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The Daily Wildcat

 

Debt crisis signals need to stop spending

If you haven’t noticed, politicians and pundits alike really enjoy stoking fears in order to gain support for their respective agendas. Both parties do it, though the current offenders happen to be Democrats pushing to hike up the national debt ceiling.

Treasury Secretary Timothy Geithner said recently that failure to raise the debt limit “”would be catastrophic.”” Austan Goolsbee, chairman of the U.S. Council of Economic Advisers, echoed those same sentiments (and of course also used the word “”catastrophic””).   

Well, if there is so much to worry about, why hasn’t the urgent rhetoric transformed into action?

With so much doom following the $14 trillion debt limit sometime in early May, you would think that Congress wouldn’t be on recess, or President Barack Obama wouldn’t be off traveling the country (in true campaigner’s style) touting his deficit reduction plan. Geithner can’t even bring himself to give specifics on how much he thinks the debt limit should be raised.

In terms of political calculation, it’s probably preferable to get closer to the crisis before taking action. Both sides want as much time as possible to frame the debate, so that once the deadline is actually reached, one side or the other will have a better hand at the negotiating table.

Ah yes, and then comes the deal, at the eleventh hour, like always. Again, not a surprise, but it is slightly frustrating when one side says that failure to act in a timely manner will lead to financial doom. And it is with this lack of action that the urgency of the debt limit issue is put into question.    

But, when actually looking at the numbers, the idea that the U.S. will go into default becomes truly mistaken.    

Veronique de Rugy, senior research fellow at the Mercatus Center, put it best in her column for Reason magazine: “”If Congress refuses to raise the debt ceiling, the federal government will still have more than enough money to fully service the debt. This year, for instance, about 6.1 percent of all projected federal expenditures will go to interest on the debt, and tax revenue is projected to cover about 60.1 percent of all government expenditures. With roughly 10 times more income than needed to honor its debt obligations, why would the government ever default?””

Indeed, why would it default? It wouldn’t. Now, this is not to say that everything would still be peachy. There would no doubt be a strain on the economy and financial markets. But to insinuate the entire U.S. economy is going to fall off a cliff is simply disingenuous.  

So what will Congress end up doing? Republican Rep. Ron Paul won’t go along with raising the debt at all, while Democratic Rep. Peter Welch wants a no-strings-attached clean debt ceiling raise. Neither is likely to win out, and the ultimate result will probably be an increase in the debt limit in concert with large decreases in spending. But frankly, if you believe the aforementioned analysis by de Rugy, then it is almost in the Republicans’ best interest to push this thing down to the wire in order to get the greatest concessions.

Rep. Chris Van Hollen warned Republicans not to “”monkey around with the full faith and credit of the United States.”” While that is actually a good suggestion, it should really be addressed to those, both Democrat and Republican, who in the past decades have refused to curb the U.S. government’s spending binge. Because in reality, keeping your fiscal house in order to begin with is what shows a deep commitment to upholding the full faith and credit of the United States.

Let’s face it. Republicans like to spend. Democrats like to spend. But in opposing a clean increase of the debt ceiling, some members of Congress may actually be resisting this spending trend.    

 

— Tanner Weigel is a sophomore studying history and Spanish. He can be reached at letters@wildcat.arizona.edu.

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