According to Treasury Secretary Tim “Turbo Tax” Geithner, The United States government will default on its debt obligations on August 2 unless the debt ceiling is raised.
But like every other Obama deadline, this is an artificial date with no basis in reality. Let me explain.
Since January, Sec. Geithner has repeatedly changed the deadline for default, not based on sound fiscal calculations but upon a desire to force Republicans to act quickly, giving Obama the easy win.
First it was March 31. Then April 5. After that, May 16. Soon the default deadline was pushed back to July 8. Now it’s August 2.
In this situation, Treasury Elf Geithner is the boy who cried wolf. He warns of catastrophic consequences if the debt ceiling is not raised in a matter of weeks, yet why should we believe a Treasury Secretary who keeps changing his story? How can we trust the calculations of a Former New York Fed President who can’t even calculate his own taxes properly?
And besides, the government can take significant measures to avoid default outside of raising the debt ceiling. Sec. Geithner can direct the Treasury to prioritize certain spending to insure that government debt obligations are met. Social Security checks can still go out. Food inspections can continue. Sure, the situation won’t be pretty, but at least the government would avoid default, and it would be better than a continuation of Obama’s reckless spending policies that have increased the national debt faster than any other President in history.
Yet for whatever reason, Sec. Geithner and his buddies in the White House prefer a campaign of fear to a campaign of hope. They prefer the false choice of debt or default over the truth: Federal spending must be cut, significantly, beginning as soon as possible:
If the debt limit isn’t raised, the Treasury will be forced to reduce spending in other areas to meet its obligations. The government would not go belly up — some services would be cut back or discontinued. But the Treasury would continue to collect some $175 billion per month — enough to meet the government’s most pressing obligations and service the debt.
Congress can also balance the budget by selling government assets. For instance, the federal government currently owns some 650 million acres of U.S. land, approximately one-third of the entire country. While some of these lands are natural treasures, the government’s holdings also include millions of acres that have valuable commercial potential — for oil and natural gas exploration, for example. These lands can and should be sold.
Federal land sales would also entail significant reductions in spending. The Department of Interior’s budget could be reduced, eliminating unnecessary bureaus and saving nearly $11 billion annually.
Other government functions such as Amtrak, the U.S. Postal Service and the air traffic control system could be operated by organizations other than the federal government — saving taxpayers billions more.
Ultimately, our political leaders have a responsibility to find a way to balance the federal budget. Otherwise, new debt will merely be strapped to the backs of taxpayers.
America won’t default. Enough tax revenue comes into the Treasury each week to pay its creditors. August 2 is an artificial deadline, just like Obama’s deadlines regarding troop levels in Afghanistan. Rather than base deadlines on reality (conditions on the ground, tax revenue coming into the Treasury), Obama chooses to base them on politics.
Even his definition of “long-term” in a long-term debt deal is politicized. He wants the compromise legislation to raise the debt ceiling long enough so this issue doesn’t come back up before November 6, 2012. That’s Election Day for those of you who don’t have a countdown clock to the end of Obama’s Presidency.
So what should Republicans do? First, they should read Charles Krauthammer’s most recent column. Then, they should take his advice.
The Republicans are being totally outmaneuvered. The House speaker appears disoriented. It’s time to act. Time to call Obama’s bluff.
A long-term deal or nothing? The Republican House should immediately pass a short-term debt-ceiling hike of $500 billion containing $500 billion in budget cuts. That would give us about five months to work on something larger.
The fat-cat tax breaks (those corporate jets) that Obama’s talking points endlessly recycle? Republicans should call for urgent negotiations on tax reform along the lines of Simpson-Bowles that, in one option, strips out annually $1.1 trillion of deductions, credits and loopholes while lowering tax rates across the board to a top rate of 23%.
The president says he wants tax reform, doesn’t he? Well, Mr. President, here are five months to do so.
Will the Democratic Senate or the Democratic president refuse this offer and allow the country to default — with all the cataclysmic consequences that the Democrats have been warning about for months — because Obama insists on a deal that is 10 months and seven days longer?
That’s indefensible and transparently self-serving. Dare the president to make that case. Dare him to veto — or the Democratic Senate to block — a short-term debt-limit increase.
House Republicans, ignore the artificial deadlines and Obama’s fear mongering. Pass a short-term debt limit increase and push hard for tax reform. You can’t govern the country from one half of one branch, but you can at least force Obama’s hand. The real deadline in all of this is November 6, 2012. That’s the day Barack Obama and Harry Reid lose their jobs, and the task of fixing America’s fiscal disaster begins.