“An increase in the national debt limit that is notaccompanied by significant spending cuts and budget reforms to address ourgovernment’s spending addiction will harm private-sector job creation in America.”
So reads a statementby 150 economists supporting Speaker of the House John Boehner’s insistencethat any increase in the debt limit must be matched by spending cuts.
The view stands in sharp contrast to the ObamaAdministration’s push for a clean $2.4 trillion increase to the debt ceiling.Obama has warnedthat, “If investors around the world thought that the full faith and credit ofthe United States was not being backed up, if they thought that we might renegeon our IOUs, it could unravel the entire financial system.”
What our President conveniently left out was the fact thatour current fiscal trajectory, one with deficits as far as the eye can see, isalso enough to “unravel the entire financial system.”
In the last ten years we’ve raised the debt limit ten times.This year’s proposed $2.4 trillion increase would be the largest in our nation’shistory, and is clearly designed to push off another potential hike until afterthe all-important 2012 elections. But investors, markets, and businesses carelittle about the politics behind the vote, they just want to know that thegovernment will be able to pay off its debt. If we continue down our currentcourse, that prospect becomes dim.
Between rising entitlement costs, growing health careexpenditures, and compounding interest payments, durable reforms are needed tostave off default. The nonpartisan Congressional Budget Office recently warnedthat, “A growing level of federal debt would also increase the probability of asudden fiscal crisis, during which investors would lose confidence in thegovernment’s ability to manage its budget.”
It’s time to stop kicking the can down the road andacknowledge that while failing to increase the debt limit is bad, raising theceiling without addressing spending is immensely worse. After all, “what goodis increasing the debt ceiling if nothing is done to curb the reckless spendingthat will perpetually test any limit on borrowing, no matter how high?” askedNTU President Duane Parde.
That is why NTU is committed to fighting for a BalancedBudget Amendment, a statutory spending cap without tax increases, and repeal ofthe 2010 health care reform law as necessary prerequisites of any increase tothe debt ceiling. Our resolve to fight for such measures has only beenstrengthened by the support of 150 economists who, like us, realize we are at apivotal moment in history. If Washington fails to change course now, we willinevitably continue down the road to default.