WASHINGTON, December 27, 2013 — At a recent press conference, President Obama was asked about the upcoming battle with Congress to raise the debt ceiling. He said that he will not negotiate on the debt ceiling because we must agree to pay the bills that we have already incurred.
Obama’s refusal to negotiate will be a problem in February. He is simply wrong to take that position. Here’s why.
It is true that we must pay our bills. But like any fiscally responsible entity, before agreeing to assume more debt, Congress simply wants some assurances that this pattern of spending significantly more than the government receives in annual income, will at least be curtailed.
No matter how you look at it, $17.2 trillion of debt is excessive, burdensome and counter-productive to economic growth. Last year, the federal government’s annual income was about $2.8 trillion, meaning the debt is more than 6 times annual income. An analogy would be a person with a $50,000 annual income carrying a $300,000 mortgage. It is simply unsustainable. The interest payments are currently more than $400 billion per year, and this is at record low interest rates. As rates rise, so will these payments.
We have had annual deficits in 48 of the 51 years. Each deficit adds to the public debt. While the president says that the 2013 deficit declined by more than 30 percent from the prior year, the fact remains that the $640 billion 2013 deficit was about 50 percent higher than any president, other than Obama, has ever incurred. For 2014 the deficit will likely grow rather than shrink, and it could again soon top $1 trillion, especially if economic growth is low and spending for more government programs, like the Affordable Care Act, increases.
We have elected representatives to Congress who are supposed to watch the fiscal health of America and to ensure that no undue burdens are placed on future generations. It is imperative that Congress and the president have a plan to reduce annual deficits and slow the growth of the public debt — before agreeing to raise the debt ceiling.
The government has no means nor any intention of ever repaying this debt. When bonds, which were sold to finance the deficit, mature, the government simply sells new bonds to re-pay the mature bonds and just rolls over the debt. As a result, the public debt just keeps growing. Imagine lending money to someone who makes only interest payments and has no intention of ever fully repaying the debt. What credit rating would such a person have? What credit rating should the U.S. government have?
The House of Representatives recently agreed to a budget plan that spends more money and incurs a larger deficit than the sequester plan which was the law of the land. It is doubtful though, that the House will agree to raise the debt ceiling in February without some assurances that annual deficits will be significantly reduced.
Americans hope that this issue can be resolved before the deadline so that another crisis can be avoided. In October, the House gave in and agreed to re-open the government without getting any spending or debt reduction concessions. Then in December the House and Senate agreed on a budget which continues to have large deficits and an ever increasing public debt.
The House has given too much. It must now hold firm and demand fiscal responsibility to protect our economy and to stop placing heavy burdens on the next generation which already has to pay for underfunded Obamacare mandates, underfunded Social Security, underfunded Medicare and underfunded Medicaid. The young will also face high personal debt from going to college where tuition, housing and fees have skyrocketed. They face a bleak job market due to the stagnant economy of the last six years. And they face ever increasing taxes to fund the social programs instituted by the current administration.
We have a responsibility to our children. So yes, Mr. President, you will negotiate over the debt ceiling.
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