The Debt Limit Scam
“The government will reach the $14.29 trillion debt limit no later than May 16”
Most of us heard that President Obama voted against raising the debt limit when he was a Senator. But there is no reason to just single him out – the debt ceiling vote gives us an excellent chance to look at hypocrisy on both sides of the isle. This is difficult to do in the House because these bills are frequently handled with the Gephardt rule and simply ‘deemed’ to have passed so nobody is on the record one way or the other. But the US Senate has no such rule. Not only are their votes on the record, but most of these votes were cast by the same people.
Congress has voted to raise the debt ceiling 10 times since 2001. Today, you hear Obama, Geitner, and most of the rest of the ruling class saying that if they fail to vote to increase the debt limit there will be a financial disaster, so you might guess that every past debt limit vote would have been something like 95 to 5 in favor of increasing the limit — right?
The Votes Prove the Scam
March 16, 2006, during the Bush administration, the Senate voted 52-48 to increase the debt limit. It seems like 48 Senators were not so concerned about the consequence of not raising the debt limit in 2006. But the real interesting fact is learned when you look at the detailed vote.
U.S. Senate Roll Call Votes 109th Congress – 2nd Session H.J.Res. 47
Of the 52 Senators voting to raise the debt limit, every one was a Republican. Of the 48 that voted against raising the debt limit, 3 were republicans and the rest were Democrats (and “Independents”).
Interesting? Not as interesting as this.
On Dec 24, 2009, the Senate voted 60 to 39 to increase the debt limit again. The bill was entitled “Continued Financing of Government Operations”, but it was a debt limit increase bill. Click Here to see the text of the bill. It’s about 20 words and it increased the limit to $12.394T.
So, how did this vote go? The vote was 60 to 39. 59 Democrats/Independents (and 1 Republican) voted to increase the debt limit, and 38 Republicans (and 1 Democrat) voted not to increase the debt limit. See the results yourself.
In 2006 when Bush was in office, essentially all the Democrats voted against raising the debt limit, and in 2009 when Obama was in office ALL the Republicans voted against raising the debt limit.
In September of 2007 they needed to borrow another $850 billion and they played a different game, splitting the vote almost perfectly down the middle – 26 Democrats and 27 Republicans voted for it, 21 Democrats and 20 Republicans voted against. This was right before the 2008 Presidential election season – guess which Senators chose not to vote at all? Obama, Clinton, Biden and McCain. Congress got their spending increase (with three votes to spare), the split was mathematically perfect, and the Presidential candidates got to keep their votes off the record. Sounds like politics to me.
The important thing to notice is that it doesn’t matter what games they have played, in EVERY case the limit has been raised. They know it has to, otherwise their spending binge will hit a major speed bump. Bad for them – good for US.
So Why is it VITAL to NOT Raise the Limit?
In the good ol’ days when you reached your spending limit on a credit card, the company simply raised your credit limit. It’s like they were saying “OK – let’s see if you can spend this much…”. Congress is doing the same thing.
I used to think if we reduce taxes we will reduce spending. The debt limit debate proves that is not the case. The ONLY way to control Congress is to limit the spending – and that is exactly what the debt limit does.
For the last 20 years the total debt held by the government has hovered around 60% of GDP, but the $13.5 Trillion debt held in 2010 worked out to 92.1% of GDP. The Q1 2011 Seasonally Adjusted GDP was $15 Billion which puts the current ratio at 95%. If they increase the limit (now $14.29 Billion) by just $1 Billion the debt alone will be more than the entire Gross Domestic Product of the United States. This is like a family with a $100,000 annual income having $110,000 in credit card debt.
So, what to do? If the House was serious, the FIRST thing they would do TODAY is pass H.R.42 – the Full Faith and Credit Act. Here is the entire text of the bill:
“To require that the Government prioritize all obligations on the debt held by the public in the event that the debt limit is reached.” H.R. 42
This would be the best signal we could send to the world. Not only would we show that we would not default but we would prove that we will start to cut spending. The House has the Republicans to pass it now – the fact that they don’t shows that they are not willing to make the cuts required. They much prefer the appearance of being dragged kicking and screaming into a vote to raise the limit while still continuing to spend your children’s money.
Based on the 2011 Budget the US is borrowing something like $188 Million per hour. How long will we let this continue?