Some Republicans in Congress continue to insist that next month, when the deferred financial crisis rears its ugly head again, they will not agree to increasing the debt ceiling unless that increase is matched with an equal amount of spending cuts, largely in entitlement programs. The problem is that the two aren't connected. The debt ceiling is the United States' borrowing limit, not spending limit. Raising the debt ceiling is about being able to pay the bills for PAST spending (past spending which was authorized by Congress, by the way), and not about allowing FUTURE spending. No amount of spending cuts or sequestration (the threatened across the board cut in all federal discretionary spending) will eliminate the need to pay the bills that have come due for money already spent.
Everyone, Democrats included, acknowledges that spending must be cut. Today's spending becomes tomorrow's bills, and at some point the deficit must be reduced to end the cycle. However, the United States government still has to spend money to keep the country operating. Cutting spending heavily and arbitrarily (also known as an austerity budget) risks putting the country back into a recession, negating four years of slow but steady recovery. And another recession will necessitate - wait for it - more spending, in the form of stimulus, and assistance for the underemployed. Instead of stemming the bleeding, it could backfire and increase the country's deficits even further.
Republican weeping and gnashing of teeth aside, the fact remains that the debt ceiling MUST be raised. Failing to do so will cause the United States to be unable to pay its bills and service its loans, leading to default, partial government shutdown, and likely another credit downgrade. Yet some conservatives still threaten to stand firm against raising the ceiling and take down the entire U.S. economy - and possibly the global economy - if they don't get the spending cuts they seek. Hopefully, Wall Street and other business sectors will step in if necessary, to convince Republican lawmakers that this default under any circumstance is a bad deal for American business. After all, the party that seems to bend only to the wealthiest Americans and corporations will surely listen to them, right? They may not care about the average American, but if default would harm big business, well then perhaps Republicans would take heed.
In fact, the US officially hit the debt ceiling last week, and only "extraordinary measures" taken by the Treasury Department to shuffle money around is keeping the country from defaulting on its financial obligations right now. Those fiscal maneuvers will take us to approximately February 28, when either the ceiling must be raised or default will ensue. A default would have disastrous effects on average Americans as well as on Wall Street. It would increase interest rates for businesses and consumers, if not halt lending entirely. But the effects will extend far beyond our borders. Sixty percent of the world's capital is tied to the United States. Markets would freeze worldwide. The resulting global crisis would dwarf the 2008 financial collapse. All for what? A group of legislators to have a victory over the President? This would be a very hollow victory, regretted for years to come.
Government spending must be controlled. The debt ceiling must be raised. The two are not mutually exclusive, and both must happen. But they must not be tied to each other.
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