What do you think?: The debt ceiling
By Jeff Whitten
This is the first in a series of columns I hope to be doing regularly.
However, this is a different type of column because I won’t be expressing my opinion here.
I don’t believe newspaper reporters have any business telling you what to think.
That is the only opinion you will ever hear me express here.
Instead, I will give you the facts and expose you to arguments on different sides of an issue. I hope this will help you in forming your own opinion.
The first issue we will deal with here is the debt ceiling.
If the debt ceiling is not raised from the current $14.3 trillion by Aug. 2, the federal government will not be able to pay all its bills.
According to Federal Reserve Chairman Ben Bernanke, failing to raise the debt ceiling before the deadline could cause “severe disruptions” in the financial markets and the U.S.’s credit rating to be downgraded.
This would also cause interest rates on Treasury bonds to rise. interest rates on mortgages, credit cards, auto and business loans would also rise since they are tied to the interest rates on Treasury bonds. So would the interest rates that state and local governments pay on their bonds.
Not everyone agrees with Bernanke. Former Minnesota Gov. and presidential candidateTim Pawlenty told the Wall Street Journal in January that the debt ceiling would not have to be raised to avoid the catastrophe described by Bernanke.
He instead proposed legislation that would require the federal government to pay interest payments on the debt before any other obligation.
Another Minnesotan and presidential candidate, Rep. Michelle Bachman, agrees.
According to budget figures obtained from the Government Printing Office, the $2.1 trillion in revenues are insufficient to pay the $206 billion interest on the debt, the $768 billion defense expenditure, the $748 billion for Social Security and the $494 billion expenditure for Medicare that is budgeted for fiscal year 2011. Though they would cover the interest on the debt, revenues are about $50 billion too small to cover even these four expenditure categories.
The Social Security trust fund is projected to run a $111 billion deficit and the Medicare trust fund is projected to run a $46 billion deficit in fiscal year 2011.
As a last resort, Senate Majority Leader Harry Reid of Nevada and Minority Leader Mitch McConnell of Kentucky have developed a plan that would allow President Obama to raise the debt ceiling by as much as $2.5 trillion until the next president takes office in 2013.
Both houses of Congress could block this by a majority vote in each. However, the President could veto this disapproval, and the Congress could only override it by a two-thirds vote in each house.
Obama has threatened to veto any short-term stopgap measure but has said he would sign such a measure if a deal was near on a long-term deficit reduction plan.
Many House Republicans loathe this plan and have pledged to vote against it.
On Monday, House Republicans and Senate Democrats introduced competing plans as President Obama and House Speaker John Boehner gave competing addresses to the nation.
The Republican plan would increase the debt ceiling by $900 billion and cut spending by a bit more. A committee would then recommend $1.8 trillion in savings next year. There would be another vote on these cuts and raising the debt ceiling.
The Democratic plan would cut $2.7 in spending and raise the debt ceiling by $2.4 trillion.
The President said “voters didn’t vote for a dysfunctional government” and said not raising the debt ceiling is a “dangerous game we’ve never played before.”
The Speaker said that the Democratic plan was “filled with phony accounting and Washington gimmicks.”
What do you think?
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