In the last three years of debt ceiling debates, both parties have claimed their path is the more responsible one. Democrats claim they want to cover bills due after the debt ceiling’s day of reckoning arrives, and Republicans say they want some level of deficit reduction in exchange for raising the debt ceiling.
Based on their actions, both parties spelled “procrastination” wrong. Only a few fiscal conservatives are willing to take a stand against raising the debt ceiling and finally getting spending under control.
If the debt ceiling is not raised, a few things will happen. Most importantly, we will have to pay interest on our debt or default – which will not happen. The Congressional Budget Office’s current policy scenario in May projected that the federal can afford over 81% of every dollar it spends in 2014. Interest is “only” about 14% of the federal budget. The math says the Treasury Department can afford to pay our federal interest obligations without raising the debt ceiling.
Second, the Treasury will have to prioritize spending. What can government do without? What can be postponed until funds are available? Priorities would include Social Security checks, Medicare spending, and most of the Defense Department – which, even combined with interest payments total less than 70% of the federal budget, meaning these programs can still be covered without further debt.
Third, yes, markets will react. America’s credit rating may take (another) hit, and the economy will slow in the short-term. This is an expected side-effect of allowing government spending to displace so many of the private sector’s resources. The good thing is this adjustment to the American economy will assert itself as a positive thing in the short-term and long-term as the economy grows faster, debt is paid down, and confidence in our financial health rises.
As the debt ceiling debate gets closer, it is incumbent upon Tea Party activists to remind elected officials of the best choice for America:
1) Do not raise the debt ceiling.
2) Cut spending
3) Ignore short-term political gain for long-term national benefit
4) Watch as America’s economy roars back
America has proven time and again that it is willing to work hard and make difficult choices.
Congress? Feel free to join us at your earliest opportunity.