It official, the United States has hit its Debt Ceiling today according to Treasury Secretary Timothy Geithner. So what about this august 2 deadline? Geithner has figured out he can stretch the existing Debt Ceiling until then by deferring required payments into various federal retirement funds. While he assures federal retirees that in no way would they feel any effect of the deferred payments, in fact he is incurring additional obligations with the federal government itself. Basically he is doing the same thing as if a home owner delayed paying their property taxes for a few months knowing that such a delay would not result in a default. Yet if a public company did exactly this, they would be required to post it as a liability on their balance sheet consistent with GAP.
Secretary of the Treasury Timothy Geithner Hits Debt Ceiling
Yes, I know this is government and the rules do not apply, and to try and figure out why the rules do not apply would kill far too many brain cells. Yet the question remains, why delay until August and not face the music today? Might it have something to do with the fact traditionally Congress is not in session then and the Administration may be hoping that members may cave in on their demands in order to take their summer vacations? Might it be that the news in August is generally dead and it is the lowest rated month for news outlets? Maybe it’s just the government tendency to never do today what can be delayed until tomorrow. Regardless, the Government is tapped out on its credit cards and needs to deal with the root cause now, not later.
This past Wednesday I wrote about a letter being circulated by conservative members of the House of Representatives who were signing on the a radical proposal by the republican Study Committee (RSC) to make the increase in the national debt ceiling contingent on spending cuts sufficient to reduce the deficit by 50 percent in the FY2012 budget. It hasn’t taken long for the left to cry what an outrage it is for republicans to make increasing the debt ceiling conditional on anything. Jonathan Chait has written an article entitled “It’s either a Ransom or a Bargain, Not Both” in The New Republic. At least he takes aim at President Obama for allowing the republicans to use the usual automatic votes on the debt ceiling to extract legislative concessions! Now it’s not often you will find me being sympathetic to the Obama Administration, but I am afraid they did not have much choice. It seems Mister Chait has failed to study the Constitution and understand that in our democracy the President must in fact seek congressional action before he signs things such as bills and debt ceiling increases. Now President Obama has not yet agreed to negotiate with congress over the debt ceiling but on this there is little doubt. If Congress does not approve an increase, on or about August 2nd according to the Treasury Department the government will no longer be able to borrow additional money and will have to live off the approximately 62 cents of every dollar spent it actually receives in taxes in the current fiscal year. So a refusal to negotiate and the resultant refusal, I hope, of the house to pass the extension would result in a massive budget cut and an instant balanced budget. Now that is even too draconian for me but trust me, the left would be far more upset than those of us of a more conservative perspective.
Again the left seems to be misreading their mandate and with support for increasing the debt limit running at less than 20 percent they just don’t get it. The American People elected the democrats in 2006 and 2008 because the Republicans in congress and the Bush administration had failed in their responsibility to manage the nation’s finances responsibly, as well as disasters like the response to Katrina and 7 years of war. The Democrats took this as a mandate to double the deficit, federalize health care and start a third war in Libya. If they take the advice of leftists in the media such, the 2012 election will make them long for the good old days…of the 2010 vote. Let’s hope the Republicans in the House listen to the RSC and hold the line on the debt ceiling negotiations.
Filed under 2010 Election, 2012 Election, Budget, Congress, National Debt, Obama Administration, Politics, Republican Party, Spending, Taxes, The Grand Old Party, The White House
In a report today by Erik Wasson in The Hill, he reports that the Republican Study Committee, the caucus representing over 175 Conservative Republicans in the House of Representatives is making a truly radical set of demands in exchange for increasing the Debt Ceiling which will be required in the next couple of months. The RSC is asking each of its members to sign a pledge to support three proposed conditions in exchange for agreeing to increase the nation’s debt ceiling. The RSC conditions include:
1. Cutting the Budget deficit in half by next year. Given this year’s $1.4trillion deficit and a projected FY12 deficit of $1.08 trillion, an additional $381 billion in cuts will be required to reach the required limit of $700 billion
2. Placing a ceiling on federal spending not to exceed 18 percent of Gross Domestic Product. Current federal spending is at 24 percent of GDP.
