The case for raising the debt limit 

Everybody favors raising the debt ceiling. They only differ about the timing.

Even the opponents of doing this have argued that the Aug. 2 date being promoted by President Barack Obama is arbitrary. They’ve also emphasized that the Treasury Department would still have enough money coming in to pay the interest on our debt, military salaries, plus Social Security, Medicare and Medicaid benefits. But that isn’t a long-term answer.

But this would leave a whole lot out, including border patrol and funding for federal prisons, among many other government functions that conservatives favor.

And it won’t be conservatives who will be making decisions about what to pay for — it will be Treasury Secretary Tim Geithner.

Even if various accounting tricks and payment prioritization could buy the government a few more weeks, or even months, at some point, as long as no plan balances the budget immediately, the debt limit will have to go up to accommodate additional deficit spending.

As things stand, not a single Republican in Congress has offered a plan that would reduce deficits to zero in August, and virtually every Republican has voted for at least one budget that would continue adding to deficits.

The most aggressive budget on the table, offered by Sen. Rand Paul, R-Ky., doesn’t balance the budget until 2016 — and it anticipates $1.2 trillion in deficits in the coming four years.

So the actual debate isn’t over whether the debt limit will be raised, but over when it will be hiked and under what conditions. And for those who want to shrink government, the question is whether it would advance the cause more to raise the debt limit now, or wait until after Aug. 2, come what may.

Some conservatives insist that if Republicans hold firm, Obama and the Senate Democrats will eventually cave and we’ll get serious budget reform without any tax increases. But that’s wishful thinking.

Markets hate uncertainty more than anything, and failure to raise the debt limit would trigger a major sell-off that would be further exacerbated by any downgrade by the rating agencies.

The experience of the Wall Street bailout provides us with the lesson that when chaos ensues, Congress doesn’t act calmly and deliberately to address problems. It governs in crisis mode and lawmakers pass anything they are handed that will stop the bleeding.

If the credit rating gets downgraded as a result of failure to raise the debt limit, it allows Democrats to blame advocates of smaller government, who would then be in a much weaker position to enact fundamental changes down the road.

On the other hand, if the debt limit is raised and we end up facing a downgrade anyway, Democrats lose their ability to muddy the waters. Instead, Obama’s inability to fix the debt crisis would be blamed and he would lose strength.

Conservatives wanted Republicans to end the practice of simply rubber-stamping debt limit increases. That point has been made loudly and clearly.

Now it’s time to take the best deal to raise the debt limit that has a plausible chance of becoming law, and focus on the fundamental issues.
Philip Klein is a senior editorial writer for The Washington Examiner.

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