March 30th, 2011, Fairfax, VA—Americans for Limited Government President Bill Wilson today praised Senator Marco Rubio for his “courageous stand” against increasing the $14.294 trillion federal debt ceiling.
Writing for the Wall Street Journal, Senator Rubio outlined his conditions for approving any increase in the ceiling, which will be hit between April 15th and May 31st according to U.S. Treasury estimates.
“I will vote to defeat an increase in the debt limit unless it is the last one we ever authorize and is accompanied by a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced-budget amendment, and reforms to save Social Security, Medicare and Medicaid,” wrote Senator Rubio.
Wilson said Rubio’s conditions were “reasonable.” He explained, “Look, with a national debt that has already soared above $14 trillion that will become larger than the entire economy, soon the debt will become too large to even refinance, let alone ever be repaid.” By 2021, the Office of Management and Budget projects the national debt will soar to over $25 trillion.
“If Senate Republicans cannot use their leverage on the debt ceiling vote to achieve significant concessions, including a Balanced Budget Amendment, to turn the Ship of State around now, will assuredly sink into the Abyss in the not-so-distant future,” Wilson warned.
Currently, the $14.2 trillion national debt already stands at 95.5 percent of the nation’s $14.8 trillion Gross Domestic Product (GDP). Wilson said it was unclear at what percentage of debt-to-GDP that the debt becomes too large to refinance, but that “the warning signs are already there that we cannot even meet our current obligations honestly.”
“Right now, we’re currently meeting our financing obligations by having the Federal Reserve simply print money to buy debt. Anyone ever heard of the Weimar Republic? How’d that work out for them?” Wilson asked.
The Weimar Republic experienced hyperinflation in 1920’s as it attempted to print money to honor its war debts and reparations, destabilizing the country and leading directly to its fall.
Pimco reports that in 2009, 80 percent of treasuries were purchased by the Federal Reserve, and in 2010, it had to buy 70 percent, bringing its current U.S. debt holdings to $1.3 trillion. “The Fed is the largest lender to the U.S. government in the world, more than China or Japan. When the Fed ends QE2 in June, it will likely keep a high water mark of $1.5 trillion in treasuries holdings. That means it will still be buying U.S. debt to aid in refinancing,” Wilson explained.
“Republicans need to do a better job of explaining the fiscal catastrophe we face, and what will happen if the debt is allowed to become too large to even refinance,” Wilson noted.
“If the GOP cannot articulate what will happen to this country, specifically, if Congress fails to act and the debt soars to over $25 trillion in a decade, it will undercut their case for real fiscal reform,” Wilson explained. “Either the debt will become too large to service, or it can continue to grow forever with no danger. If members truly believe that indeed it can get too large, then Senate Republicans’ time to act is now.”
Wilson concluded, “This is not just about getting an up-or-down vote on a Balanced Budget Amendment. This is about actually making certain that the debt ceiling never needs to be increased again. Senator Rubio’s stand is an example all members should emulate. He’s trying to save his country before it’s too late, and we applaud him for that.”
Attachments:
ALG Praises Senate Republicans for Standing Tall on Debt Ceiling and Proposing Balanced Budget Amendment, March 25th, 2011.
Senate Proposal to Balance the Budget, March 25th, 2011 at www.getliberty.org/files/BBA 032511.pdf.
One page fact sheet on Balanced Budget Amendment, March 25th, 2011 at www.getliberty.org/files/BBA One Pager 032511.pdf.
Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at rrast@getliberty.org to arrange an interview with ALG President Bill Wilson.
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