Editorial - Barry MacDonald
President Obama played his trump card on July 12 in his showdown over raising the ceiling of the national debt before the August 2 deadline. He told a CBS broadcaster:
Well, this is not just a matter of Social Security checks. These are veterans' checks. These are folks on disability and their checks. There are about 70 million checks that go out. . . . I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it.
When he says "there may simply not be enough money in the coffers," he is lying.
The President is scaring the elderly and the disabled. He wants Americans to believe Republicans are taking pay away from soldiers.
If the debt ceiling weren't raised by August 2 there would be a 44 percent drop in government spending. It would be the Treasury Secretary's job under the direction of the President to prioritize which agencies get funded.
According to an excellent post by Kurt Brouwer at his "Fundmastery Blog" on July 12, there is no need for the Treasury to default on its debt after August 2. Every month the Treasury owes roughly between $15 to $20 billion in interest on the national debt, and every month the Treasury takes in through tax collections on average about $200 billion.
Kurt Brouwer cites a Bipartisan Policy Center study that estimates $172 billion in tax revenues available in August when the debt ceiling is reached, and about $307 billion in promised expenditures by the federal government for August.
If the Republicans, the President, and the Democrats are unable to agree on raising the debt ceiling by August 2 there will be a partial government shut down, but there will be enough money coming into the Treasury to pay for interest on the debt ($29 billion), Social Security ($49.2 billion), Medicare and Medicaid ($50 billion), active duty troop pay ($2.9 billion), and veterans affairs programs ($2.9 billion).
President Obama's and Treasury Secretary Geithner's rhetoric describing catastrophic consequences of a default is also a lie. There would be enough money to pay the interest on the debt. The President and the Secretary are deceiving the American people. There is no danger of a default on the nation's debt.
But without a deal hard choices would have to be made. Who would go without?
It costs per month $31.7 billion to fund defense vendors; $3.9 billion for IRS refunds; $9.3 billion for food stamps and welfare; $12.8 for unemployment insurance benefits; $20.2 billion for the Department of Education; $6.7 billion for Housing and Urban development; and $73.6 billion for the Departments of Justice, Labor, Commerce, E.P.A., and HHS.
Imagine a government shut down with the President using his power of choice to conjure heart-wrenching T.V. footage. He may choose not to send out Social Security and Medicare checks, or not to pay for food stamps, and welfare benefits. The media would create images comparable to the residents of New Orleans stranded in the sweltering heat without food, water, and medicine after hurricane Katrina; only this time the spectacle would be nationwide. CBS will release a poll, using a skewed sampling of adults with few Republicans included, showing that Republican's have become villains in the public's opinion. Some famous entertainer will say: "The Republicans don't like poor people!"
The President has a very simple narrative: The Republicans have decided to shut down the government because they refuse to raise taxes on the wealthy. He will say that he was reasonable, and was considering cutting entitlements (don't believe it, he's never given specific proposals).
The simplicity of the President's message gives him some advantage, although it is difficult to know how much. Republicans have to be careful not to be blamed for initiating the shut down. Our financial problem results from decades of overspending, a most egregious example being President Obama's nearly $1 trillion stimulus package of February 2009 that failed to keep unemployment under 9 percent.
As of this writing the Republicans have two plans. There is the Cut, Cap, and Balance, involving cutting and capping spending as a percentage of GDP, and passing a balanced budget amendment to the Constitution. There are virtues to this approach but it would take a lot of explaining, and take many years to effect - each state voting to approve the amendment. Cut, Cap, and Balance couldn't pass the Senate.
Then there is the McConnell plan giving the President the ability along with the blame for raising the debt ceiling without spending cuts (cuts are promised but such promises have been ignored in the past) - it couldn't pass the Republican-controlled House.
The problem for Republicans is that their responses are convoluted and time consuming, and the House and Senate Republicans aren't unified. The president will show us the suffering poor on T.V., and the Republicans will counter with charts and statistics.
The American people already know the federal government has a spending problem; Republicans were elected in 2010 to put a check on President Obama and the Democrats. But if polls are accurate, Americans are not yet prepared for cuts in the entitlements, including Medicare, that are driving the nation to financial ruin.
The American people don't yet understand the magnitude of the government's impending failure to meet its promised benefits in a few years. Finding how to make people see that Medicare and Medicaid are going bankrupt while the liberal politicians and the media (being ignorant?) obscure the truth is proving difficult.
The debate over raising the debt ceiling is an opportunity to further educate the American people. But the Republicans must avoid being seen as wanting the shutdown. If pushed to the brink the Republicans should pass a bill through the House that raises the debt ceiling along with spending cuts equal in proportion. A 6-month extension of the debt ceiling, raising it $500 billion, with $500 billion in cuts, as Charles Krauthammer has suggested, is a good idea. They should not raise taxes.
Let the Senate fail to act on, or the President to veto, the House legislation. Let the Democrats take blame or at least share blame for a shut down. Let the American people witness the chaos ensuing from the failure to put our finances on a sound footing. Conservatives have enough media outlets today to get our message out, a factor we didn't have during the 1995 shutdown.
Honest people must inform the American people that if the current pace of spending isn't addressed, the interest on the debt climbs from today's $214 billion a year to $931 billion in a decade - Charles Krauthammer's numbers.
The Republicans must nominate an articulate presidential candidate who can hammer the President on his high unemployment numbers, the dismal economy, and the corrupt manner by which the Democrats and the President rushed through both the hugely-expensive and ineffective 2009 stimulus and the 2000-page Obamacare legislation before anyone had time read the bills. Make the President defend his exploding spending and his wrong-headed energy policy. Let the President's failure speak for itself. *
