The United States will hit the debt ceiling on Tuesday, August 2. Since 1960, the Congress has raised the debt ceiling 78 times – under both Republican and Democratic administrations. That’s because a failure to do so would have jeopardized the “full faith and credit” of our nation.
It’s important to understand that raising the debt ceiling has nothing to do with increased spending. It simply means paying our current bills. We have never defaulted on our debt and economists agree that to do so would have a catastrophic impact on our fragile economy.
According to the Bipartisan Policy Center, if we fail to raise the debt ceiling by August 2 we will have bills totaling $306 billion next month, but only $172 billion in revenues to pay those bills.
Under those circumstances, if we met our debt obligations, paid Social Security, Medicare/Medicaid and our troops there would be no money left to pay for anything else, including student loans, air traffic controllers, food inspectors, border patrol guards and millions of federal employees. A failure to pay our bills would risk the financial security of every American, including seniors, military families, retirees, and veterans.
It also would have other far-reaching consequences. It would mean downgrading the U.S. currency, putting at risk the global supremacy of the U.S. dollar; it would increase interest rates on all loans, including home mortgages and credit cards; it would result in a sharp decline of the stock market, reducing the retirement security of millions of Americans; and it would push us back into a full-scale recession, possibly costing millions of Americans their jobs.
A default is not an option because it’s too great a risk to our nation. Our deficits are not sustainable, but the responsible course of action is to increase the debt ceiling and develop a credible, balanced plan that will enable us to manage our deficits.
We have a historic opportunity to agree to what has been called a “grand” deficit reduction plan. I am a member of the Senate Budget Committee and Democrats have crafted such a plan. It includes more deficit reduction than the budget passed by the Republican-controlled House of Representatives because it puts all elements of our budget on the table, including defense spending, revenues and entitlements. But it also protects important investments that will ensure our nation’s future growth.
Too many members of the House have said that a default is an acceptable option. House Majority Leader Eric Cantor (R-VA) recently said there can be no “compromise.” I do not agree. The U.S. Constitution is structured in such a way that our nation’s governance is based on compromise. I believe we can pass a “grand” budget deal, but it must involve compromise on the part of both Republicans and Democrats, members of both parties who want to put our nation first.
This is our moment in history. It’s time for both Republicans and Democrats to agree on a balanced and credible, bipartisan budget plan that will get our deficit under control.