The last few weeks have been filled with debate, accusations, stalemate and false claims about the debt ceiling and how — and whether — it should be raised. As the Aug. 2 default deadline looms, here’s a look at the less-than-factual talking points we’ve addressed.
Republicans constantly repeat that President Obama is demanding a “blank check,” when in fact he’s seeking borrowing authority to pay obligations already approved by Congress — and has said he’d accept deep spending cuts to get approval of that authority. For his part, the president has said raising the debt limit has been “routine” for every president since the 1950s. True, but his request is anything but routine; it would be the largest increase in history, in inflation-adjusted dollars.
Some in the GOP have claimed that the government could continue to make interest payments on the debt and avoid default, even without borrowing any more. But to do that, the government would have to cut all non-interest spending by 34 percent next fiscal year to make ends meet. And if some programs (like Social Security or Medicare) were cut less, others would have to be cut even more deeply.
Read on to the Analysis for more on these claims and others from the debt-limit debate.
Will Congress agree on a way to raise the debt limit before Treasury says the government can’t pay all of its obligations? We only wish we could predict the future. But we can give a rundown of the misleading and false claims that have fueled the long, partisan debate.
What’s a Blank Check?
Republicans, including House Speaker John Boehner and Rep. Michele Bachmann, have said that the president wants “a blank check.” Not true. First, he’s asking to borrow money to pay obligations Congress has already approved. Second, Obama has proposed cutting spending by between $1.5 trillion and $1.7 trillion over 10 years in exchange for increasing the borrowing limit.
Boehner said in his July 25 speech that the president “wants a blank check today.” At a July 28 appearance at the National Press Club, presidential candidate Bachmann said that “President Obama has asked for a $2.4 trillion blank check to get himself through the election in 2012.” The conservative group Crossroads GPS also has made “no more blank checks” the theme of a major ad campaign.
We’re a little perplexed by this popular talking point. A “blank check” would be authorization for unlimited spending. But Obama has been seeking, as Bachmann mentioned, a $2.4 trillion increase in the debt limit, according to various reports — that’s a lot of money, but not a blank check. Plus, as we mentioned, the president has proposed well more than a trillion in spending cuts, according to White House Press Secretary Jay Carney, as well as tax increases to raise revenue. That’s not a $2.4 trillion check with no strings attached. Republicans haven’t agreed with what the president has supported to reduce the deficit, but it’s false to characterize his proposals as a “blank check.”
Not Exactly ‘Routine’
Obama said it has been “routine” for presidents to raise the debt limit in the past. “Since the 1950s, Congress has always passed it, and every president has signed it,” he said July 25. That’s true — in fact, every president since the 1940s except for Harry Truman raised the debt ceiling. But this increase is the largest in history, in inflation-adjusted dollars.
We only found a few occasions that came anywhere close to the $2.4 trillion increase the White House wants this time around. There was a $1.6 trillion increase, in inflation-adjusted dollars, under President George H.W. Bush, and a $1.2 trillion increase, also inflation-adjusted, under President George W. Bush. During President Jimmy Carter’s term, the limit was raised by nearly $1.4 trillion and $1.3 trillion in two separate instances.
34 Percent Spending Cuts
Bachmann claimed that the U.S. wouldn’t default if it didn’t raise the debt limit, “because very simply the Treasury secretary can pay the interest on the debt first and then from there we have to just prioritize our spending.” And Sen. Jim DeMint said that “we’re not talking about draconian types of situations” if the ceiling isn’t increased.
But we did the math, and the government would have to cut spending next fiscal year by 34 percent if the debt limit doesn’t go up, and if interest payments are exempted from those cuts. If popular programs like Medicare and Social Security were also exempted, everything else the government spends money on would have to be cut by 53 percent. It’s a matter of opinion whether such cuts are acceptable, but Bachmann and DeMint suggested these wouldn’t amount to drastic budget slashing.
Social Security and the Deficit
Democratic Rep. Xavier Becerra of California said that he would “fight to take [Social Security] off the table” in budget negotiations, because it “hasn’t contributed 1 cent to the deficit that we face today, nor 1 cent to any of the national debt, the $14.3 trillion.” We take no position on whether Social Security should be cut, but it’s wrong to say it’s not contributing to the deficit.
