President Barack Obama correctly warned again Tuesday that if Congress doesn’t raise the debt ceiling within the next week, the U.S. economy will suffer a steep fall. Congress should respond accordingly to avert that outcome.
When America’s economy is endangered, so is the world’s economy.
Indeed, Chinese Vice Finance Minister Zhu Guang-yao said Monday: “We naturally are paying attention to financial deadlock in the U.S. and reasonably demand that the U.S. guarantee the safety of Chinese investment there.”
That “Chinese investment” is more than $1.2 trillion in U.S. Treasury notes.
Our Democratic president, Democratic Senate and Republican House must find common ground to avert the default risk as the Oct. 17 debt-limit deadline projected by Treasury Secretary Jack Lew looms.
Congress already missed the Oct. 1 deadline for a continuing budget resolution to avert the federal government shutdown that entered its second week Tuesday.
That dispute can’t be duplicated with the debt ceiling.
Last month, the GOP House passed a budget bill that didn’t include funding for the Patient Protection and Affordable Care Act. The Senate and the president refused to go along with that exclusion.
President Obama has challenged Speaker John Boehner, R-Ohio, to allow a House vote on a budget resolution that wouldn’t “defund” Obamacare. The speaker has challenged the president to negotiate spending cuts before the House passes not just a budget resolution but a debt-ceiling hike.
Cooler heads should prevail in time to raise the debt limit — and at some point, to belatedly end the shutdown.
But once the political smoke clears from the latest games of Beltway chicken, this overriding problem will persist:
Our national debt will continue to climb at an alarming rate.
When Mr. Obama was sworn in for his first White House term, the debt was $10.6 trillion. Today, after the last five years produced the five highest deficits in U.S. history, it’s $16.7 trillion. And soon, that necessary debt-ceiling hike will boost it even higher.
Yes, the deficit was only $750 billion after the first 11 months of fiscal year 2013, which ended on Sept. 30, putting it on track to finish as the first total under $1 trillion since 2008. However, the crush of Baby Boomer retirements will exert intensifying stress on Medicare and Social Security in the coming decades.
Add Obamacare to federal obligations, and our nation’s fiscal future faces serious structural hazards that demand overdue — and politically difficult — reforms.
That losing numbers game brings to mind a freshman senator’s eloquent warning about the folly of repeatedly boosting the debt ceiling rather than making the hard budgetary decisions required to right our nation’s foundering fiscal ship.
No, not Sen. Ted Cruz, R-Texas, in 2013.
Sen. Barack Obama, D-Ill., on March 16, 2006.
Explaining his decision to vote against raising the debt ceiling back when it was $8.6 trillion, scarcely more than half of its current level, Mr. Obama said on the Senate floor:
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policies.”
And: “Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”
Yes, the debt ceiling must be raised — again — to avert the threat of a federal default.
But that short-term menace is minor compared to the long-term devastation America faces if we keep spending far beyond our means.