In today's Wall Street Journal, Sen. Pat Toomey of Pennsylvania, the man whose reputation as a friend of the Republic would remain secure even if he never did anything beyond replacing Sen. Arlen Specter, publishes a forthright, fascinating and--to my mind--utterly compelling article on the debt ceiling. His argument, in brief:
Point one: Let's all stipulate, right here at the outset, that it would be very, very bad for the federal government to welsh on its debts.
Under no circumstances is it acceptable for the U.S. to default on its debt. Not only are we morally obligated to honor our debts, but we benefit greatly from the nearly universal conviction that those who lend to us will always be repaid, on time and in full.
Point two: Unless we raise the debt ceiling, many now argue, default will become inevitable. To which Sen. Toomey responds, Aw, hooey.
Next year...about 6.5% of all projected federal government expenditures will go to interest on our debt, and tax revenue is projected to cover about 67% of all government expenditures. With roughly 10 times more income than needed to honor our debt obligations, why would we ever default?
Point three? Well, point three is where things get especially interesting.
If we do not raise [the debt ceiling], the government's tax revenue will enable us to fund roughly two-thirds of projected expenditures, including interest payments. Without the ability to borrow the other third, spending cuts would be sudden and severe....But it would be even worse simply to raise the debt ceiling without regaining control of federal spending....The vote on whether to raise the debt ceiling—and, if so, by how much—is our best opportunity to insist that any increase in our nation's debt be coupled with concrete steps toward fiscal sanity.
Pat Toomey means business. And he's not about to permit himself--or his fellow Republicans--to be panicked by a bogus threat of default.
Oh, but this is glorious.