When Congress and the president pass laws that set up programs and services – from Social Security to student loans to national parks to Medicare – they have a legal obligation to pay for them. That means paying with cash on hand – and, if cash is short, by borrowing.
Not paying would be deeply irresponsible, hurting the nation's reputation and creditworthiness.
Yet that is what majority House Republicans are threatening in a risky game of brinksmanship. If the president and Democratic majority in the Senate don't accede to their demands on a variety of issues, they have said they will not increase the nation's debt limit. The U.S. Treasury would not be able to borrow to pay for obligations already made by Congress and the president.
Worse, Rep. Tom McClintock and others naively seem to believe that the United States could preserve its reputation and creditworthiness simply by requiring principal and interest payments as a priority "over all other obligations (H.R. 421). Either they do not fully understand the consequences – or they would renege on various commitments.
Donald Marron, head of the Tax Policy Center, explains the dynamic. Our monthly bills are about $300 billion; revenue, $180 billion. If we reach the current debt limit (projected to come by May 16), the government could pay only 60 cents of every dollar it should be paying.
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