Yesterday, the United States hit the so-called debt ceiling with the establishment media
predicting “economic calamity,” “financial crisis,” and other “immediate economic pain” if Republicans don’t immediately cave to the Democrats’ demand for an immediate no-strings increase in the government’s borrowing power.
The problem for the debt ceiling Chicken Littles is that yesterday came and went with no economic meltdown. As our friend Rick Manning explained in Americans for Limited Government’s must-read newsletter The Daily Torch:
The sun rose on Jan. 19. Nothing happened.
There was no default on the $31.4 trillion U.S. national debt as the Treasury continues to refinance existing debt up to the statutory debt limit as Congress considers the terms for an increase.
A comet did not strike the U.S. economy.
Interest rates did not suddenly skyrocket as the U.S. government failed to pay its obligations to bond holders.
Foreign nations such as Japan or the United Kingdom have held onto their stockpiles of U.S. treasuries, continuing the years-long arrangement of preserving the dollar as the world’s reserve currency.
It’s almost like everyone outside of Washington’s establishment media has figured out that after a period of partisan wrangling and posturing by both sides the debt ceiling will be raised, federal employees and contractors will be paid, the parks will be open and Social Security recipients will always get paid.
So, what’s the big deal about the latest debt ceiling fight?
Remember, there is already legislation dating back to 1985, the Gramm-Rudman-Hollings bill and 2011, the Budget Control Act of 2011, that is supposed to reduce spending, but Congress routinely waives the provisions of these laws.
As Mr. Manning noted, Biden “can cut or freeze spending now by doing a deal with House Republicans, it will give the Treasury some wiggle room on selling treasuries, and have less money printing as a result from the Federal Reserve, helping to cool off inflation more.”
But that would look like a win for Republicans, so Biden and his Democrat allies in Congress will be loath to make that deal – at least right away.
And there is precedent for House Republicans hanging tough.
House Republicans passed a Cut, Cap and Balance bill in 2011. The bill barred any increase in the debt ceiling unless Congress first sent a balanced budget amendment to the states for ratification, called for a $1.5 trillion cut in that year's deficit and capped federal spending to 24 percent of the gross domestic product.
Ultimately, the hard-won Cut, Cap and Balance victory was undone by (no surprise here) Senate Republican leader Mitch McConnell who, in concert with then-Democrat leader Harry Reid and President Obama crafted the phony Budget Control Act of 2011.
In 2011 Mitch McConnell negotiated a package with then-President Obama that called for at least $2.4 trillion in spending cuts over 10 years, a new Congressional committee to recommend a deficit-reduction proposals, and a two-step increase in the debt ceiling.
The deal with Obama (the Budget Control Act of 2011) was supposed to cut spending across the board starting in 2013. The reductions in spending authority were approximately $85.4 billion (versus a reduction of $42 billion in actual cash outlays) during fiscal year 2013, however, the Congressional Budget Office estimated that the total federal outlays would continue to increase even with the sequester by an average of $238.6 billion per year during the following decade, although at a somewhat lesser rate.
And that $238.6 billion increase in spending per year was quietly ignored by both Parties and hailed as ushering in historic budget cuts. So, the question is (and truth be told always is) what will be the circumstances under which the debt ceiling will be raised, not if it will be raised.
Our recommendation is that House Republicans demand passage of Cut, Cap and Balance as their price for raising the debt ceiling.
Cut, Cap and Balance is a common sense proposal that will cut and cap federal spending to ensure that Washington begins to live within its means and put in place a Constitutional balanced budget amendment that will make balancing the budget the rule, not the exception, said House Republicans back in 2011, and if anything, events since 2011 have proven the necessity of a constitutional amendment to control federal spending.
The Capitol Switchboard is (202) 224-3121 we urge CHQ readers and friends to call House Republicans to demand that they stand fast for Cut, Cap and Balance - a real solution to the disastrous advance of the federal debt that threatens to destroy our economy and overwhelm our government’s ability to defend the nation and deliver services to its citizens.
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