- An Argument For Not Raising The Debt Ceiling

I’ve been very busy the last few days so I haven’t been able to research these numbers, but if you’ll forgive the unconfirmed ‘back of the envelope’ estimates, I have an interesting idea to put up.

There is no doubt whatsoever that federal tax revenues for next year will be more than enough to cover all of our interest payments on our federal debt. There will also be enough left afterward to cover a substantial portion of our federal operating budget for 2012. How much? I’m not sure. A number I heard in conversation yesterday was something like 72% of the operating budget.

Frankly that sounds high to me – but if it’s true, (maybe one of you guys can research this) then that means that a failure to increase the debt ceiling would amount to an immediate across the board spending cut of 28% for every portion of the federal government. It would then be up to the Whitehouse to decide whether they would like to ‘risk the full faith and credit’ of the United States by defaulting on a debt payment, or live within it’s means and cope with the cuts.

Since the Democrats want to spend considerably MORE next year than they did this year, this will be presented as the end of civilization as we know it – in fact it already is. But to me a 28% cut, while dramatic, does not seem catastrophic at all. Mind you – this is a REAL cut, not a reduction in projected increases which is what they typically refer to as ‘savings’ in Washington.

So the question then is not whether the republicans are willing to risk the ‘full faith and credit’ of the US where the debt ceiling is concerned, but whether Obama and the Democrats are willing to do so. Obama wants to reinvent America as a top down, command and control bastion of federally mandated fairness regulation. So to him a default might be just the thing to usher in a new era. But if it goes that way, there won’t be any question of who is to blame.

Like I said, these numbers may be way off. But even if it's only enough to cover 50% of the operating budget, that seems like a harsh but survivable number to me. (Maybe not for the SEIU - but certainly for the rest of us.)

And when I think of it that way, I think Republicans can starch their shorts and stand a little tougher. The base assumption that the federal government is not only entitled to a huge slice of GDP in the form of taxes today, but is also entitled an even bigger slice of future GDP in the form of an annual debt increase, is just ridiculous.


%%%%%%%%%%UPDATE%%%%%%%%%%


After getting a little feedback I can see that I really need to restate this a bit more clearly. This isn't a complex thing. It doesn't include projections that extend out into the far future, or estimates from the heritage foundation. It doesn't include debates about tax policy, entitlements, medicare or demographics.

In fact, it's really quite simple. If our debt ceiling is not raised, then the changes that MUST then take place will amount to the same as (roughly) a 28% cut in real federal spending. If Obama and his team will not agree to something in advance then we can compel them by law. The gun in this debate is against the Democrat skull - not the other way around.

That's it. That's the worst case. There will be no debt default. There will be no collapse. There will be no apocalypse, no Thunderdome, no dogs and cats living together. Our federal spending will be cut, but civilization will not end.

Obama and the Democrat party are nothing if not irresponsible, so in theory they could cut 28% of the budget from the defense department. But there will be real consequences to actions like that, and in my opinion, they won't survive it.


That's it. That's my whole point. Making it any more complex than that only advances the interests of the Democrats.