I write this editorial on raising the debt ceiling at the request of Chad Capps and the Huntsville Tea Party.
As an overview, and for the reasons stated below, I will vote to raise the debt ceiling unless there are significant circumstances that cause me to pause and reconsider my position.
For example, will a vote be to raise the debt ceiling $100 billion, $500 billion, $1 trillion, $2 trillion, or some other number? The higher the requested increase, the more likely I am to vote “no”.
Has satisfactory progress been made in cutting the deficit (via actual cuts or via passage of a Balanced Budget Constitutional Amendment)? If not, then I am more likely to vote “no” on raising the debt ceiling. Is the debt ceiling increase going to pass by a large margin? If yes, then I am more likely to vote “no” as a protest, a message and a reminder to the White House and Senate that they cannot continue their reckless spending habits that endanger America’s future.
Will someone offer a viable, alternative to raising the debt ceiling? If so, I’ll readily consider it.
Debt Ceiling Facts and Background:
1. The budget deficits for Fiscal Years 2001-2002 through FY 2006-07 were bad (when Republicans controlled Congress and the White House), averaging almost $300 billion/year. Fortunately, Republicans were making post-9/11 progress such that, by FY 2006-07, the budget deficit was down to $161 billion.
2. The budget deficits since the Democrats captured Congress in November 2006 have been horrendous, averaging $1.2 trillion/year. And the situation is getting graver. The White House projects this year’s deficit to exceed $1.6 trillion, the worst in American history.
3. The federal government spent roughly $3.5 trillion in FY2009-10.
4. The federal government spent roughly $1.9 trillion in FY2009-10 on “entitlements” (Social Security, Medicare, Medicaid, etc.).
5. “Entitlements” are statutory obligations owed to citizens by the federal government. Intended entitlement recipients may obtain a court order forcing the federal government to pay entitlement sums owed. The way to reduce or stop entitlements is via bills that change the entitlement statutes, which means there must be House & Senate approval to reduce an entitlement (and enough votes to override a presidential veto should President Obama veto such legislation).
6. The federal government spent roughly $202 billion on interest on the debt in FY2009-10. Interest payments are contractual obligations of the federal government that can be enforced in court.
7. The federal government spent roughly $692 billion on national defense in FY2009-10.
8. The federal government spent roughly $666 billion on “everything else” in FY2009-10. “Everything else” is highways, justice department and federal courts, Congress, White House, CIA, FBI, federal prisons, education, EPA, IRS, etc., etc.
Impact of Not Raising Debt Ceiling:
If Congress does not increase the debt ceiling, here is what happens.
There is a $1.6 Trillion gap between revenues (roughly $2.1 Trillion) and budgeted expenditures, plus entitlements, plus interest on the debt (roughly $3.7 Trillion). After mandated payment of entitlements (an estimated roughly $2 Trillion for FY2010-11), $100 billion is left to spend on everything else.
After that $100 billion is applied to the $200 billion in interest on the debt, there is a deficit of roughly $100 billion, and there is no money for anything else.
Hence, if the debt ceiling is not raised, if available revenues are applied to entitlements and interest on the debt, if America immediately limits expenditures to revenues, and if taxes are not significantly increased, there is a substantial risk and probability of a federal government collapse. While some conservatives may say “Go ahead!”, there are probable and horrific real-life consequences to a federal government collapse caused by a lack of funds. After payment of entitlements and interest on the debt:
1. There is zero money for national defense. All of America’s uniformed personnel are laid off. There is no army, air force, navy, marines or coast guard. All military civilian personnel are laid off. All defense contractors’ employees are laid off. And what happens to American warfighters in Afghanistan, Iraq and other places around the world when the money runs out?
2. There is zero money for Congress, the White House, federal courts and the justice department. All related personnel are laid off. The federal government’s governing entities cease to function.
3. There is zero money for executive branch agencies. There is no CIA or FBI. Corrections officers at federal prisons are laid off and dangerous criminals are set free. There is no IRS (which means taxes go uncollected, leaving the federal government with no means to pay entitlements or interest on the debt). There is no NASA, HUD, or any other federal government agency. All federal employees are laid off.
I can understand the zeal of those who do not want to raise the debt ceiling. I don’t want to raise the debt ceiling. I want a Balanced Budget Constitutional Amendment phased in over a 5-10 year period of time that will gradually force the federal government to get its house in order.
Notwithstanding zeal and desires, there are more, cascading effects to refusing to raise the debt ceiling.
Massive tax increases will be a first option advocated by the Senate and White House . . . but even that is insufficient because doubling current income tax rates does not generate enough money to eliminate the deficit (and that assumes exorbitant rates do not so severely hurt the economy that tax increases result in reduced revenues).
In the absence of massive tax increases, the federal government collapses and, shortly thereafter, the American economy collapses.
If the federal government and American economy collapse, anarchy is a real risk. Riots and killings are a real risk.
Although it sounds nice to say “don’t raise the debt ceiling”, I know of no one who has thought through the cascading effects of that action who believes that course of action is either prudent or advisable.
I welcome insight from those who can provide hard financial data (not theories or wishful thinking) for alternative options or effects of a refusal to raise the debt ceiling. I’ve made this same offer to others. To date, no one has successfully rebutted the risks and description of uncharted waters America faces from a default on our obligations to the American people resulting from a refusal to ever raise the debt ceiling.
Congressman Mo Brooks
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