Social Security benefits paid were more than payroll taxes in 2010, leading to a cash deficit of $49 billion. For 2011, the Social Security and Medicare Boards of Trustees project a $46 billion deficit. And those figures don’t include the billions more the government will have to borrow to cover that reduction in payroll taxes that was in last year’s deal to extend the Bush tax cuts.
Twists and Turns on the Debt July 12
First Time Flirting with Default?
Obama’s communications director, Dan Pfeiffer, said the country has “never been in a situation where we have been in danger of defaulting on our obligations.” Actually, we have.
The U.S. was in danger of default three previous times under President George W. Bush, according to a Congressional Research Service report. Treasury used accounting measures to avoid default when the government was just millions away from hitting the debt limit in 2002 and 2003. In 2002, Treasury Secretary Paul O’Neill threatened to resign, telling Congress: “You’re going to have to raise the debt ceiling or you’re going to have to find a new Treasury secretary, because I’m not going to go to jail because you failed to act and I have to take some extraordinary action that is unconstitutional. I’m not going to do that.”
The country also came close to defaulting in 1995-1996 under President Bill Clinton.
Default ‘Danger’ Revisited July 28
Falsely Accusing the President
Speaker Boehner said Obama is against “fundamental changes to our entitlement programs.” But Obama has supported raising the eligibility age for Medicare, means-testing benefits and decreasing future Social Security payments, and he says he has proposed cuts of $650 billion over a decade. Whether those are “fundamental changes” is opinion, but it’s false to imply that Obama isn’t willing to cut Medicare, Medicaid and Social Security.
Senate Minority Leader Mitch McConnell claimed that Obama “rejected the only plan the Democrats have proposed” to increase the debt limit, a reference to Senate Majority Leader Harry Reid’s plan. But that’s not true. In fact, White House Press Secretary Carney issued a statement that said the Senate Democrats’ proposal was “a responsible compromise” that both parties should support. And in his speech to the nation July 25, the president said: “The Senate has introduced a plan to avoid default, which makes a down payment on deficit reduction and ensures that we don’t have to go through this again in six months. I think that’s a much better approach, although serious deficit reduction would still require us to tackle the tough challenges of entitlement and tax reform.”
McConnell’s spokesman told us that since the Reid plan didn’t raise taxes and Obama has called for doing so, he must not support Reid’s plan. But that reasoning is completely contradicted by Obama’s explicit support for the Reid proposal.
Won’t Get Much from Oil Companies
Obama said Republicans would rather cut Medicare than get rid of tax breaks for oil companies and corporate jet owners. But voters should know that the revenue from raising those taxes wouldn’t even amount to 1 percent of the deficit.
The president, in his July 25 speech, said that “most Americans … don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask a corporate jet owner or the oil companies to give up tax breaks that other companies don’t get.” But most Americans may not know that those popular-sounding revenue raisers would only bring in about $39 billion over 10 years. That’s less than one-half of 1 percent of the $9.5 trillion projected deficit over those 10 years. And it’s also a small fraction of the $1.2 trillion in tax revenue the president reportedly has been seeking.
Reagan Wasn’t So Reluctant
In a campaign ad, Texas Rep. Ron Paul — no fan of raising the debt limit — falsely suggested that President Ronald Reagan was reluctant to increase the debt ceiling in 1987. But Reagan actually said he had “no objection whatsoever” to doing so.
Paul’s ad quoted a New York Times article as saying, “‘Mr. Reagan reluctantly agreed Saturday to sign the legislation, which also raises the government debt ceiling.” … (The emphasis was included in the ad graphics.)
But Reagan’s reluctancy in signing the bill had to with his objection to spending cuts that would be triggered under certain circumstances, cuts that he thought would hurt national defense. As we mentioned, Reagan didn’t object to raising the debt limit. In fact, he signed legislation to do so 17 times during his eight years in office.
– by Lori Robertson
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