The United States government officially reached the debt ceiling on Monday. This means that the United States would be in default if not for “extraordinary actions” being taken by Treasury Secretary Timothy Geithner.
Geithner is reducing government investments in these two federal pension funds: the Civil Service Retirement and Disability Fund and the Government Securities Investment Fund, to keep the government from defaulting on its debt. Geithner thinks he has enough money to keep the government running until Aug. 2 using these tools.
The Republicans are refusing to raise the debt ceiling as a tactic to pressure the Democrats to cut the deficit. While this is a noble goal, it is extremely dangerous and is playing with fire.
Ron Paul, R-Texas, suggested that the United States should sell the gold from Fort Knox to keep the government running. While Paul is on the fringe of the GOP, other mainstream GOP members are suggesting very similar ideas.
Paul Ryan, Eric Cantor and other prominent leaders are dismissing the notion that the debt ceiling is something to be concerned about.
However, history proves otherwise.
According to The Los Angeles Times, “the Government Accountability Office estimated that a seven-day delay in an auction of two-year securities during a debt-ceiling impasse in 2002 caused the Treasury to pay $19 billion in additional interest on them each year.”
As noted above, the GOP has noble goals. The United States is up to its knees in debt and even according to the most aggressive ideas proposed, the debt will continue to increase.
It is vital that serious cuts be made to entitlement spending; pensions, Social Security and Medicare must be reformed. There will also have to be cuts to the military. Which, ironically, are the only real cuts that have been proposed so far by President Barack Obama.
However, to hold the debt ceiling as hostage is just plain dangerous.
While the Democrats should be more willing to comprise, they haven't, so instead of stooping to their level the GOP should understand the risk of a U.S. default.
If both sides don't reach a compromise and the debt ceiling isn't raised, here are some further suggestions for how to raise revenue.
• Sell all the government’s holdings in gold.
• Sell all of the oil in our strategic petroleum oil reserve.
• Sell national parks.
• China would surely be interested in some of our military technology; we could probably make a lot of money selling it to them.
• Finally, we can sell off the whole country to China!
Clearly, the long-term solution is to raise the debt ceiling and then negotiate a serious plan to decrease the deficit in the future.
The Republicans swept the elections in 2010 because they were the party of fiscal responsibility. If they want to stay true to their mantle and win in 2012 they will do the right thing and raise the debt ceiling.
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