October 17 2013
Debt Ceiling Double-talk
Vicki E. Alger
Treasury Secretary Jack Lew is breathing a sigh of relief now that a budget deal’s been struck. For the past couple of weeks he’s been stumping about a fiscal end of days leaving us no option but to default on our bills without more cash. Nonsense, says Investor’s Business Daily:
No option? In reality, we have more than enough cash to pay our debts. Revenues flowing into federal coffers exceed our debt payments by nearly 12-to-1.
Sure, if we breached the debt ceiling, we would have to cut federal spending elsewhere and shut down some unnecessary functions of government — a kind of Super Sequester. But our debts would be paid.
Same is true with Social Security. But Lew and other Democrats have warned that even Social Security payments are in jeopardy if the debt ceiling isn't raised. Say what? Social Security is a pay-as-you-go program. By law, the money coming in should go straight out to retirees — not to a spendthrift Congress.
They know this. But, as in so much else with this administration, creating chaos is more important than telling the truth.
For the record, debt-rating service Moody's Investors Service Inc. said in a memo …"We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact."
Just to be clear, it added: "There is no direct connection between the debt limit ... and a default."
And someone who should also know is David Stockman, former head of the Office of Management and Budget under President Reagan. He told The Daily Ticker: "It is a complete red herring to say there will be a default. There will never be a time in which there is not enough cash to pay the interest."
But no need to worry about all that now. We’ve kicked the can down the road until February 2014—with the added bonus that we won’t be hemmed in by a debt limit for the next couple of months because no debt limit was voted on.
Oh, and another bit of good news: although we were apparently on the verge of fiscal calamity Congress was able to find more than $2 billion worth of loose change in the collective sofa cushions to spend more money on a Kentucky dam project, a multi-millionaire’s widow, and a new government civil liberties board.
Secretary Lew announced yesterday that he is glad that the “cloud of uncertainty” has been lifted. Indeed. It certainly appears that government as usual is back in business.