By Teresa Welsh |
Benjamin Franklin once advised, "When you run in debt; you give to another power over your liberty."
Washington is in the midst of an epic political battle that will determine America's fate for decades to come. The fight is between those who are financially responsible and have the understanding and backbone needed to prevent an American bankruptcy, and those who do not.
America's economy suffers from a $17 trillion debt and five years of deficits averaging more than $1 trillion per year. Both are the worst in history. During 2009-2013, the federal government borrowed 30 percent of what it spent. How many families and businesses can avoid bankruptcy if, year after year, 30 percent of their spending is borrowed money? Not many, and not for long. Yet that is America.
Economic principles don't care if you are a family, a business or a country. If you borrow more than you can pay back, you go insolvent or bankrupt.
Warning signs are plentiful. President Obama's Comptroller General Eugene Louis Dodaro warns America's finances are on an "unsustainable path." Chairman of the Joint Chiefs of Staff Admiral Michael Mullen warns that our greatest national security threat is not Iran, al-Qaida, China or Russia, it is our debt. Debt and sequestration severely damage America's defense capabilities and risk national security.
Detroit and Stockton's bankruptcies mean retirees may lose their pensions. Greece's unemployment rate is 27 percent - worse than any year in America's Great Depression. Cyprus confiscated up to 60 percent of its citizens' checking and savings accounts.
Not raising the debt ceiling poses significant economic risks. Why, then, fight over it? Because the debt ceiling and spending bills are the only leverages available to cajole financially irresponsible Washington politicians into supporting policies that prevent an American bankruptcy debacle.
Washington should raise the debt ceiling while simultaneously addressing out-of-control spending and deficits that cause the problem.
Debt ceiling risks, as bad as they are, pale in comparison to the economic devastation of a bankruptcy that could leave America without money to pay for a military, FBI, Social Security, Medicaid, Medicare, NASA or any number of other federal programs.
It is irresponsible to kick the can down the road yet again, thereby forcing America to face a bigger financial challenge after we are weakened by trillions more in debt. The longer we wait, the greater the risk America is beyond the point of no return, at which point bankruptcy is inevitable.
President George Washington once advised Congress that "no pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious." George Washington gave prudent advice in 1793. It is prudent advice today. Congress and the White House must cut spending and balance the budget before America's debt burden is so great we cannot recover.
Failure risks a bankruptcy that can destroy the America it took our ancestors centuries to build. Ours is a fight America must win.
About Mo Brooks Republican Representative from Alabama
Michael Madowitz Economist at the Center for American Progress
Douglas Holtz-Eakin President of the American Action Forum
Dean Baker Codirector of the Center for Economic and Policy Research
David Schweikert Republican Representative from Arizona