Posted by: SWL | July 29, 2011

Obama Says Raising Debt Ceiling Does Not Allow Congress to Spend More

Earlier today President Obama said the following:

“It’s not a vote that allows Congress to spend more money. Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend. It simply authorizes us to pay the bills we already have racked up.”

Does he think the American people are stupid? There may be a few kernels of truth in that statement, but it is mostly false. Let’s take things in order.

“It’s not a vote that allows Congress to spend more money.” True in that raising the debt ceiling only allows the government to borrow more money. But ultimately false, because if Congress did not want to spend more money, they wouldn’t need to raise the debt limit. The Treasury Dept. may be able to juggle revenue for a few weeks to pay current obligations, but we will need to borrow more to operate long-term. Since Congress knows they need more money to fund the federal budget, they must authorize an increase in the debt ceiling to have the money to spend.

“Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up” False. Voting on the debt ceiling is not a vote about whether or not to pay the country’s bills. It is a vote on whether or not to raise the amount the country can borrow, just like raising the limit on your credit card. A tidbit of truth is that without borrowing more money, the long-term ability to pay US obligations is seriously hindered.

“The debt ceiling does not determine how much more money we can spend.” Yes, it does, although technically it only determines how much the US can borrow. With our debt far exceeding our revenue, we must borrow more money to keep the government running. (Currently for every federal dollar spent, 40 cents is borrowed.) Congress cannot authorize spending above what money the US has or what it is allowed to borrow. The debt ceiling is a limit on the amount that can be borrowed, so it does have a huge effect on how much money we can spend.

Instead of making ridiculous statements such this, President Obama needs to seriously talk about specific amounts of cuts and other provisions to achieve his goal of raising the debt ceiling.

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