If the current $14.3 trillion dollar debt limit is not raised, the government will have to default on its debt. That’s the view of a number of prominent economists, including Federal Reserve Chairman Ben Bernanke, a Dillon, SC native who recently told the Senate that it would be a “recovery-ending event.”
However, South Carolina’s U.S. Senator Jim DeMint disagrees. Appearing on MSNBC Wednesday morning, DeMint says if Congress does not come to an agreement to raise the debt ceiling, the country will still meet its financial obligations:
“First of all, we are not going to default: we may have to cut government programs but we’re going to pay our debts as they come due. Over 70 percent of our total expenses come in from tax revenue. We would eventually if we never raise the debt ceiling have to go back to 2003 spending levels, but we will pay our debts.”
In mid-May Treasury Secretary Timothy Geithner told Congress that he was taking steps that would keep the nation from defaulting, however those measures run out August 2. At that time, lawmakers must come to a decision to increase the limit on borrowing or face default. DeMint accuses Geithner of using scare tactics to force lawmakers into making a deal with major cuts to spending.
We will pay our debts and it has been irresponsible for Secretary Geithner to suggest that we won’t. It would be disruptive, I’m not pretending that it wouldn’t be and you would have to begin cutting things you don’t want to cut.
House Republicans say they will not approve an increase in the debt limit without at least $2 trillion in spending cuts.
Democrats have argued that the government must build up revenue by closing tax loopholes for the nation’s wealthy and for corporations, which would include ending subsidies for oil companies. DeMint contends that revenues accrued from closing those loopholes will not make a significant dent in the nation’s deficit. DeMint and other conservatives are pushing for a balanced budget amendment. DeMint says it’s time for the U.S. Government to curb its spending habit. He says it can be done:
There are decisions I would have made 10 years ago that are different now. I voted for things 10 years ago that we can’t afford today. I’m a recovering earmarker. I tried to take money to South Carolina. We can’t do that anymore, were $14 trillion in debt. So we’re in a different place in time, and the priority has got to be to keep our country out of bankruptcy.
DeMint drew the ire of fellow South Carolina Republicans and Democrats by repeatedly blocking in the Senate efforts to secure an earmark that would have paid for the study for the deepening of the Charleston Harbor.