Ron Paul: Stop Raising the Debt Ceiling




Date: 05/23/2011

by Ron Paul

The federal government once again has reached the limit of its legal ability to borrow money, meaning it cannot issue new Treasury debt without action by Congress to increase the debt ceiling limit. As of this month, our “official” national debt- which doesn’t include the staggering future payments promised to Social Security and Medicare beneficiaries- stands at $14.2 trillion.

The debt ceiling law, passed in 1917, enables Congress to place a statutory cap on the total amount of government debt rather than having to approve each individual Treasury bond offering. It also, however, forces Congress into an open and presumably somewhat shameful vote to approve more borrowing. If the new Republican majority in the House of Representatives gives in to establishment pressure by voting to increase the debt ceiling once again, you will know that the status quo has prevailed. You will know that the simple notion of balancing the budget, by limiting federal spending to federal revenue, remains a shallow and laughable campaign platitude.

It is predictable that Congress will once again merely delay the inevitable and raise the debt ceiling, after the usual rhetoric about controlling spending, making cuts, and yes, raising taxes. We have heard endless warnings about how irresponsible it would be to “shut down the government.” The implication is that sober, rational, mature pundits and politicians understand reality, while those who oppose raising the debt ceiling limit are reckless ideologues who will harm the economy just to make a point.

But like any debtor that has to reduce its spending, the federal government simply needs to establish priorities and stop spending money on anything other than those priorities. Interest payments on our federal bond debt likely will amount to about $500 billion for fiscal year 2011, an average of $41 billion per month. Federal tax revenues vary by month, but should total around $2 trillion to $2.5 trillion for FY 2011– an average of perhaps $180 billion per month. So clearly the federal government has sufficient tax revenue to make interest payments to our creditors. For now, those interest payments represent about 12% of the total federal budget.

What nobody wants to admit is this: even if the federal government has only $1.5 trillion remaining to spend in 2011 after interest payments, this is PLENTY to fund the constitutional functions of government. After all, the entire federal budget in 1990 was about $1 trillion. Does anyone seriously believe the federal government was too small or too frugal just 20 years ago? Hardly. So why have we allowed the federal budget to quadruple during those 20 years?

The truth is, in spite of how cataclysmic some might say it would be if we did not pass a new debt ceiling, it is hardly the catastrophe that has been advertised. The debt ceiling is a self-imposed limit on borrowing. The signal congress sends to worldwide markets by raising the debt ceiling is simple: business as usual will continue in Washington; no real spending cuts will be made; and fiscal austerity will remain a pipe dream.

When our creditors finally wise up and cut us off, we will be forced to face economic realities whether we want to or not. It would be easier to deal with the tough choices we face now, on our own terms, rather than wait until we are at the mercy of foreign creditors. However, leaders in Washington have no political will to admit that we cannot afford to continue spending without any meaningful limit. They prefer maintaining the illusion and putting off reality for another day.



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123 Comments:

  1. Debt ceiling is not a real stuff or god. Creating that debt ceiling is a religious of crisis, just like some man-made promises of Jesus' returns or man-made beliefs of raptures. Childish minds can only create childish gods even you childishly gold plated everything. Ron Paul 2012 should know about blind spots through histories. Stop fooling around with languages like those in GOP old boys club.

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  2. Debt ceiling is not a real stuff or god. Creating that debt ceiling is a religious of crisis, just like some man-made promises of Jesus' returns or man-made beliefs of raptures. Childish minds can only create childish gods even you childishly gold plated everything. Ron Paul 2012 should know about blind spots through histories. Stop fooling around with languages like those in GOP old boys club.

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  3. What about tax loopholes the rich pay no taxes because of these loopholes , but the republicans don't want to close the loopholes they want to cut SS and every program for the poor and middle class.. real winners these guys.

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  4. What about tax loopholes the rich pay no taxes because of these loopholes , but the republicans don't want to close the loopholes they want to cut SS and every program for the poor and middle class.. real winners these guys.

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  5. Paul is a idiot.. so flush the country down the toilet...

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  6. Paul is a idiot.. so flush the country down the toilet...

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  7. this country should break up into smaller countries. into about four parts. Who has dept now????

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  8. this country should break up into smaller countries. into about four parts. Who has dept now????

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  9. listen to this guy next week they are raising the debt ceiling again watch.

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  10. listen to this guy next week they are raising the debt ceiling again watch.

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  11. You will all see that he is right on aug 2 onwards when a loaf of bread will cost $27.You wont believe it now but will wish you had prepared and listened very very soon.Look into it this new world order.And prepare for the worst and hope for the best.You will be able to rely on yourself or a FEMA camp when they take your homes seize your food supplies(3 days worth allowed)pay you no social security benefits.no food stamps.no food.food is your commodity people wake up

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  12. You will all see that he is right on aug 2 onwards when a loaf of bread will cost $27.You wont believe it now but will wish you had prepared and listened very very soon.Look into it this new world order.And prepare for the worst and hope for the best.You will be able to rely on yourself or a FEMA camp when they take your homes seize your food supplies(3 days worth allowed)pay you no social security benefits.no food stamps.no food.food is your commodity people wake up

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  13. You will all see that he is right on aug 2 onwards when a loaf of bread will cost $27.You wont believe it now but will wish you had prepared and listened very very soon.Look into it this new world order.And prepare for the worst and hope for the best.You will be able to rely on yourself or a FEMA camp when they take your homes seize your food supplies(3 days worth allowed)pay you no social security benefits.no food stamps.no food.food is your commodity people wake up

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  14. A default on US bonds is not allowed by the Constitution and would be an impeachable offense. If Obama is not able to negotiate a debt ceiling increase, the Obama Administration effectively goes into default. Congress holds the pursestrings and must abide by Constitutional priorities. Debt must be paid first. A huge cut in federal employees is the only option. I suggest cutting Departments of Education, Labor, Transportation completely with drastic cuts to other depts.

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  15. Ron Paul has exposed the fiat money system for what it is by proposing that we just tear up bonds that the Fed has issued for quantitative easing. Various economists can find no downside to that solution. Many have called it "surprisingly lucid", including The New Republic. Even liberal economists can find no reason not to, however it is getting no traction on Capitol Hill. It would mean the end of the Federal Reserve and the money power structure as we know it, when we all realize that the national debt is just not real.

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  16. ... You're awfully quiet about it publicly. In fact nobody speaks out against the outrageous defense budget. The Europeans are quiet ... and quietly laughing too. They know that as long as America is carrying their water spending $700 billion annually, Europe doesn't have to carry its loan and help pay for its own defense. Instead, European companies and governments can put that money into domestic technologies and eat our lunch in better automobile and aerospace technologies.

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  17. Some of us are outraged about defense spending.

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  18. ... well, one thing that you can ask for ... is a brain!! Ron Paul is a flake, and isn't even a real Republican. And! His toupee wearing racist son Rand is also a flake, and a coward. He's been silent for months. Must be afraid to put that toupee under too much light. Grow a brain!

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  19. ... quit spending huh? The Defense budget was more than doubled during the Bush years ... from $300 billion to over $700 billion a year. That's $1.4 trillion every two years for Defense. China spends only $120 billion a year in Defense, Russia only $86 billion a year. The U.S. spends more on Defense annually than every other country combined. Why do you "quit spending" types never get upset about our biggest money drainer ... the Defense budget! That's who has the money.

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  20. Raising the debt ceiling is no answer. QUIT SPENDING. Thats the answer

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