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Of all the reforms to House rules secured by conservative agitators last week, perhaps the most significant is that Republicans will raise the debt ceiling until substantial budget process reforms and spending cuts are secured. It was a promise not to let the
The need for such a rule seems self-evident. Debt has increased by about $4 trillion in just two years. Government borrowing last year hit 13 figures, or $1.4 trillion. Without budget reform, we can easily expect another $10 trillion of debt to be added over the next decade. Let’s not forget, every 1% increase in interest rates by the Fed will increase his debt by more than $1 trillion over the next decade.
So budget hawks and those concerned about the country’s debt should applaud this commitment.
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unlikely. Instead, President Joe Biden, Senate Majority Leader Chuck Schumer, and the entire Washington Special Interest Group will see an economic Armageddon if there is even any indication that the debt limit will expire this summer. A primitive cry is collectively ringing. The New York Times said, “Breaking the debt ceiling would lead to the first-ever default for the United States and wreak financial havoc on the global economy. U.S. officials also said they would continue to support social security checks and other funds. You will be forced to choose whether to pay or pay,” he said hyperventilating. Interest on national debt. ”
House Speaker Kevin McCarthy must stand up to Democrat spending demands if he wants to keep debt and deficits under control.
(Kent Nishimura / Los Angeles Times via Getty Images)
This is inverted logic. A country’s good credit standing in the global capital markets cannot be undermined by not exceeding its debt ceiling. The far greater danger is that Congress will extend the debt ceiling, but not make any reforms in the way Congress spends heavily.
There was just one painful effect of runaway government spending and debt over the past year. Runaway inflation reached her highest level in 40 years, and the average American family lost nearly $4,000 of her real take home salary.
Governments are not addicted to deficits because they don’t collect enough taxes. The Congressional Budget Office reported this week that the U.S. government will collect a record $4.9 trillion from Americans in 2022. As a share of GDP very close to all-time highs.
But Biden and Democrats in Congress say they want a “clean” debt ceiling bill without conditions.
Republicans, on the other hand, should say “no deal.” The experience of the past 40 years clearly shows that this is the only time fiscal conservatives have secured significant spending reform concessions from Democrats as a condition of raising the debt ceiling. These are the “come to yes moments” for financial discipline.
In 1985, as part of the Debt Bill, the Gramm-Rudman deficit cap was enacted. It spent Congressional spending on diets. In 1996, Republican and Democratic presidents in Congress signed a historic budget accord on the eve of the debt ceiling vote. Three years later, the budget he balanced for the third year in a row. This is the only example in the last 50 years that has not been in the red. And in 2011, House Republicans used the debt ceiling vote to win approval from President Barack Obama for a Budget Control Act that includes automatic spending cuts, slashing the deficit.
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The lesson is clear. House Speaker Kevin McCarthy will need to use the debt ceiling vote as a bargaining chip to secure spending cuts and reforms to make any progress toward easing the debt crisis.
This has been denounced by the crowd inside the Beltway as grossly irresponsible, as is holding the country hostage. wait. When a business owner is millions of dollars in debt and goes to the bank for a loan or credit card extension, the bank naturally asks, “What is your financial plan to get out of debt?” would say Without a plan, you’ll drive the owner out onto the street without a loan or credit card extension.
To contain the debt, House Republicans must resist spending demands from top Democrats, including President Joe Biden.
(Screenshot/Twitter)
We all hope this doesn’t happen, but if for some reason bullish Democrats refuse to budge and the debt ceiling isn’t raised in time, it won’t default. not. Rather, it immediately prohibits Congress from borrowing more money. You can spend the taxes that come into the Treasury every day, but not more. Republicans are working on contingency plans to ensure debt payments are made and Social Security checks are top priority. But other low-priority programs, such as the Department of Education, Foreign Aid and Energy Programs, will be closed until a deal is made. No default unless Biden’s Treasury Department allows it.
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Republicans in the House can argue that almost all of the increase in debt over the last two years is because Biden and Congressional Democrats spent $4 trillion piling up debt that we don’t have. increase. Republican vote. Democrats own this debt increase.
But if Republicans agree to get along by raising the debt ceiling without concessions from Democrats, they will end up supporting and furthering Biden’s big-government socialist agenda. Folks, it will be the biggest financial crisis for America.
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