By Bill Wilson – “If Congress in any way suggests that they’re going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation — which, by the way, we had never done in our history until we did it last year — I will not play that game.”
That was Barack Obama’s reaction, speaking to the Business Roundtable, to calls on Capitol Hill that congressional Republicans tie a vote increasing the $16.394 trillion debt ceiling to making tax relief permanent for all Americans, implementing wide-ranging spending cuts, or any other proposal he disagrees with.
In short, there is no room for compromise for Obama.
Instead, chief among the White House’s demands in the so-called fiscal cliff “negotiations” — besides there being higher income, capital gains, and dividends taxes on the top two brackets, which, of course, are non-negotiable — would be the automatic increase of the national debt ceiling for perpetuity.
In a Dec. 2 interview with NBC’s Meet the Press, U.S. Treasury Secretary Timothy Geithner introduced the idea of eliminating the debt ceiling altogether “to make sure that the country is not left at risk of periodic threats of default.”
Geithner leaves out the part where if the Treasury prioritized payments of principal and interest to our nation’s creditors, and refinanced existing debt up to the limit, there would be no default even if the debt ceiling was never increased again.
But prioritizing is something the department refuses to do, according to a shocking Inspector General’s report released in this past summer: “While Congress enacted these expenditures, it did not prioritize them, nor did it direct the President or the Treasury to pay some expenses and not pay others [should the debt ceiling be reached]. As a result, Treasury officials determined that there is no fair or sensible way to pick and choose among the many bills that come due every day. Furthermore, because Congress has never provided guidance to the contrary, Treasury’s systems are designed to make each payment in the order it comes due.”
The Treasury’s only apparent plan was to postpone payments to everyone in lieu of a resolution. In other words, to hold our creditors hostage and to effectively default until Congress caved in to the White House’s demands to increase the debt limit.
Now, the Obama Administration wants to take away Congress’ power altogether.
On the Treasury’s website, Assistant Secretary for Public Affairs Jenni LeCompte further outlined the proposal, promising it would “remove politics from future debt limit debates.”
What she really means is abrogating Congress’ constitutional Article 1, Section 8 power to borrow money on the credit of the U.S. to the executive, something that was not lost on South Carolina Republican Sen. Lindsey Graham.
Responding to Geithner’s proposal, Graham said, “Suggesting that we never have a say about raising the debt limit again, that it be raised in perpetuity, when it’s a constitutional requirement that Congress only can borrow money, shows to me that [Obama is] trying to create a situation for unlimited power.”
And that is the problem. If Congress were to adopt the Obama-Geithner proposal, removing such an important check on executive power, it would be an outright dissolution of representative government, in effect eroding the Article 4, Section 4 guarantee of a republican form of government
The debt ceiling has its origins in World War I, when as noted by Euro Pacific Capital CEO Peter Schiff, “The government passed an amendment to the charter to allow the Fed to purchase Treasury Bonds. Fearing (correctly) that this would create a mechanism for perpetual debt expansion, conservative lawmakers insisted that the amendment include a ‘debt ceiling’ provision that would cap the amount that the government could borrow.”
But, over the years, Schiff writes that the provision has become “meaningless,” because Congress has never, ever used it to restrain the expansion of the federal government.
That may be starting to change, however. Sen. Graham warned Obama that Republicans are “not going to raise the debt ceiling ever again until we address what got us in debt, and that’s government spending and entitlement growth.”
We sincerely hope he means it. The debt ceiling was last raised in Aug. 2011 by $2.1 trillion, the largest such increase ever, and the Obama Administration has burnt through all of that in just 16 months. By 2022, the national debt will soar to $26 trillion under the current baseline. By 2042, it could be as large as $100 trillion.
Which is why Obama wants an unlimited credit card. Instead, congressional Republicans should freeze his account and demand permanent tax relief, a balanced budget, and entitlement reform — before it is too late and the debt is too large to be refinanced, let alone repaid.
Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.