising taxes.  We have heard endless 
warnings about how irresponsible it would be to “shut down the government.” 
The implication is that sober, rational, mature pundits and politicians 
understand reality, while those who oppose raising the debt ceiling limit are 
reckless ideologues who will harm the economy just to make a point.

But like any debtor that has to reduce its spending, the federal government 
simply needs to establish priorities and stop spending money on anything 
other than those priorities.  Interest payments on our federal bond debt 
likely will amount to about $500 billion for fiscal year 2011, an average of 
$41 billion per month.  Federal tax revenues vary by month, but should total 
around $2 trillion to $2.5 trillion for FY 2011-- an average of perhaps $180 
billion per month.  So clearly the federal government has sufficient tax 
revenue to make interest payments to our creditors.  For now, those interest 
payments represent about 12% of the total federal budget. 

What nobody wants to admit is this: even if the federal government has only 
$1.5 trillion remaining to spend in 2011 after interest payments, this is 
PLENTY to fund the constitutional functions of government.  After all, the 
entire federal budget in 1990 was about $1 trillion.  Does anyone seriously 
believe the federal government was too small or too frugal just 20 years 
ago?  Hardly.  So why have we allowed the federal budget to quadruple during 
those 20 years?

The truth is, in spite of how cataclysmic some might say it would be if we 
did not pass a new debt ceiling, it is hardly the catastrophe that has been 
advertised.  The debt ceiling is a self-imposed limit on borrowing.  The 
signal congress sends to worldwide markets by raising the debt ceiling is 
simple: business as usual will continue in Washington; no real spending cuts 
will be made; and fiscal austerity will remain a pipe dream.

When our creditors finally wise up and cut us off, we will be forced to face 
economic realities whether we want to or not. It would be easier to deal with 
the tough choices we face now, on our own terms, rather than wait until we 
are at the mercy of foreign creditors.  However, leaders in Washington have 
no political will to admit that we cannot afford to continue spending without 
any meaningful limit. They prefer maintaining the illusion and putting off 
reality for another day.

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