Representatives Jerrold Nadler, Hank Johnson, Jim Moran, Jan Schakowsky, Keith Ellison and Peter Welch are co-sponsoring the Full Faith and Credit Act of 2013, which would abolish the anachronistic debt ceiling and prevent future gamesmanship over the Treasury’s ability to pay the country’s bills.
The measure was originally introduced in 2011 after the last battle over the debt ceiling resulted in Standard and Poor’s downgrading of the US credit rating for the first time in history. The bill was referred to the House Committee on Ways and Means, but did not go any further in the Republican Congress.
As Congress approaches the borrowing limit, which Geithner says will be reached sometime in February or March, they’re giving it another shot.
Nadler painted a grim picture of what the debt ceiling hath wrought so far: “Even as we stand here, our Republican colleagues are visibly gearing up for battle—a battle of wills against Democrats and President Obama with stakes so high, the entire economy may hang in the balance.”
Each representative reiterated the dangerous consequences in store, should Congress fail to extend the debt limit, thereby forfeiting the government's ability to make payments of any kind. One result, which Republican Tom Coburn recently called “a wonderful experiment,” would be a government shutdown.
Representative Johnson echoed statements Obama made in a Monday news conference, by listing the sectors of society that would be affected. Social security recipients, troops and veterans, small businesses contracting with the government, and air traffic controllers are among the many that would see immediate reductions, or even discontinuation of their paychecks.
The government would also be unable to pay its creditors, which would lead to the graver consequence: a default on the national debt. Defaulting would surely result in a further downgrade of the American credit rating and an increase in interest rates that would have major ramifications in the world economy.
Historically, raising the debt ceiling has been a mere formality. It was established in 1939, based on amendments to the Second Liberty Bond Act of 1917, in order to consolidate federal debts and allow the US Treasury more flexibility to reduce interest costs. The debt limit does not dictate how Congress decides to spend money; rather, Congress votes on spending and then increases the debt ceiling as necessary. Since its inception, Congress has raised the debt ceiling as a matter of routine at least once during almost every administration.
“The debt ceiling was raised seven times during the George W. Bush administration with no great battles and no threats of economic chaos,” Nadler explained. “Now that we have a Democratic president, the Republicans have chosen to exploit the routine necessity of raising the debt ceiling as a means of blackmailing the American people in order to impose an extremist agenda.”
By refusing to vote for a debt limit increase unless Democrats agree to major spending cuts, Republicans are rhetorically linking the two issues, creating the implication that increasing the debt ceiling is an example of big-government Democrats wanting to borrow more money to do more spending.
“Raising the debt ceiling does not allow one penny in new spending,” Johnson explained. “It simply allows the government to pay the bills for spending that Congress has already authorized.… I don’t think anyone here denies that the national deficit is unsustainable over the long-term, but to hold the nation and the economy hostage is ridiculous, and it’s no way to responsibly govern. Ironically, these guerilla tactics would probably increase our deficit by sending our economy back into a recession and increasing interest rates.”
Unlike 2011, however, it’s not just congressional progressives pushing for an end to the debt ceiling. Alan Simpson may not care if Social Security benefits are stalled, seeing as he once likened the program to “a milk cow with 310 million tits,” but yesterday he told a CNBC reporter that “it would be a grave mistake to use the debate on the debt ceiling to get President Obama to agree to spending cuts.”
Newt Gingrich, interviewed yesterday on CBS This Morning, called Republicans’ position on the debt ceiling “a threat they can’t sustain.” Even Americans for Prosperity, a conservative lobbying group backed by the Koch brothers, has weighed in, advising Republican leaders to focus on the issue of sequestration instead.
Original article on The Nation