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Analyst: Borrowing can't continue forever
Posted By -NO AUTHOR- On 01/03/2012 @ 2:00 pm In Front Page,Money,Politics,U.S. | No Comments
The director of the Center for Data Analysis at the Heritage Foundation is warning that the federal government cannot continue to borrow money into perpetuity, and there really is only one sure solution to the catastrophic effects of the U.S. owing trillions of dollars to mostly overseas lenders.
That’s from Bill Beach, of the Heritage Foundation’s operation, who was interviewed today for WND.
“The real solution here is to stop the spending,” he said.
The comments come in light of the next step in the process to raise the debt ceiling for the U.S. – which is the maximum amount the government is allowed to borrow to pay its bills.
There was a massive fight in Congress last year over raising the ceiling, and it was accompanied by a No More Red Ink campaign where thousands and thousands of Americans dispatched messages to their representatives telling them simply to do what is needed to stop the spending.
The situation is slightly different now, as last year’s agreement allowed additional borrowing increases to be implemented unless Congress specifically vetoes them. The deal struck then allows the cap automatically to rise unless Congress votes to stop it.
Members of Congress have 15 days after getting a request to vote on an increase to take action. But even the vote isn’t thought of as significant as Obama can veto it.
Beach said while the ceiling needs to be raised, to protect the credit of the U.S., it cannot go on.
“The bottom line is that we have to maintain the full faith and credit of the U.S.,” he said. But he said cutting spending and reducing the increase in the debt each year would be a part of getting the economy moving again, he said.
“The reason conservative critics agreed to it, they understood … we really don’t have any choice. We can’t financially ruin the U.S. government. [An increase] buys some time to get to what they thought we would get to.”
He said the idea in Congress last year was that the so-called Supercommittee would come up with trillions of dollars in cuts. But that turned into a “superbust,” so “here we are in the situation the spending is at the same rate it was back in the summer and government is asking for more borrowing authority. It is a terrible mess.”
He warned that unless major steps are taken, and soon, the credit rating agencies will start to lower the boom probably inside the next year. That will, he said, drive up interest rates for every, slowing down the nation’s economy, which will impact the world’s economy.
“It really is a disaster in the long run,” he said. “That’s bad news for the U.S. economy, very bad news for the world. We’re about the only really big economy left.”
The increase in the debt limit to allow more borrowing and spending does nothing, he said.
“We’re still in the woods and have to find a way to lower spending.”
In another interview, Iowa Rep. Steve King also addressed the debt ceiling.
“I don’t think we’re in a position to block that money from going to the president,” he said, citing the arrangements of last year’s deal.
The “No More Red Ink” campaign originally was to encourage members of the U.S. House simply to not raise the debt ceiling last year and force the spending cuts that would bring the U.S. budget into line with its income.
The program allows Americans to send individually addressed letters in red ink to Republicans in the U.S. House, who have a majority and an act without help from the other party, for only $29.99.
The earlier effort dispatched more than 1 million letters to House Republicans.
In a commentary, Joseph Farah, founder and CEO of WND.com and the originator of the campaign, “I hate to say it, but I told you so. In fact, besides the 22 House Republicans who voted against the last hike in the debt limit, I am pretty much alone in American public life as an advocate of the ‘No More Red Ink’ philosophy.
“I hope that is about to change, because there’s an old adage that says, ‘The definition of insanity is doing the same thing over and over again expecting different results.’ It’s time to stop doing the same thing over and over again. ”
He explained, “Not borrowing is not the end of the world, it’s the beginning of recovery for America. It’s the beginning of fiscal responsibility and discipline. It’s the beginning of a return to constitutionally limited government. And we can do it overnight – with one simple no vote by House Republicans.”
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