Forbes: Full Faith and Credit
By Bearing Drift | Saturday, May 7th, 2011 | Columns, PolicyBy Congressman J. Randy Forbes (R-VA04)
In the weeks since Treasury Secretary Timothy Geithner’s warning that the U.S. would hit its debt limit of $14.3 trillion by May 16, debate about whether to increase the debt ceiling has exploded.
The most inflammatory rhetoric we’re hearing is the threat that failure to raise the debt limit would automatically cause the U.S. to default on our national debt. This claim, thankfully, is baseless.
Whether or not the debt ceiling is raised, the federal government collects significantly more revenue than it needs to fulfill U.S. debt obligations. According to projections for next year, interest payments on our national debt will represent 6.5% of total federal government expenditures, and tax revenue will cover about 67% of all government spending. Thus, if the debt ceiling is reached, the government will still have ten times as much revenue as it needs to make debt payments. The only way the U.S. will immediately default upon reaching the debt ceiling is if the government actively chooses to do so by not making debt payments.
We can—and must—make paying the national debt our top priority. The Full Faith and Credit Act, which I have cosponsored, offers a simple safeguard to prevent default. This bill would ensure that the U.S. government does not default on its debt by requiring the Treasury to prioritize payments on the public debt over any other payments in the event the debt ceiling is not raised.
Allowing the U.S. to default on its debts would jeopardize the full faith and credit of the U.S. government and pose unthinkable risks to our economic prosperity and national security. Defaulting would result in the U.S. being stripped of its AAA credit rating and could cause the dollar to lose its status as the world’s reserve currency. In turn, we would soon see sky-high interest rates, rapid inflation, and a deteriorating standard of living for the American taxpayers.
The recent explosion in government spending has caused our debt to skyrocket, and it has become clear that the U.S. is on an unsustainable fiscal path. The Full Faith and Credit Act would reassure our creditors that the U.S. will honor its debts and is serious about making significant spending cuts in order to do so. The passage of this bill would affirmatively tell investors that the U.S. is determined to change its current path of skyrocketing debt and unprecedented expansions in government spending.
By taking the unthinkable option of default off the table, the Full Faith and Credit Act would eliminate the distractions of inflammatory rhetoric and allow Congress to have a productive debate about how to rein in the government’s out-of-control spending and return the United States to a sustainable fiscal path.
Countless American families have faced comparable situations, where they realize that their income will be inadequate to meet their current spending levels. Most react to this situation by reassessing their finances and determining where they can cut back on future spending.
There’s no reason Congress can’t do the same.
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Bearing Drift has been providing an online conservative voice in Virginia politics since 2004. The name describes relative motion at sea - without bearing drift, you need to move to the right to avoid a collision! If it looks like the ship-of-state is going to wreck, move right; you can't go wrong!!!
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6 Responses to "Forbes: Full Faith and Credit"
Gotta love this guy ~ beautifully played Mr. Forbes!
“Look into the matter of his alliances and cause them to be severed and dissolved. If an enemy has alliances, the problem is grave and the enemy’s position strong; if he has no alliances the problem is minor and the enemy’s position weak.” Sun Tzu, the Art of War.
So instead of defaulting we would pay interest to China before paying Social Security benefits to U.S. citizens? Or maybe there would be enough for interest payments, SS and Medicare (highly doubtful but…) so we would only stiff the government contractors who make up a major percentage of Virginia’s economy in order to pay interest to China.
I hate the fact that we are in this mess but we are. We need realistic proposals to cut spending, increase revenue (preferably larger base and lower rates), start paying down our debt and put a major priority on buying back all debt held by foreign governments. We do not need poorly thought out band aid solutions developed by talk show hosts, rewritten by junior staffers and put forward by elected officials who, in their previous business careers, would have fired any financial adviser who offered such nonsense.
Mr. Sperry,
If Social Security is important to you, investigate some changes. There is alot of SS money not going for intended use–safety net for senior citizens.
Here is my primary first hand example. In 1996-97 as a bank teller working for Cenit Bank at Super K Mart in Norfolk VA for $8.00 an hour, I cashed thousands of SSI checks for women with 2 or 3 children in tow that had some physician certify all of her 3 kids as ADD, and gets $1100.00 PER MONTH TAX FREE for her kids. Ok, that’s $2200.00 or $3300.00 per month. No work involved.
Can you imagine how I felt, as a married childless woman (not having kids I could not afford) working 40 hours a week at $8.00 = $320.00 per week? ($1280.00 per month…then subtract all the Medicare & state & Federal income taxes).
Until this kind of rampant fraud & abuse is corrected…those folks lamenting on the budget cuts for entitlements should fall on deaf ears.
I have not made a total assessment on Social Security, but when you have law firms than can afford TV ads advertising they can SS disability for you–this should be a red flag.
Congressman Forbes once again repeats the current mantra of reduce the deficit which is the republican way of trying to deflect attention away from the debacle they caused by financial deregulation, tax cuts, the war in Iraq, and new Medicare benefits without paying for them. If I am not mistaken, Forbes voted for all of the above; no wonder he wants to blame us, the citizens, who rely on government services, for the deficit, when in fact, it was created by Bush and a compliant Congress. Don’t you think they would learn from the debacle they created? No, of course not, that would require them to take some responsibility. Well, it is time for grown ups to require our congressional representatives to start dealing with reality, which is that we need to get our citizens back to full employment so our economy can pull us out of deficit and debt. Enforced extreme austerity, as advocated by Forbes, is a formula for fiscal disaster, a double dip, and more misery and despair for our citizens.
PeterSperry & MB, you missed the congressman’s purpose: “… eliminate the distractions of inflammatory rhetoric and allow Congress to have a productive debate …and return the United States to a sustainable fiscal path.” As long as default is tick-tocking, half the aisle can simply wait it out ~ and we get another last minute, midnight hour, cobbled together bandage non-solution. [BTW, Forbes has some very thoughtful plans for education, spending cuts, & energy policy (including the New Manhattan Project for Energy Independence) that even your side would likely support. http://www.house.gov/forbes/newsroom/enewsletter/2008/09052008.htm ]
As far as the rest of MB’s BS, republicans took responsibility for republican spending & bad policy on Nov. 4, 2008 … we gave you President Obama. How ‘bout your side step up to the plate and do the same?
I have heard a lot of great things about The Virginia Alternative and Renewable Energy Association (VA-AREA). This group is working in partnership to enact pro-growth public policy to expand Virginia’s renewable energy industry, create jobs and attract investment to Virginia. Supporting their cause I feel will greatly help the Commonwealth out and I encourage anyone interested in sustainable energy to check out their website.
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