Editor’s Note: This is part two in a three-part series. In part one, LN discussed Bidenomics and the Federal Reserve. Today, Liberty Nation’s Andrew Moran and noted economist Stephen Moore discuss the political theater that is the debt ceiling debate.
Here we go again? The United States is going through another debt ceiling debate, with one side feigning fiscal outrage and the other discussing the government’s duty to cover its obligations. If the Democratic-led Congress fails to raise or suspend the limit, the country is projected to hit its debt ceiling – again – on Dec. 15. But is this years-long saga nothing more than political theater, aimed at Republicans and Democrats trying to score electoral points ahead of the 2022 mid-term elections? Stephen Moore, the former member of The Wall Street Journal editorial board and noted author of Trumponomics, offered his insights on the fiscal cliff in an interview with Liberty Nation.
Democrats: In Debt We Trust
Stephen Moore has lived through these debt ceiling battles for 35 years under various combinations of political power. According to Moore, it is the same thing: There is no plan to control spending or retire the debt. That said, he argues that this level of debt-induced spending from the Biden administration is new.
“What is unprecedented, what Biden is doing is he’s calling for a massive, massive increase in debt spending, even though the crisis of COVID is, for the most part, over. And so this is a time we should actually be reducing the debt, not massively increasing it,” he said. But the Democrats, Moore says, want to borrow and spend forever. And yet, this type of fiscal policy has not resulted in a “happy ending” any place in the world, from Argentina to Greece to Zimbabwe.
“Countries that get in debt crises go through gut-wrenching days of reckoning from this,” he explained. “If we’re going to raise the debt ceiling, we should put in place mandatory reductions in government spending to deal with the debt.”
The author of Crash Landing and The End of Prosperity dismissed the Democrats’ chief argument that not raising the debt ceiling would trigger a financial crisis. “The financial crisis is a result of the debt itself, not the idea of continuing to raise the debt ceiling. And so, if we didn’t raise the debt ceiling, it would just mean, guess what? Congress would have to balance the budget immediately.”
Ultimately, Moore finds the narrative absurd because all Congress needs to do is spend as much as it brings in and balance the budget. He thinks the GOP should refrain from caving to the Democrats on this issue, although he accepted that Republicans are not “fiscal saints” since they are often “as bad as Democrats.” Still, under today’s present political conditions, it is the Democrats who want to raise the borrowing limit by as much as $7 trillion, Moore asserted. “The most fiscally irresponsible thing to do would be to raise the debt ceiling without some kind of measures to bring the debt down,” he noted.
The Fiscal Doomsday Is Nigh?
Treasury Secretary Janet Yellen recently warned that the United States government could reach its debt limit by Dec. 15, two weeks later than previously anticipated. The Bipartisan Policy Center thinks Washington could begin missing payments on its bills on Dec. 21. Pundits project a ripple effect throughout international financial markets if the U.S. starts missing payments to lenders.
But how did the country get into this $28 trillion national debt and $5 trillion deficit mess in the first place? It has been decades of fiscal irresponsibility, imbalanced budgets, and Republicans and Democrats placing trillions of dollars in new spending, whether for a war or a new entitlement scheme, on a credit card. Yet, as Moore discussed, the United States does not possess a blueprint to establish its financial footing.
“It’s just give us more, more … just give us a debt extension. We’re just going to keep doing what we’re doing. No. The American people should say, hell no, we’re not going to allow you to do that. You come up with a plan to control you’re spending, just like a bank would ask a family or an individual,” Moore stated.
~ Read more from Andrew Moran.