Senator Pat Toomey has an important op-ed today at Real Clear Politics (see the NRO web briefing), pointing out that refusing to raise the already gargantuan debt ceiling would not cause a catastrophic U.S. default. Such a default could only be caused by the reckless Obama administration’s fear-mongering treasury secretary. Sen. Toomey writes:
On last Sunday morning’s talk shows, Treasury Secretary Timothy Geithner once again implied that, if the debt limit is not promptly raised, the United States will default on its debt and the resulting catastrophe will be the fault of congressional Republicans.
But Secretary Geithner knows that congressional delay in raising the debt limit will in no way cause a default on our national debt. If Congress refuses to raise the debt ceiling, the federal government will still have more than enough money to fully service our debt. Next year, about 7 percent of all projected federal government expenditures will go to interest on our debt. Tax revenue is projected to cover at least 70 percent of all government expenditures. So, under any circumstances, there will be plenty of money to pay our creditors.
Moreover, as the Congressional Research Service has noted, the Treasury secretary himself has the discretion to decide which bills to pay first in the event that a cash flow shortage occurs. Thus, it is he who would have to consciously, and needlessly, choose to default on our debt if the debt ceiling is not promptly raised upon reaching it. It takes a lot of chutzpah to preemptively blame congressional Republicans for a default only he could cause.
Our Cornerite, Veronique de Rugy, in a terrific Washington Times op-ed co-authored with Jason Fichtner last month, convincingly made the same point:
While it is true Congress has never before refused to raise the debt ceiling, it has frequently taken its sweet time to do so. In 1985, Congress waited nearly three months after the debt limit was reached before authorizing a permanent increase. In 1995, 4 1/2 months passed between hitting the ceiling and congressional action. And in 2002, Congress delayed raising the debt ceiling for three months. In each case, the U.S. and the economy survived.
Obviously, without enormous increases in taxes that the public does not want, there is not enough money to pay for the Leviathan the Obama Left insists we must have (and to which we have been led by the years of out-of-control spending by both parties that President Obama has wildly intensified). This impasse will saddle us with another $1.7 trillion deficit for this year … adding to the already accumulated trillions of debt (reputedly $14 trillion but, as our Kevin D. Williamson has shown again and again, actually more like ten times that unfathomable amount). That is why Sen. Toomey (along with Senator David Vitter) proposed the Full Faith and Credit Act, which would require Treasury to prioritize the payment of interest to America’s creditors — a demonstration of seriousness that we will not default.
That would force the government and the country to deal with urgent choices we can no longer afford to ignore. As Veronique and Mr. Fichtner elaborated:
[F]ederal revenues will reach $2.17 trillion this fiscal year. Interest payments on the nation’s debt are estimated to be $205 billion this year, or about 10 percent of revenues. Taking that payment off the top, as Mr. Toomey’s plan would, leaves $1.9 trillion for Congress to spend. That’s enough to pay for Social Security ($741 billion), Medicare ($488 billion), and Medicaid ($276 billion), with $395 billion left for other programs.
Clearly $395 billion is not going to pay for the massive government the country has come to assume without thinking about how to pay for it. Assuming entitlements are not touched, that $395 billion wouldn’t come close to paying the defense budget alone — DoD having requested a staggering $553 billion for next year … and that’s without the additional $118 billion the Pentagon says “overseas contingency operations” will cost us (long before we know what the contingencies may turn out to be).
There is no more money. The $395 billion can’t cover the nearly $700 billion for the Pentagon, and it certainly can’t be further stretched to cover another $115 billion or so for homeland security, $82 billion for HHS, $77 billion for Education, $42 billion for HUD, $21 billion for DOJ, $22 billion for agriculture, $14 billion for Treasury, $13 billion each for the Labor and Transportation Departments, $12 billion for Interior, $10 billion for EPA, and on and on and on (see here for relevant OMB tables — discretionary spending is table S-11). And all of that doesn’t count the prohibitive costs of Obamacare down the road.
The people running this government are never going to deal with this untenable situation unless and until it becomes untenable for them. The only way that will happen is if Congress refuses to raise the debt ceiling and forces the administration to prioritize payment of those obligations that must be paid to maintain our full faith and credit — for as Kevin and Veronique point out, this already perilous situation could be blown sky high if the interest rate we must pay to borrow spikes. Only when there is no way around it will we get serious consideration of what government should and should not do, and what kind of welfare state the public is willing to pay for.
If we put it off, if we expand the credit card of a bankrupt Washington whose credit card needs to be cut to pieces right now, not only will our dire straits get worse. We won’t get to deal with them — we will be at the mercy of how they deal with us when the music finally stops.