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The United States is accumulating debt at a rate that will force Congress to decide this summer whether to raise
Download Audio as MP3 the legal limit on our national debt. As the US Treasury approaches the point where it can no longer issue additional debt, an important debate over how to rein in deficit spending is brewing in Congress. While US Treasury Secretary Timothy Geithner announced that he will take "extraordinary measures" to delay reaching the debt limit for as long as possible, these extra few months will not correct the country's unsustainable fiscal path. At the same time, Senator Pat Toomey (R-PA) and twenty-two cosponsors in the Senate, along with Representative Tom McClintock (R-CA) and ninety cosponsors in the House, have introduced legislation that would require the Treasury Department to make interest payments on the federal debt first priority if the limit is reached.
At this AEI event, Senator Toomey will discuss this legislative proposal and other issues surrounding the forthcoming debt-limit debate in Congress, including how to bring about more comprehensive solutions to the country's fiscal problems and put the United States on the path to prosperity.
SENATOR PAT TOOMEY (R-PA)
Question and Answer
WASHINGTON, MAY 18, 2011--Senator Pat Toomey (R-PA) said today at AEI that the White House initially urged Congress to "increase the debt limit and stop whining," and although it has since warmed to the idea of spending cuts, an "intervention" is needed to guide these cuts and stop tax hikes. "I don't question the sincerity of the administration to make changes on this front," the former Club for Growth president said, but the White House is "populated by Keynesians." Still, Toomey stressed, as the danger of imminent default can be averted by prioritizing debt payments, it is "irresponsible of the administration to even implicitly threaten the possibility of default." The senator said he would vote to increase the debt limit, which was reached Monday, if it came with the proper reforms on spending cuts. "Given the warnings and implied threats from the administration" on catastrophic default, Toomey introduced the Full Faith and Credit Act in January, a short bill codifying that the authority of the Treasury "to pay with legal tender the principal and interest on debt held by the public shall take priority over all other obligations incurred by the Government of the United States" once the statutory debt limit is reached. Toomey also introduced a budget plan in the Senate that would balance the books within a decade, but he conceded that the legislation would not make it through the upper chamber. He praised the proposal of House Budget Committee chairman Paul Ryan (R-WI), saying he fully supports the effort. "I think it's visionary," Toomey said. "I will vote for it when it comes over to the Senate." That includes backing the controversial Medicare reform in Ryan's plan. "This is the only idea I've seen out there in the political discourse that actually does save Medicare," he said. "It's okay not to agree with everything in this plan, but it's not okay to compare it to the status quo because the status quo is not sustainable." He also praised House Speaker John Boehner (R-OH) for pulling spending cuts out of the continuing-resolution debate, saying Boehner "did the best he could" in negotiations that Toomey likened to the parable of a sheep and two wolves--President Barack Obama and Senate Majority Leader Harry Reid (D-NV)--"negotiating over what to have for dinner." Toomey argued that the administration has the resources it needs to avoid defaulting on the national debt, and "postponements" of government obligations such as furloughing employees "are not the same things as failure to reach obligation on our debts." As there are readily available solutions, the senator said, the debt-limit crisis is "not a good reason for the administration to add another reason for the markets to be concerned." Toomey said, "It's not too late to right this ship, but the window of opportunity is closing. I believe we can still have a great economic recovery."
Arthur C. Brooks is the president of AEI. Until January 1, 2009, he was the Louis A. Bantle Professor of Business and Government Policy at Syracuse University. He is the author of eight books and many articles on topics ranging from the economics of the arts to applied mathematics. His most recent books include The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America's Future (Basic Books, May 2010), Gross National Happiness (Basic Books, 2008), Social Entrepreneurship (Prentice-Hall, 2008), and Who Really Cares (Basic Books, 2006). Before pursuing his work in public policy, Mr. Brooks spent twelve years as a professional French hornist with the City Orchestra of Barcelona and other ensembles.
Senator Pat Toomey is serving his first term as the junior senator from Pennsylvania. From 1999 to 2005, he represented Pennsylvania's fifteenth congressional district in the House of Representatives. In fulfillment of his three-term pledge, Senator Toomey announced his retirement from the House of Representatives in 2004 and launched a close but ultimately unsuccessful run for the Senate. In 2005, he became the president of the limited-government, free-enterprise organization Club for Growth. Senator Toomey serves on the Budget; Banking; Commerce, Science, and Transportation; and Joint Economic Committees.
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