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EDITORIAL: Debt-ceiling cowardice costs
House approves increase that will cost each U.S. household $4,300
Question of the Day
Legislation is supposed to be messy. The give and take between political parties with a different vision for the country is supposed to yield consensus. Nobody ever walks away fully satisfied with the final product of compromise, but each side takes comfort in knowing it made an important contribution.
Under President Obama, this way of doing things is dead. Forget give and take; it’s now take and take.
The White House demanded a “clean” debt-ceiling increase, and the House obliged on Tuesday. Twenty-eight Republicans joined nearly every Democrat in voting to boost Mr. Obama’s borrowing authority through March 15, 2015.
Instead of putting a firm number on the new debt ceiling, the bill doesn’t actually name the price imposed on future generations. It’s likely to be at least $500 billion, which comes to about $4,300 per household.
House Speaker John A. Boehner took the unusual step of passing the increase with Democratic, instead of Republican, votes, a maneuver that allows his rank-and-file members to boast on the campaign trail that they voted “no.”
Unfortunately, the party’s failure to take a stand reinforces the message that labels don’t matter. Regardless of who’s in control, debt continues to mount at an alarming rate.
The head of the nonpartisan Congressional Budget Office (CBO) was on Capitol Hill on Tuesday explaining just how bad this is for the nation’s economic future. In 2007, the national debt accounted for 35 percent of our economic output, but in the past few years the figure has jumped to 74 percent.
“Such large and growing federal debt could have serious negative consequences,” says CBO Director Douglas W. Elmendorf, “including restraining economic growth in the long term, giving policymakers less flexibility to respond to unexpected challenges, and eventually increasing the risk of a fiscal crisis (in which investors would demand high interest rates to buy the government’s debt).”
Interest rates are effectively at zero percent right now, so the only direction they can go is up. Each 1 percent increase adds a $1.5 trillion cost to the federal budget over a decade. When rates climb, and eventually they must, a big chunk of America’s future productivity will be set aside to pay back money lenders in places like China.
Democrats refuse to recognize this as a problem. “We ought to all be celebrating today,” says Sen. Debbie Stabenow, Michigan Democrat, who pointed out that the deficit recently dropped from stratospheric levels to slightly less-stratospheric levels.
The deficit isn’t coming down because the government is sequestering itself, tightening its belt and adopting a frugal attitude. Mr. Obama insists on spending more, and Republicans are afraid to say “no.”
The deficit dropped because tax hikes provided a short-term revenue increase that, in the long run, will discourage economic growth.
The Congressional Budget Office predicts that the national debt will rise $10 trillion over the next decade. Each household’s share of this overspending rises to $230,000, but that’s only if the CBO’s optimistic forecasts hold true.
The agency admits its predictions have been overly rosy under the Obama administration. “We missed the extent to which this recovery was very slow,” says Mr. Elmendorf. Reality could prove much worse. Republicans need to take a stand before it’s too late.
About the Author
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