‘We’re defaulting all the time’

Everyone "agrees a failure to raise the debt ceiling would have devastating repercussions for our economy," says one of myriad voices on the radio. "But what the Republicans have to be sure they get in any deal to raise the debt ceiling is a firm commitment to cut spending in future ..." blah, blah, blah.

No, everyone does not agree. In fact, if the goal is to cut federal spending, the only effective answer is to not raise the debt ceiling, for Washington to spend this fiscal year only that amount which they take in, and next year to reduce the debt ceiling.

Of course, the radio pontificators presumably mean, "Everyone who has any credibility on this issue."

So let's start with the U.S. Senate. I agree with the U.S. senator who voted against increasing the debt ceiling, saying: "The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government's reckless fiscal policies. ... Increasing America's debt weakens us domestically and internationally. Leadership means that 'the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

I agree. That senator, of course, was Barack Obama, D-Ill., back in 2006.

"Tax revenues are projected to be $2,567 billion in 2011," writes Bill Woolsey, mayor of James Island, S.C.,who's also an economics professor at the Citadel. "This allows the (federal) government to pay the entire $414 billion in interest expense, and have $2,153 billion to spend on other things. Having interest payments at 16 percent of revenue seems a bit high to me, but that still leaves 84 percent of revenue to spend on other things.

"Unfortunately, government spending is projected to be $3,834 billion in 2011. The projected budget deficit is $1,267 billion. And so, the government actually wants to expand its borrowing and ... the national debt by $1,267 (billion) over the coming year. Failure to increase the legal limit on the national debt will prevent this from happening.

"And, of course, that is exactly why the 'Tea Party' Republicans newly elected to Congress are balking at the increase in the debt limit," says Professor Woolsey. "They want to stop the administration's plan for deficit spending. They don't want the government to borrow an additional $1.2 trillion and spend it."

When the Obama administration says that if the legal debt limit is not increased, then the United States will default on its debt, "what they are really saying," according to Professor Woolsey, "is that they will fix roads, buy military equipment, send out Social Security checks, and then tell bond holders that we are out of money."

If, instead, the government cut spending immediately to the projected $2,567 billion in revenues, "This is a 33 percent cut," Mr. Woolsey calculates. "That is significant. The resulting level of spending would be a little higher than it was in 2005. Of course, there has been inflation over that period. The real volume of government goods and services that could be purchased would be a little more than was purchased in 2003. ...

"My view is that federal government spending was much too high in 2003, and so, I have no problem with cutting it back to that level and even lower."

Economist Richard M. Salsman, writing for Forbes on May 17, agreed. "The size and scope of American government is wildly excessive, regardless of whether it's funded by taxes, borrowing or money-printing," he wrote. "Notice how both sides in today's U.S. debt debate quibble over how much to raise the debt ceiling and/or when to raise it, never over reducing it, which requires slashing the size and scope of government."

The best decision at this stage would be to abolish the public debt ceiling, Salsman argues. Because a debt ceiling never actually restrains growth in the public debt or spending, but only appears to do so, it "misleads citizens into believing institutional fiscal restraints exist," Mr. Salsman writes. "Since the U.S. debt ceiling was first introduced in 1917 invariably it's been raised whenever necessary. ... There have been 85 increases in the U.S. debt ceiling since 1940 (11 in the past decade alone), yet growth in federal spending prior to each episode didn't slow but usually accelerated."

Furthermore, a supposed U.S. public debt ceiling "permits Washington's spendthrifts and prodigals to periodically devote a few months to loudly and undeservedly proclaiming themselves paragons of fiscal rectitude, when in truth they are complicit cohorts of the bipartisan gang that sunk the nation into so much debt in the first place," Salsman writes.

Finally, hard-money GOP presidential candidate Ron Paul of Texas was interviewed by Candy Crowley of CNN on June 5:

Crowley: "How much of the House rejecting any increase in the debt ceiling until there is a deal to cut something in government spending is real? How much of that is real and how much of it is a game of chicken? ... Is this now in the gamesmanship stage rather than the serious stage?"

Ron Paul: "One hundred percent gamesmanship, I'm convinced. They're not serious. If they thought there was a problem, they would cut spending and get down to business. But no, they're not serious. It's who's going to get the blame and who's going to get the power and who's going to get the political benefits ... that's what it's all about. It will come down to the wire and they'll pass it. ..."

Crowley: "And in the end, what do you think would happen if it didn't pass? Because you're right, we're told that economic recovery would be threatened if the debt ceiling was not raised. Do you believe that?"

Ron Paul: "It depends on how it's done. If it was a sign that we were getting our house in order, it might restore ... confidence in our dollar. ... But what they don't want to think about is where we're going. Because they say it could be bad and there could be some difficult circumstances on delaying payments. But ... governments always pay their bills, they never default by not paying bills. They always default by paying off with junk money. And we're already doing this.

"We're worrying about a default?" asks Rep. Paul. "The default is on the average person today, because their inflation rate is higher, they've lost their jobs and so we're defaulting all the time. The default is just who is going to get punished the most, the people who got bailed out on Wall Street ... or will it once again be the middle class and default on them by just printing money?"

"We're defaulting all the time," says Rep. Paul, because our dollars are growing increasingly worthless.

Can anyone else remember when the lunch buffets in this town were $5.95 and the dinners were $7.95, and you could get them for free if you gambled a little, and the breakfast special was $2?

Downtown, I drove by a sign for a $17.95 seafood buffet Wednesday. I'm sure it's good. On the Strip, $25 to $30 is now common. How soon do you suppose buffets will be $37.95, or $43.95? Think your paycheck will have doubled by then -- assuming you have one?

Vin Suprynowicz is assistant editorial page editor of the Review-Journal, and author of the novel "The Black Arrow" and "The Ballad of Carl Drega." See www.vinsuprynowicz.com.