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Reason...
Reason.tv: 3 Reasons
Why The Debt-Ceiling Debate is Full of Malarkey
By Nick Gillespie & Meredith Bragg
July 15, 2011
All anybody in Washington can talk about these days is the debt limit
or debt ceiling – the total amount of money the federal government is
authorized to borrow at any given time. After a decade in which
spending increased by more than 60 percent in inflation-adjusted
dollars and the debt limit was raised no fewer than 10 times, the
government is about to max out its $14.3 trillion credit line, leading
to fears that Washington is going to default on its bonds, stop cutting
Social Security checks, and destroy the economy more than it already
has.
But the current debate over the debt ceiling is full of malarkey for at
least three reasons.
1. August 2 is a phony deadline. Treasury Secretary Timothy Geithner
has pushed back the drop-dead date when the U.S. finally reaches its
limit a bunch of times already: March 31, April 15, May 31 were all
cited as deadlines before August 2 was inked in as Armageddon. But this
time, he means it, man, really.
2. Reaching the debt ceiling is NOT the same as defaulting on our debt
– which would indeed be catastrophic.
Think about it: You can max out your credit cards but as long as you
keep paying the minimum amount due each month, your creditors don’t go
crazy. Interest on the debt is a small fraction of total outlays and
the government has a series of tools – from using cash on hand to
selling assets to scrimping on nonessential payments – to make sure
interest payments are made and seniors aren’t put on an all cat-food
diet.
3. Legislating-by-Panic is no way to run a country. The reason we’re in
this mess is because government can’t stop spending. And the government
can’t even pass a budget on a year’s notice. But we’re expecting them
to come up with a good plan for the country’s borrowing in a couple of
weeks? Trying to force through an expansion of the country’s credit
line by promising cuts in spending down the road is exactly why we’re
in this situation to begin with.
It makes far more sense to do something like sell some TARP assets --
the government is sitting on $320 billion in outstanding direct loans
and equities investments -- to cover interest payments through the end
of the fiscal year than to force Congress and the president to come up
with a budget that cuts spending -- and borrowing -- for real, next
year, not is some distant future.
For more information, check out Nick Gillespie’s 5 Uncomfortable Facts
About the Wonderful, Horrible Debt-Limit Debate and Mercatus Center’s
Jason J. Fichtner & Veronique de Rugy’s The Debt Ceiling: What is
at Stake.
About 2.35 minutes. Produced by Nick Gillespie and Meredith Bragg,
edited by Joshua Swain. Go to Reason.tv for downloadable versions, and
subscribe to Reason.tv’s YouTube Channel to receive automatic
notifications when new material goes live.
Read it at Reason
Three more debt ceiling-related articles:
Cut the Debt By Cutting Government
The Truth About the Debt Ceiling
Raising the Debt Limit: It Just Makes Sense. Not.
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