Views on nation’s debt limit vary locally
To some, raising the nation’s debt ceiling is something that simply must be done, but to others, it’s a line in the sand.
“It is a moral issue moreso than a money issue,” said Glen Newman, with the Marietta OH 9-12 Project. “The amount of money that is owed, that every taxpayer owes, is unconscionable.”
Belpre resident Charles Digges, 59, agrees the nation’s $16 trillion-plus debt must be addressed but doesn’t see how Congress can refuse to raise the federal government’s borrowing limit by early March or sooner.
“It must be raised. There’s no doubt,” he said.
Digges said he fears the loss of critical government services and economic turmoil if the limit on how much money the government can borrow to pay its bills, including interest on foreign-held debt, is not increased. A document posted by the U.S. Treasury Department during the 2011 debt ceiling showdown says the result would be “catastrophic.”
“It would cause the government to default on its legal obligations – an unprecedented event in American history,” it says. “That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans.”
The government reached its $16.4 trillion borrowing limit Dec. 31 but has avoided default by using cash from pension and other funds it administers, money that will eventually be replaced. Treasury Secretary Timothy Geithner has said his ability to use such bookkeeping measures will be exhausted by early March or sooner.
Republicans have sought to tie a hike in the debt ceiling to spending cuts. President Barack Obama, a Democrat, has said he’ll be glad to talk deficit reduction – but not in relation to the debt ceiling.
Prior to the last debt ceiling showdown, lawmakers and presidents from both parties presided over 78 increases in the debt ceiling limit since 1960, according to the Treasury Department.
Critics of the Republican approach say raising the debt ceiling only allows the government to borrow money to pay for what it’s already obligated to pay. Others say the debt ceiling provides the leverage needed to affect real change on the national debt issue.
Brad Merritt, professor of business management at Washington State Community College, said he’s sure there have been arguments over raising the debt ceiling in the past, but the recent debates seem more pronounced and rancorous.
“You didn’t have what I call all the saber-rattling,” he said, noting the debt ceiling was raised when Ronald Reagan was president, “but Reagan was able to get along with the opposition well.”
Sen. Rob Portman, R-Ohio, feels any increase in the debt ceiling must be tied to deficit reduction, a spokeswoman said Thursday.
“Washington’s pattern of reckless spending is driving our long-term deficits, hiking up taxes, reducing economic growth and dumping an unconscionable burden on future generations,” Portman press secretary Caitlin Dunn said.
In December, Portman and 43 other Republican senators sent a letter to Obama indicating linking deficit reduction with the debt ceiling is not unprecedented.
“The 1985 Gramm-Rudman-Hollings Act, which helped reduce the deficit, was attached to a debt limit bill,” the letter says. “The three largest deficit reduction bills in the 1990s … were each linked to debt limit legislation, as was the Statutory Pay-As-You-Go Act of 2010. Finally, the debt limit was the impetus for the 2011 Budget Control Act, estimated to save $2.1 trillion over the decade.”
To address the situation, Portman has proposed two pieces of legislation – one requiring increases in the debt ceiling to be accompanied by corresponding spending cuts and another preventing government shutdowns by setting automatic spending appropriations and reductions.
Congressman Bill Johnson, R-Ohio, doesn’t believe in separating the two either.
“Any increase in the debt ceiling must be offset by an equal or greater cut in spending,” he said in an emailed statement Thursday. “Americans are not taxed too little; rather, Washington spends too much.”
Johnson said the House has passed various bills to address the issue, but Obama and Democrats in the Senate have refused to consider them.
Newman blames Democrats and Republicans for not tackling the deficit issue sooner. He said some experts have questioned how severe hitting the ceiling would be, and called those concerns an excuse to raise the debt and continue irresponsible spending by lawmakers on both sides of the aisle.
“This is paying for all the ancillary items that they’re wasting millions and millions on,” he said.
Merritt said if the U.S. indicates it can’t pay what it owes, foreign entities like China, Japan and OPEC might refuse to extend low-interest loans to the country. That in turn could raise interest rates on Treasury bonds, with corporate, municipal and state bonds likely to follow suit. Eventually, it would trickle down to consumer loans and mortgages.
“It’s kind of inter-related, like a big spider web,” Merritt said.
Digges said he sees the logic in using the debt ceiling to address spending. However, he doubts there will be enough time before the limit must be raised for meaningful change to be accomplished.
“Somehow there needs to be some kind of a barrier to make them start working on solving the issue,” he said. “They have been blindly spending more than they have for quite some time.”
The Associated Press contributed.