The United States debt will reach $14.3 trillion — the maximum amount of debt it is permitted to accrue —on May 16. Unless this limit is once again raised, as it has been about 100 times in the nation’s history, the U.S. will be unable to legally borrow more money and could find itself in default on its debt obligations for the first time in history.
Economists of all persuasions agree that for this to happen to the U.S. economy — the gold standard of the global economy — the result would be calamitous in this country and worldwide.
America has long been able to borrow money at very low interest rates because its economy was rated as safe and strong. But that advantage would be shattered and the U.S. would be forced to pay significantly higher interest rates, thus increasing the already-high budget deficits.
For decades, Congress routinely voted to raise the debt limit. But no more. Republican leaders are now demanding new limits on discretionary spending, entitlement program reforms, a balanced budget amendment and, of course, no new taxes. President Barack Obama rejects such measures.
On Monday, an economic earthquake of sorts shook Wall Street, Washington, D.C., and world markets — but apparently not Washington’s political-games players. The Standard & Poor’s ratings agency said the U.S. economy was no longer “stable” and was now considered “negative.” The warning meant the U.S. could lose its AAA rating as one of the world’s safest investments.
But — and here’s where it gets reckless — White House and congressional Republicans both sought to use the dire S&P warning as new ammunition for their political salvos. Obama advisers blast Republicans for trying to hold the U.S. economy hostage and accuse Republicans of playing chicken with the debt limit.
Obama has special insight into this because in 2006, as a freshman senator, he joined Senate Democrats in voting no on President George W. Bush’s request for increasing the debt limit, calling it a “leadership failure.” That was glib Democratic demagoguery; Obama now calls his vote and comment a mistake.
Congressional Republicans are playing the same political game now. They are right that we must cut spending and institute reforms. But vowing to vote no on raising the debt ceiling without these reforms is dangerously irresponsible. It is indeed playing chicken with our economic future. Bush raised the debt limit seven times in
Senators and representatives play these games because they never are forced, as individuals, to face the consequences of their votes unless they control the government. It is all just trash-talk. Obama talked political trash in 2006 because he knew the debt limit would be raised by the Republicans who controlled the Senate. So now Republicans are doing the same to him.
During World War II when an enemy attacked the U.S. from the air, Washington mobilized and Americans sacrificed. Americans were asked, by a memorable patriot, to pay their taxes early. “Taxes to beat the Axis!” quacked Donald Duck, in Walt Disney’s most famous cartoon. The animated “New Spirit” was nominated for an Academy Award in 1943.
It is a spirit of sacrifice we failed to summon after 9/11. And we must pay the price now, and not pass it on to our children to pay for us.
Martin Schram writes political analysis for the Scripps Howard News Service.