Here’s one that every single member of Congress should receive, read, and REALIZE before any consideration on raising the debt ceiling. I seriously doubt that most know this, but are instead listening to Obama, Geithner and others creating a ‘sky-is-falling’ scenario, that doesn’t actually exist. The recurring reasons given that are said to ‘require’ an increase in the debt ceiling are dishonest assessments. Here’s what Walter Cruttenden tells us about the Three Myths Of The Debt Ceiling Debate:
One. If the debt ceiling is not increased immediately the existing debt can still be serviced through tax revenues for quite some time. While it is true that the US has gotten into the habit of servicing old debt by issuing new debt there is nothing wrong with using tax revenues to service the debt while a realistic budget is being worked out. It is possible that some of the current government programs may have to be cut back depending on how long the negotiations persist but isn’t that the whole point? If we can eventually cut government enough to live within our means we will never have to worry about debt ceiling limits and the repercussions of sensible negotiations.
Two. The principles of supply and demand apply just as well to the capital markets as they do to our local farmer’s markets. If bumping up against the debt limit causes fewer new bonds to be issued, and demand stays the same, then interest rates will likely decline not rise. Scaring the citizens into approving an increase in the debt limit without a budget deal will not cause the rules of the marketplace to magically change.
Three. If the US does not approve an increase in the debt limit it will not suddenly cause a loss of international credibility. What will cause a loss of credibility is if the US approves an increase in the debt limit “without” making any serious attempt to work towards a balanced budget. Foreign investors have been increasingly wary of US fiscal policy as evidenced by the decline of the dollar versus gold and foreign currencies. If we were serious enough to not increase the debt limit until we had a reasonable budget agreement the result would likely be “increased” credibility not a loss of credibility.
Cruttenden ends this piece with warning against the scare tactics practiced by the administration (on a far too regular basis, I might add) and gives us an important reminder: “To be frightened or bullied into anything less is not worthy of the principles upon which this nation was founded.” Are you listening, GOP leadership?!
ADDENDUM: The latest CBS News Poll shows that a clear majority of Americans aren't falling for these fallacies either...so will the leadership follow our lead? This Reuters report cast serious doubt that they will: "As Washington gears up for a fight over the debt ceiling, lawmakers are considering an approach that would allow them to say they are adopting fiscal discipline over the long term even as they vote for increased borrowing." The majority of Americans can see right through that one too, boys! And we're not alone: Republican Pat Toomey, joined by Andrew McCarthy of NRO, are giving conservatives a glimmer of hope that some want to do the right thing. Help them out by phoning, faxing and emailing your congress members!