3. Approval of a Balanced Budget Amendment to the Constitution
This would be the largest reduction in federal spending ever and would dramatically move the nation in the direction of fiscal responsibility and stability. For years we as a nation have lived off what some have seen as a credit card without a limit. However the time of reckoning has come. This past April Standard & Poor’s changed its outlook on US Government Debt to negative while retaining its AAA rating. That is the equivalent of seeing your once stellar personal credit score of over 800 slip into the high 700’s because you have run all your cards up to their limits. Hopefully this is a wake up not only for the inside the beltway crew but for the nation as a whole. One cannot overstate the potential consequences of failing to get the deficit under control. Every day we wait the pain involved with restoring fiscal responsibility simply increases.
We should all send our representatives, even those of us with liberal democrats in our district, a message communicating our strong support for the RSC proposal, as well as the House and senate leadership. The Obama Administration and Congressional Democrats have failed their responsibility to the American people to manage the nation’s finances. Now it’s the GOP’s turn. Game on.
Read more about the Republican Study Committee.
Later today Former Speaker of the House of Representatives Newt Gingrich will announce he is a candidate for President of the United States in 2012. Newt Gingrich is a formidable individual with a record which would on paper make him an ideal candidate. He is a political strategist of the first order who literally created the republican revolution of 1994 and in designing the Contract with America defined a pattern for defining a mandate and nationalizing congressional elections. Beyond his electoral success, Newt is considered one of the leading policy wonks, something many candidates clearly are not and a stream on innovative ideas on areas as diverse as health care, energy policy and new technologies. Lastly Newt is a fighter, a skill which serves any presidential candidate well.
Former Speaker of the House of Representitives Newt Gingrich
However there are other sides to Newt Gingrich which we cannot forget and will be brought to light during the primaries which will not be so flattering. Central to these are the events surrounding his being dumped as Speaker after the 1998 congressional election by the House Republican Conference. Not only was this a reaction to the loss of seats, but to questions of policy and ethics charges which had swirled around the speaker for most of his term. Let’s remember, his removal was a direct result of Republican members, not Democrats, many of whom owed their very seats to Gingrich. While Newt has been a policy innovator without equal in Washington, it was a failure of leadership on his part not to bring his Republican colleagues along with him. Lastly we cannot overlook Newt’s admitted personal failure to live up to the family values he has made central to his political philosophy in being divorced twice and in both cases he has admitted infidelity as the cause.
While Gingrich has been out of public office since he resigned his seat in the House in 1999 he has had the opportunity to restart his political career on several occasions. With the death of Senator Paul Coverdell (R-GA) in July 2000 and the appointment of Democrat Zell Miller to complete his term, Gingrich could have run for the senate in an open race he surely would have won in 2004, thus bringing his immense legislative talents to the US Senate. Alternatively he could have sought the Governors’ office in Georgia in 2002 which would have given him a platform to execute on many of his innovative ideas. Additionally running for either of these offices would have given Newt the opportunity to rehabilitate his political reputation in front of the voters of his home state. Instead he chose to go the way of life in his own Washington think tank. Many factors go into the personal choices to seek higher offices. But the bottom line is Newt Gingrich chose not to reenter electoral politics for more than a decade.
People run for President for many reasons and without question newt Gingrich has earned his place on the debate platforms and will be a serious contender for the nomination. As a former Speaker of the House of Representatives he has the political bona fides most will not be able to equal. Newt lead the conservative revolution and has always been true to his beliefs and convictions and the House Republicans would likely not have suffered the loss of direction which led to their defeat has Gingrich remained as Speaker. Yet his personal record cannot be overlooked as he now seeks the Presidency. More than a decade has passed since Gingrich last held elected office and the politics of today are very different. I truly hope no serious Republican thinks defeating Barak Obama will be easy, it will not. While President Obama has badly misread his mandate and congressional Democrats paid the price in 2010, he remains an adept politician. No incumbent President can be underestimated, especially one who has shown an uncanny ability to say one thing and do another without regret or hesitation, and who has the media as his booster club. All Republicans must keep singular focus on enduring Barak Obama becomes a private citizen ounce again on January 20th, 2013; America would be seriously harmed by a second term for this President. While Newt Gingrich has a central role to play in driving the future of the Republican Party, unfortunately it will not be as the 45th President of the United States.