There is an easy way to achieve a balanced budget starting next month – don’t raise the debt ceiling.
Unless the current debt ceiling of $14.2 trillion is raised by August 2nd, the U.S. government will “default”. That’s what we’re all being told. In my Wall Street Journal, I saw an article this week entitled “Companies Bracing for U.S. Default”. Today (July 29th) I read an article on Fox News which states.
“With the U.S. moving perilously closer to default on its loans to cover years of deficit spending, the majority leader [Reid] announced his plan to cut $2.5 trillion from the deficit over a decade. At the same time, House Speaker John Boehner announced he would include a balanced budget amendment in his proposal, which appeared to earn him the support he needed from recalcitrant Republicans.”
Do the numbers support this sentiment? According to a study by the Bipartisan Policy Center (which gathers its data from U.S. Treasury Department), the U.S. Treasury will take in an estimated $172 billion in August. The bills for August include:
Estimated Payments, August 2011. Source: Bipartisan Policy Center
A few things are clear. We are not at risk of defaulting on interest payments. We can also pay for Social Security, Medicare, Medicaid, and military expenses. Beyond that, we are faced with tough choices about spending cuts. However, these are the same choices that would need to be made under the “Cut, Cap, and Balance” bill offered up by Republicans - or a longer-term Balanced Budget amendment to our Constitution. So why is there such broad support for raising the debt ceiling? Aren’t we just prolonging a problem that is going to become much worse over time? Our nation’s credit rating shouldn’t have anything to do with how effectively we can print more money; it should reflect our ability to avoid more debt.
Our government has a miserable track record in terms of spending; the national debt hasn’t been reduced one time since 1958. The debt-ceiling is likely the only “bi-partisan” tool available in the short to medium-term to reduce spending, because no one really wants to talk about the changes that are necessary to become debt free. Visit www.UnderstandingTheUSDebt.com to learn more.