The Zeitgeist with Howard Barbanel

Speaker of the House John Buehner in debate recently with President Obama

Hit the Ceiling

(Editorial I wrote for The South Shore Standard, July 15th issue)

Television news this week has been awash in President Obama’s dire threat/prediction that if the national debt ceiling is not raised by Congress by the August 2^nd deadline that social security and other benefits checks may not go out.

The debt ceiling is the maximum amount the Federal Government is permitted to borrow. Think of it as the credit limit on your MasterCard or Visa. If your limit is $5,000 and you’re already carrying a balance of $4,950 and need to charge another $500, you either need to get authorization from the credit card company for an expansion or increase of your credit limit or your new purchase will be denied.

Right now the U.S. is very close to maxing out on its credit. The limit is $14.3 trillion. Just for points of reference, take into consideration that in 1996 the debt ceiling was $4.9 trillion. In 2005 the debt ceiling was at $8.19 trillion. From 2007 thru early 2011 when the Democrats were in control of both houses of Congress the debt ceiling has risen from $9.8 trillion to today’s $14.3. That is an increase of $4.5 trillion or an average of $1.125 trillion a year in increased indebtedness and overspending. Just so you know, a trillion is a thousand billion. By comparison, the entire budget of the State of New York for the next fiscal year is $131.7 billion. New York City’s budget is $65.7 billion. That means that you could run New York State for over seven and a half years on justone trillion dollars. And New York’s spending is ridiculously high.

According to the Congressional Research Service “The debt limit…provides Congress with the strings to control the federal purse, allowing Congress to assert its constitutional prerogatives to control spending.  The debt limit also imposes a form of fiscal accountability, which compels Congress and the President to take visible action to allow further federal borrowing when the federal government spends more than it collects in revenues.  In the words of one author, the debt limit “expresses a national devotion to the idea of thrift and to economical management of the fiscal affairs of the government.”

The government is drunk with spending other people’s money – your money, our money. What the President is seeking is a more than $2 trillion increase in the debt ceiling – meaning he wants to borrow another $2 trillion and ramp the ceiling up to over $16 trillion. To supposedly pay for this he wants to raise our taxes, particularly on “the rich,” meaning folks and small businesses earning more than $250,000, which, we’re sorry to say, in New York doesn’t make you rich especially with the over 50 percent in federal, state and local taxes you’ll be paying on that quarter mil.

The stand-off between President Obama and The House of Representatives, more pointedly, with the Republicans is over the whole notion and philosophy of debt and spending. The GOP wants commensurate spending cuts to equal out borrowing. The Democrats want to raise taxes and spending. The GOP wants an end of deficit spending, advocating for a balanced budget amendment. New York State, New York City and Nassau County are all required by law to have a balanced budget, but not the Federal Government. The American people spoke quite clearly in the 2010 Congressional elections. They want fiscal probity.

The President is using scare tactics to try and pressure Congress to pass a higher debt ceiling. The government will not be broke on August 2^nd, taxes come in every day. Social Security has a trust fund. Money will be there. It’s just that the government won’t be able to borrow and spend any more than they already have – they’d be maxed-out on credit.

The President could ask for a temporary debt increase for August and September while negotiations continue with Congress but he’s thrown down the gauntlet and wants the whole $2 trillion-plus and is ready to scare seniors, veterans and the disabled to do get it.

We think Congress should stand firm and not buckle to this kind of pressure. We urge them to pass a one or two month extension, send it to the President and let him decide if he wants to hit the ceiling or not. Congress should also pass spending cuts concurrent with the increase in spending. This is no time for weak knees and in this economy this is no time for increased taxes and trillions in more spending that we can’t afford.