Yes, it makes sense to push for a debt-limit deal that puts the brakes on runaway federal government overspending. But Philip Klein of the Washington Examiner makes the case today for making a deal sooner — rather than later — even if it’s not ideal.
Even if various accounting tricks and payment prioritization could buy the government a few more weeks, or even months, at some point, as long as no plan balances the budget immediately, the debt limit will have to go up to accommodate additional deficit spending.
As things stand, not a single Republican in Congress has offered a plan that would reduce deficits to zero in August, and virtually every Republican has voted for at least one budget that would continue adding to deficits.
The most aggressive budget on the table, offered by Sen. Rand Paul, R-Ky., doesn’t balance the budget until 2016 — and it anticipates $1.2 trillion in deficits in the coming four years.
So the actual debate isn’t over whether the debt limit will be raised, but over when it will be raised and under what conditions. And for those of us who want to shrink government, the question is whether it would advance our cause more to raise the debt limit now, or wait until after Aug. 2, come what may.
Some conservatives insist that if Republicans hold firm, President Obama and the Senate Democrats will eventually cave and we’ll get serious budget reform without any tax increases. But that’s wishful thinking.
Markets hate uncertainty more than anything, and a failure to raise the debt limit would trigger a major sell-off that would be further exacerbated by any downgrade by the rating agencies.
If the experience of the Wall Street bailout provides us with any lesson, when chaos ensues, Congress doesn’t act calmly and deliberately to address problems, but it governs in crisis mode and lawmakers pass anything they are handed that will stop the bleeding.
It’s true that neither of the two main deals on the table to extend the debt limit (offered by House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev.,) do anything to address the underlying problem of the nation’s unsustainable debt burden, which rating agencies said also runs the risk of a downgrade.
However, if the credit rating gets downgraded as a result of a failure to raise the debt limit, it allows Democrats to blame advocates of smaller government, and we’ll be in a much weaker position to enact fundamental changes down the road.
