Thursday, January 17, 2013

If Republicans Want To Cut Spending, The Debt Ceiling is Another Opportunity

Republicans have many chances to make good on their general promises to cut government spending and deficits. The coming debt ceiling vote is yet another opportunity.

Republicans are in the Driver’s Seat

By refusing to raise the debt ceiling, Republicans limit the federal government to spending only the money it gets from taxes. This is effectively identical to a balanced budget amendment that Republicans frequently praise as necessary.

Republicans could also agree to raise the debt ceiling in exchange for substantial spending cuts. This would be a step between the status quo and a balanced budget amendment.

The point is, because they control the House of Representatives, Republicans have complete control of the outcome of this debate. Democrats cannot do anything unless they try to get away with some weird, risky gimmicks to avoid the debt ceiling, like minting a $1 trillion platinum coin. They have expressed little interest in this so far. Obama insists there is no plan B, it is up to Congress.

Where Will Republicans Drive Us?

We’ve been down this road many times before. Republicans always go ahead and raise the debt ceiling. They just like to put on a little show to make voters think they are trying to be responsible (So do Democrats, by the way, including Obama, Biden, and Reid).

A few Republicans are genuinely interested in cutting spending and some go all the way and would refuse to vote for any debt ceiling increase no matter what. But the vast majority will support increasing the debt ceiling, because they don’t actually oppose all the government spending and debt, despite their campaign rhetoric. Republican voters, take a moment and let that sink in.

Republicans may manage to insert token spending cuts. But they will be meaningless, as they were last time Republicans voted for such a deal. Remember the “fiscal cliff”? Just a few weeks ago those cuts were about to happen. The 2013 budget was going to fall from the previous year’s $3,563 billion to $3,554 billion, a whole quarter of a percent.

But even these minuscule cuts never happened. Republicans voted to push them off for another two months.

What Should Republicans Do?

Someone once said, “Gradualism in theory is perpetuity in practice”. This applies perfectly to Republicans. Their gradualism gets them nowhere regarding spending cuts and cutting the debt (unfortunately, that’s exactly what many Republicans actually want).

Republicans should not raise the debt ceiling. Instead, they should immediately work with Democrats and the White House to figure out how to live within their current means, which is well over $2 trillion annually- the size of the entire budget just eight years ago.

While it’s not a lot of time to work out such a long overdue deal, there is no justification for raising the debt ceiling even a penny. If they need to buy extra time they can sell federal assets.

Why not raise the debt ceiling? Because raising it means more government spending and more government interventions. In other words, more waste and more violations of our natural rights. Additionally, the government has accumulated unsustainable debt levels that can never be repaid in full. When interest rates rise again, which almost certainly will happen this decade, the federal budget will be overwhelmed by interest payments very quickly. For all these reasons, it’s completely irresponsible for Republicans and Democrats to raise the debt ceiling.

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