History tells us that the only leverage conservatives and Republicans have to rein in government spending is to refuse to raise the debt limit.
When Republicans stood firm and demanded legislation to control federal spending, it worked well. Now, we must learn the lessons of the past and demand that any increase in the debt limit be coupled with mandatory spending cuts.
House Republicans should refuse to raise the debt limit unless every dollar of debt increase is matched by a dollar of spending cuts. These mandatory cuts should exclude only debt service payments, Social Security, Medicare, and Medicaid. But the trillions spent on other federal agencies would have to face spending cuts.
Democrats and the media like to threaten that any refusal to raise the debt limit will cause the US to default and send global markets reeling. Totally untrue.
If the debt limit is not raised, the government cannot borrow more. But it can use incoming federal revenue from taxation anyway it wants. This revenue stream, that has grown in recent years, is more than adequate to avert default and to fund fully Social Security, Medicare, and Medicaid.
Deals to cut spending as a precondition of debt limit increases have worked very well in the past.
It was the GOP’s refusal to allow more borrowing that catalyzed the Gramm-Rudman bill in the late 1980s that effectively cut the deficit and led, eventually, to a balanced budget.
The bill was passed in 1987 and signed by President Reagan. It forced mandatory spending cuts each year to reduce the budget deficit. The Supreme Court struck it down ruling that it was an unconstitutional usurpation of executive branch powers, but an amended law was soon passed and took effect.
In 1990, Gramm-Rudman was replaced by the PAYGO Act requiring that any new federal spending be offset by spending cuts elsewhere in the budget. The whole system of budget controls culminated in a balanced federal budget — and even some debt reduction — for four years in President Clinton’s second term.
But after 9/11, the entire system was junked to respond to the terrorist threat, opening the door to the mammoth increases in spending ever since. With the huge federal bailouts that followed the fiscal shocks of 2003, 2008, and the COVID pandemic of 2020, the debt soared, and deficits spiraled out of control.
Now, we have got to bring controls back.
Some Republicans think that by a blanket refusal. They are wrong. A blanket, across-the-board refusal to raise the limit would be akin to a fast instead of a diet.
By refusing to eat anything, you starve and, eventually, will break down and begin eating again. But a planned cut in spending, linked to increases in the debt limit, is like a diet, sustainable through political willpower.
Former President Trump and Speaker McCarthy should announce that they will refuse to accept any increase in the debt limit without mandatory cuts in federal spending.
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