A couple days ago, in an interview with CNS News, Governor Palin expressed healthy skepticism over Democrat insistence that the so-called debt ceiling be raised above it’s current $14.294 trillion, essentially arguing that such an increase is little more than another excuse for Obama and his big spending allies in Congress to continue down the path to fiscal ruin on which they’re taking us.
“I absolutely do think the Republicans and Democrats – any common sense fiscal conservatives who understand that we can’t just give another tool to big spenders – I think they should vote against the debt ceiling; take the 6-8 billion dollars a day that the federal government rakes in – use that to service the debt; pay highest priorities first then we don’t have to raise that debt ceiling,” Palintold CNSNews.com during an interview on the red carpet at MSNBC’s White House Correspondents Dinner after party Saturday night.
“Otherwise, it’s just unlimited debt that we’re going to incur in this nation. Yeah, I’d vote against and I hope they do too.”
Obama, despite having voted against an increase in the debt ceiling in 2006, now claims that such a vote in 2011 will result in the sky falling or cause the world to stop spinning on its axis or something. Today, in a piece at Real Clear Politics, David Harsanyi discusses the myth of the debt ceiling and basically backs up what Governor Palin said in her interview with CNS. Harsanyi begins by noting how amorphous the debt ceiling concept is:
It is reprehensible how politicians waste our time with whimsical notions about “debt ceilings” and “budgets.” A federal debt limit is much like other government guidelines — e.g., “speed limits” and “filing taxes” — that exist only theoretically. In the past decade, Congress has raised the debt limit — instituted in 1917 to restrain spending — 10 times, and the U.S. has reached its ceiling 74 times since President Barack Obama’s birth. So in other words, technically speaking, there is no ceiling. We might as well eliminate it.
It is likely that we will now witness another ridiculous debate on the topic, followed by another Republican surrender, because a measly $14.3 trillion cap won’t do for a great nation. By now, you’ve also probably seen the quote from a once-chaste future president, arguing that even a debate about raising America’s debt limit was a sign of failed leadership (Bush!). A signal, he claimed, that the U.S. government could not pay its own bills, that we were dependent on the assistance of foreigners to fund our “reckless” fiscal policies.
Harsanyi then notes that hypocrisy on this issue is bipartisan, and that neither party has taken the high road in the recent past on raising the debt ceiling:
Obama was just kidding. Those were impetuous days in 2006 when Democrats railed against increasing the debt ceiling and Republicans — not yet having discovered “The Road to Serfdom” — were doing what they could to power it through. Today, via the magic of partisanship, the role reversal is complete.
Harsanyi makes an excellent point. The Republican leadership in Washington in 2006 was just as guilty as the the Obama Democrats are today in using the debt ceiling increase as an excuse to justify their profligate spending, although admittedly the Republicans were mere pikers compared to the Obama-Pelosi-Reid Democrats when it comes to spending the country into oblivion. Having noted that using the debt ceiling to justify more spending has historically been a bi-partisan phenomenon, Harsanyi next disposes of the argument put forth by the big spenders that some kind of economic cataclysm will befall America if Obama doesn’t get his way (emphasis added):
Obama, as usual, claims that “economists” — by which he means Austan Goolsbee — contend that disaster looms if we play games with this arbitrary number we always ignore. (This administration is just jampacked with soothsayers and futurists, always relying on the unknown and the unverifiable as the core of its argument. The recession, for instance, would have been far worse if we hadn’t spent as many billions on green infrastructure that “saved” jobs and may one day create energy.)
Today President Nostradamus contends that not raising the debt limit would have a catastrophic economic impact. This, many argue with the help of history, is simply untrue. The United States has hit the debt limit four times in recent history, and it survived without any damage to the capital markets as they waited for a deal to be struck. The debt could still be paid with tax revenue. But that would mean cutting spending.
This is exactly what Governor Palin’s point has been all along, and what she meant in her CNS interview when she noted that the government takes in $6-$8 billion per day and can use some of that revenue to service the debt. If Obama would simply limit government spending to that amount, there is nothing to fear from failure to vote an increase in the debt ceiling. The real reason Obama wants an increase is so he can continue spending far in excess of that amount per day. Indeed Obama wants to spend $4 billion more per day than is taken in via tax revenues, as the following excerpt from an eye-opening letter Obama’s Treasury Tim Geithner wrote to Harry Reid a couple weeks ago makes clear:
“On average,” Geithner wrote, “the public debt of the United States increases by approximately $125 billion per month (although there are significant variations from month to month).”
In a 31-day month, $125 billion in new debt works out to an average of $4.03 billion in new debt per day.
This is the real reason Obama wants the debt ceiling raised, and is as clear an indication as is possible that Obama has no intention of dealing with the deficit. Far from being an economic calamity, there are those making the argument that failure to increase the debt ceiling would be an excellent signal to the markets that the government is serious about dealing with the deficit, as such a move would force fiscal responsibility on a government addicted to adding an unsustainable $4 billion to the national debt every day, as Harsanyi notes:
Some economists — such as Jagadeesh Gokhale, former senior economic adviser to the Federal Reserve Bank of Cleveland — have argued that “a temporarily frozen debt limit could … signal U.S. lawmakers’ resolve to get our fiscal house in order. It may even reassure investors about long-term U.S. economic prospects.” Immeasurable debt, on the other hand…
This is an excellent point. If businesses, large and small, see a return to fiscal sanity and a sound dollar down the road, they may be willing to expand their businesses and add to payroll. If, on the other hand, they see us speeding down the road to a Greece style debt crisis, their best bet is to hunker down and hope to ride out the coming storm. To be sure, failure to raise the debt ceiling may result in some short-term pain, and will certainly cause a lot of hand ringing among the beltway establishment of both parties. But at the end of the day, it may well be exactly the kind of shock therapy needed to awaken Washington from their spendthrift stupor, and is almost certainly better than the alternative: continuing to ignore the fiscal trainwreck Obama’s policies are driving us toward.
Read Harsanyi’s entire piece here.