Raising the Debt Limit Without Cutting Spending Would Endanger Job Growth
Treasury Secretary Tim Geithner and the Obama Administration want a debt limit increase “‘done and clean’ by July,” says the Wall Street Journal. But in a must-watch speech earlier this week, Chairman Paul Ryan (R-WI) explained that President Obama’s request for a debt limit hike without spending cuts would endanger job growth in America:
“[I]t’s pretty simple. You can’t get real, sustainable growth by continuing to pile on the debt. More debt means more uncertainty, and more uncertainty means fewer jobs.
“The rating agency S&P just downgraded the outlook on U.S. debt from ‘stable’ to ‘negative.’ That sends a signal to job creators. If S&P is telling them that America is a bad investment, they’re not going to expand and create jobs in America – not at the rate we need them to. …
“Speaker Boehner made this clear in a recent speech at the Economic Club of New York: If the debt ceiling has to be raised, then we’ve got to cut spending. The House-passed budget contained $6.2 trillion in spending cuts. For every dollar the President wants to raise the debt ceiling, we can show him plenty of ways to cut far more than a dollar of spending. Given the magnitude of our debt burden, the size of the spending cuts should exceed the size of the President’s debt limit increase.”
Stanford economist John B. Taylor says “linking the debt limit to spending reductions” as Speaker Boehner and Republicans have done is “good economics in theory and in practice.” It is “essential to a credible return to sound fiscal policy and an end to the ongoing debt explosion,” he says.
Democrats, on the other hand, want a “clean” debt limit increase now and then maybe a “tax trigger” later that automatically raises taxes on families and small businesses if politicians spend too much. But the American people aren’t buying it – a recent survey by Resurgent Republic that shows “[a]n overwhelming 89 percent of voters oppose President Obama’s policy to raise the debt limit without limiting spending” – and this has Democrats panicking.
What do you think: should Congress simply raise the debt limit as it’s done in the past? Or should there be meaningful budget reforms and serious spending cuts – in excess of any debt limit increase – as Republicans are demanding? Leave your comments below.