The debate over raising the nation’s debt ceiling continues to dominate discussions on Capitol Hill. And, as WEKU’s Matt Laslo reports from Washington DC, the Kentucky congressional delegation isn’t too keen on raising the nation’s borrowing limit unless serious spending cuts are included.
The U-S government has reached its current borrowing limit and seemingly nothing happened. But if Congress fails to raise the debt limit, Joe Minarik says interest rates would go up and effects will ripple out from there. Minarik’s an economist who once worked at the Office of Management and Budget in the Clinton White House.
“It will also go through the rest of the financial markets to affect private securities, bonds of corporations, interest rates paid by consumers, it would send the stock market down dramatically, it would send the value of the dollar down which would increase the cost of imported goods,” said Minarik.
No one in either party wants that outcome. The Treasury Department shifted around some accounts and says the U-S is solvent until August, but the clock is ticking. Republicans who control the House see the debt limit debate as a way to gain more leverage as they attempt to curb deficit spending. Kentucky’s Hal Rogers is the top Republican on the Appropriations, or spending, Committee.
“We want to see more spending cuts than the raise in the debt ceiling,” said Rogers.
Even trillions in dollars in spending cuts won’t get the vote of freshman Kentucky Republican Rand Paul.
“If we pass a balanced budget amendment I’ll vote to raise the debt ceiling,” said Paul.
That’s a steep requirement. To get a balanced budget amendment included in the Constitution would require a two thirds vote in both chambers of Congress and support from three fourths of the states. But Senator Paul says the amendment would force both parties to rein in spending.
“I don’t think they can be trusted to do a good job. They haven’t been good stewards of the money so we need to have new constitutional requirements that require a balanced budget,” said Paul.
Rogers says the debt ceiling vote is so crucial for the solvency of the nation that he thinks demanding trillions of dollars in budget cuts will get the job done.
“Well, I’ve voted for balanced budget amendments ever since I’ve been here – we’ve never been able to pass one. Plus it would take years to do that. I think there are quicker, better means to get at a balanced budget than to try to pass a Constitutional amendment to do that,” said Rogers.
Kentucky Democratic Congressman Ben Chandler says the debate about whether to increase the nation’s borrowing limit misses the underlying problem facing the nation.
“We talk about the deficit a lot, but the biggest answer to the deficit problem is putting people back to work. You can see any analysis of this that you want – one of the largest, if not the largest, cause of the deficit that we’ve got today is the recession that is taking place and the fact that not as many people are productive and working,” said Chandler.
While Senate Minority Leader Mitch McConnell is opening the door for a short term debt limit increase, Democrats in the Senate are now pushing to include job creating measures in a debt limit deal. One idea is a pay roll tax holiday. They argue short term spending will help put some of the 14 million unemployed Americans back to work. But Rogers says their mini-stimulus program isn’t focused on the right problem.
“The problem here is we’re spending too much. We’re taxing too much and we’re borrowing too much. It’s a time of austerity. We have to cut back and get the deficit under control so that the business community out there will feel confident that the government is finally facing up to this horrendous debt,” said Rogers.
Left leaning critics say Republicans are too staunch in rejecting any new taxes as a part of a deficit reducing plan. Critics on the other side of the debate accuse Democrats of too firmly opposing changes to entitlements. Congressional negotiations have fallen apart, so now it’s up to President Obama to reach a deal with party leaders in the House and Senate…and there isn’t much wiggle room if he wants the support of Kentucky’s lawmakers.