Hostage to Debt


Charlie Cook of the National Journal is very concerned that America is not sufficiently freaked out by the danger of failing to raise the debt limit in May.  “Failing to raise the debt ceiling, essentially letting the federal government go into default, has never happened and has consequences,” he writes.

One is tempted to ask how he knows what the consequences would be, if it has never happened, but surely we can all agree there would be repercussions.  Cook mentions the likelihood of panic in the stock market, and selling government bonds would become a job for used-car salesmen.  We have to sell a lot of those bonds to keep this government lurching along.  “Keep in mind that we are carrying about $14 trillion in debt,” Cook reminds us.  “Interest rates, needless to say, would soar.” 

Gee, I guess the political class really should have warned us about that before we racked up $14 trillion in debt.  Our parents and grandparents should have been told they were signing on to a government that would become an unstoppable avalanche of debt.  Now our signatures are no longer necessary, for we are told that declaring a true “limit” to our government’s debt is unthinkable.

Cook worries “failure to raise the debt ceiling would mean that the government would have to make choices as to who they would and would not pay.”  That sounds like something dangerously close to fiscal responsibility!  But wait: some of those decisions would involve “whether to pay bondholders, including those in China and Japan who had loaned the United States money, or whether to issue Social Security checks.”

Wow… if we don’t raise the debt ceiling the moment we hit it, we instantly default on all of our loans, and the Social Security vending machine immediately runs out of Zagnut bars and Fig Newtons?  For years Democrats have assured us that Big Government is perfectly solvent, while simultaneously warning us that if we don’t let the government keep borrowing money forever, it will explode. 

The net interest on the national debt is currently about $17 billion per month, which is roughly equal to the amount of real spending cuts in that “$38 billion spending reduction” budget deal Congress just reached.  If we don’t raise the debt ceiling, we’d have to freeze all federal spending immediately, and begin cutting the budget by $17 billion per month to make those mandatory interest payments.  Most members of Congress would rather use kitchen utensils to remove their own gall bladders, but such budget cuts are not impossible, and they can be made without shutting down Social Security.

Of course, the acolytes of Big Government would threaten to shut down the most vital programs first.  The government takes itself hostage when we threaten to cut up its credit cards.

When we talk about slamming into the statutory debt ceiling, people like Charlie Cook assure us that our debt obligations and mandatory entitlement programs will be the first thing to go.  The government won’t have to scramble to cut waste and fraud, or tell billion-dollar allies like Planned Parenthood to make do without their steady diet of tax dollars.  It won’t be required to pawn the expensive baubles that fill its jewelry box, like National Public Radio and Americorps.  It won’t be forced to sell the assets it has been hoarding, or relax absurd regulations so businesses can generate more tax revenue.

We’ve known the debt ceiling was approaching for years.  The President and Congress could have been scrambling to make deep cuts in order to avoid it.  Instead, we’re sold an image of a confused and frightened Uncle Sam asking why his credit card was rejected when he used it to buy food for his millions of starving children.  We never hear a word about the sacrifices government must make in order to live within its means.

Cook says the intention of the debt limit “was to compel restraint when further federal borrowing would have to occur. Since then, whenever the debt limit has been reached, it has always been raised, although there is always plenty of fuss over it.”  That doesn’t sound like much of a restraint.  In truth, we live in a system that was designed to grow inexorably, until it dies.  We can raise the debt limit in May, but the day will soon arrive when that is simply no longer an option. 

As Congressman Paul Ryan points out in the introductory video for his “Path to Prosperity” budget, by 2025 debt interest and entitlements will consume the entire federal budget, and it really will be impossible to cut spending without defaulting on those obligations.  Our children will curse us for raising the debt ceiling when we still had a choice, creating a future in which they have no choices at all.