Why should Congress risk economic calamity by not raising the federal debt ceiling? Because of the economic calamity we're facing! Or at least, so the Tea Party argument goes. We now have less than two weeks before the dreaded August 2 deadline, when, unless the debt limit is raised, the government runs out of money and pretty much all financial hell breaks loose. It's a familiar scenario -- primarily because the Republicans who are standing in the way of an immediate plan to avert a default have been warning us for months that it's been coming.
But their apocalyptic visions seem to take place decades in the future. Sen. Ron Johnson, Republican of Wisconsin, went on MSNBC's Morning Joe on Tuesday to explain why he wasn't ready to vote to allow the Treasury to borrow more money:
I've always felt, if we're really going to prevent America from going bankrupt, it's a two-step process. The first we have to do is we have to instill that fiscal discipline. The hard spending caps. And I think honestly in the end we need a constitutional amendment to limit the size of government... Anything else, all these other negotiations, secret little things, commissions, that's business as usual. And again that has been bankrupting America.
I mean, Americans know we're spending too much, we're headed for a cliff, we're headed for bankruptcy. Let's cut spending in year one, let's cap it as a percentage of our economy going forward. Everyone understands our government is getting too big.
I truly believe that we are well beyond heading toward bankruptcy... Like the dangerous mind set of invulnerability that took hold of the captain of the Titanic, I just don't think we can quite grasp the painful reality that America is indeed subject to the laws of finance. Lenders will eventually stop lending. Higher risk will be reflected in much higher interest rates.If we do not change course sharply, there will be a day of reckoning. And that day, in my view, is much closer than most think.
The country is heading off a debt cliff. And we need to get it away from that cliff...Are we willing to [raise the debt limit]? Yes. But we want something in there, something included in that bill, so that we can start to change the trajectory of this debt growth. Because we don't want to keep doing this over and over and over again until we go off the cliff. And that debate is raging I got to tell you within the Republican Party. ... We are trying to figure out what do we really want? I mean, in my view, I know some people are talking about structural reforms, spending limits, that sort of thing. I would rather bank some money now.
The real problem -- the real problem here is not the debt limit. The real problem here is the debt and a lack of a credible plan to deal with the debt. And it's not me saying it; it's the rating houses saying it.
I came to this conclusion because, of course, the left is taking this and saying that we have these crazy Republicans, radicals that want to shut the government down, blah, blah, blah. The reality is this, that we met with Secretary Geithner about a month ago... And I actually asked him, look, I've heard your Chicken Little argument, Secretary Geithner, about that if we don't raise the debt ceiling, that the economy will crash, and will be the Congress' fault, etc., etc.
We don't make those tough choices in Washington. We're incapable. We came within one vote, 1994 of a constitutional balanced budget amendment. The American people want us to go back there. They have to pay their bills. They can't complete -- they can't continue to run up credit cards. If they do, they'll go bankrupt. And that's where we're heading towards, bankruptcy if we don't change the way we do business in Washington.