Not a Penny More

"No more!"
--Rick Latimer (The Principal)

Similar to our commentary here, yesterday the judge was also on the case of the intellectual dishonesty that spewed from the president's Wed press conference. At ground zero is the president's claim, echoed by other Democrats and even some Republicans, that not raising the debt ceiling would mean default.

The judge says it more eloquently than I. "This is plainly a bankrupt and unconstitutional way of thinking that cannot hold up to rational interrogation."

Stated differently, and in my words, the president's claim is utter nonsense.

Not raising the debt ceiling would force the federal government to re-prioritize its resources so that debt payments can come out of current inflows. This is precisely what needs to happen.

In 2010, interest expense amounted to about $200 billion, or about 6% of outlays. In 2011, interest expense is forecast to be $207 billion--which if we stuck to 2010 receipts of nearly $2.1 trillion amounts to about 10% of inflows.

By not raising the borrowing limit, government would be forced to hack about $1.5 trillion (nearly 40%) from the budget. This would move us in the right direction.

All that has to occur to put this in motion is for House Republicans to stand fast and say 'no' to the debt ceiling increase. My fear is that they will cave. If they do, then we may lose the last opportunity to turn things around in a proactive manner.

As the judge notes, this summer we can tell the government 'not a penny more.'