DEBT CEILING VOTE

Republicans have openly stated that their #1 goal is to defeat Pres. Obama. They have frankly said that the poor and middle classes need to pay more. They publicly acknowledge that protecting the richest Americans (and corporations) is their primary objective. They have candidly admitted that they reject governmental regulations or programs. They are demolishing programs that help the poor, disabled, elderly, unions, or middle class workers who don’t have lobbyists to represent them.

The GOP asked for $2 Trillion in spending cuts. The Obama administration offered $4 Trillion. Republican leadership said, “No.” If eliminating the debt is truly the goal, there’s no logical reason to reject the larger reduction.

Debt ceiling bills have traditionally been clean—bills that raised it, with no strings attached. Republicans decided they would use a necessary bill to get rid of programs they never liked—Social Security, Medicare, Medicaid, regulatory agencies that ensure our safety, etc. It’s not only mean-spirited, it’s irresponsible.

What will happen if we don’t raise the debt ceiling? Looking at history is one of the best ways to find out.

In the spring of 1979, during a similar debate to what we’re having now, there was a last-minute approval of raising the debt limit. Because of the last-minute approval, a flood of investor demand for Treasury bills, and a series of technical glitches in processing a backlog of paperwork, $120 M of payments to Treasury bill holders were delayed. The problems were corrected, the bills were paid (late), but the U.S. paid a high price for it.

Technically this was not a default but a simple delay in payments. There were expensive consequences, though. The late payments resulted in an increase in interest rates of 0.6%, which added another $6 Billion annually to our debt.

Think about paying a credit card bill late. One late payment often causes other companies to increase their interest rates to protect themselves from becoming victims of future late payments.

It’s serious and our Congressional delegates need to understand that investors will punish the U.S., and its taxpayers, if checks stop showing up. Pass the bill.