As I predicted, the Republicans are caving again on the debt ceiling. After weeks of huffing and puffing, House Republicans have announced that they’re now willing to enact a 3-month extension of the debt ceiling. What that means is that they will once again permit more debt to be incurred by the already deeply indebted federal government, debt that the American taxpayers are ultimately liable for.
Imagine you owe the bank $1 million. You have annual income of $100,000. Your annual expenses are $300,000.
To put your financial affairs in order, libertarians say it would be wise to immediately cut your expenditures by, say, $250,000. That would leave you with $50,000 in savings per year, which you could use to begin paying down your $1 million dollar debt to the bank.
That’s not what statists say. They say that you’re better off getting another credit card and using the cash-advance feature on that card to get $50,000, which you can then use to pay the interest on your $1 million debt to the bank. That would mean, of course, that you would now owe a total of $1,050,000 rather than $1 million. Statists also say that more spending and borrowing mean more wealth and prosperity. They also say that more spending and more debt lead to a higher credit rating.
That makes a lot of sense, right? Not!
Yet, it’s the statist plan that House Republicans are now set to approve — the incurring of more debt in order to pay the current debt.
Republicans have long claimed that they support a balanced budget. In fact, the Republican Party platform even calls for a balanced-budget amendment to the Constitution. Republicans have also long claimed that they favor balancing the budget by slashing spending and not by raising taxes.
The debt ceiling debate exposes the life of the lie that has long characterized Republicans. For here is a chance to achieve a balanced budget without raising taxes. If the debt ceiling isn’t raised, the federal government will be precluded from adding any more new debt onto the existing debt. The government would have to operate solely through the tax revenues it receives each month. That means that the government would have to immediately slash $1.3 trillion in expenditures — that is, the excess of spending over tax revenues that it had planned to borrow. Expenditures would equal tax revenues.
So, there you have it: By not approving an increase in the debt ceiling, we get a balanced budget through slashing of expenditures and no new taxes.
Why then are Republicans caving again on the debt ceiling? The answer is simple: They are as committed to the giant, expensive welfare-warfare state that Democrats are. Moreover, on the issue of fiscal responsibility they simply can’t the heat from President Obama and the mainstream press. Republican love citing the free-enterprise, limited-government, fiscal-responsibility mantras, but when it comes to walking the walk, they do nothing but talk the talk.