Because most Democratic candidates have been chosen, this runoff is a fight between Republicans. And because the more conservative Republican voters tend to turn out in higher numbers, each candidate tries mightily to be the most conservative.
IN THE SENATE RUNOFF between U.S. Rep. Jack Kingston and David Perdue, each properly emphasizes the need to tackle the federal deficit. Both candidates have taken nearly identical positions – cut taxes and cut spending.
This certainly is popular. We all like lower taxes, and if the spending cuts aren’t specified, we believe they won’t have an impact on us. There is one problem with this approach: It won’t work.
Virtually every nonpartisan study has shown that reducing the deficit requires increasing revenue and cutting spending. And the spending cuts won’t just involve faceless bureaucrats in Washington. We all will be affected.
Reductions in Social Security, Medicare and the military likely will be in the mix. Popular tax deductions will be eliminated. Tackling the deficit is hard work. One aspect of the Republican Senate candidates’ fiscal position is nonsensical. They have adopted the popular misconception from the political right that we can cut spending by refusing to raise the debt ceiling.
NO OTHER COUNTRY even has a debt ceiling. Former Reagan and Bush administration official Bruce Bartlett wrote that “the debt limit is nuts. It serves no useful purpose to allow members of Congress to vote for vast cuts in taxation and increases in spending and then tell the Treasury it is not permitted to sell bonds to cover the deficits Congress created.”
If we do not raise the debt ceiling when we run out of money, it will unleash a financial chaos that no one can predict accurately. The Treasury pays bills electronically when they come due, and does not have a prioritization system. America always has paid its bills, and didn’t plan for a system that would decide whom not to pay.
The shock to the economy of the sudden random loss of Social Security, military and civilian retirement checks, and millions of other payments would drive the country back into recession.
Proponents say it’s not necessary to pay all the bills, but that it’s enough to pay only the interest on the debt to avoid a federal default.
Unfortunately, the determination that the country is in default is made not by the politicians, but by the financial markets. When the markets say we are in default, they will demand higher interest on the debt. This will increase borrowing costs for the government and the general economy.
THE ANNUAL INTEREST on our debt is about $400 billion at today’s 2.4 percent average rate. It would be $1 trillion at the historical average of 6 percent. This is 75 percent of the $1.3 trillion we collect in personal income tax receipts. Paying this much interest will cause drastic spending cuts and increased taxes.
No one knows for certain how harshly the financial markets would treat a U.S. default, but the danger is too great to risk finding out.
Perdue attacks Kingston because he voted to raise the debt ceiling. As CEO of Dollar General, would Perdue have recommended to his board of directors that they default on their bonds? Not pay their employees or suppliers? Of course not.
And instead of proudly defending Kingston’s responsible votes to raise the debt ceiling, his supporters say that at times he voted against raising the ceiling. Does that mean he acted responsibly only part of the time?
VOTING TO DEFUND Obamacare is a harmless exercise in Republican frustration. It is an entirely different action to purposely cause the first federal default in American history. History would record this self-inflicted disaster as a blot on the Republican Party that would last for years.
Cutting spending is necessary, but it requires sacrifice and compromise, not a destructive gimmick.
In the general election
campaign, Georgia deserves a responsible discussion on how to balance federal revenues and spending.
We haven’t heard one yet.
(The writer is a retired U.S. Navy officer. He lives and writes in Savannah.)