WASHINGTON — With the Treasury Secretary again
forced to take extraordinary measures to avoid breaching the $5.95 trillion
statutory debt limit, The Concord Coalition said today that Congress should
prevent an unnecessary debt crisis — now estimated to hit in June — by swiftly
approving an increase in the debt limit. Concord recommended that such
legislation should be advanced on its own without awaiting agreement on other
WASHINGTON — With the Treasury Secretary again
forced to take extraordinary measures to avoid breaching the $5.95 trillion
statutory debt limit, The Concord Coalition said today that Congress should
prevent an unnecessary debt crisis — now estimated to hit in June — by swiftly
approving an increase in the debt limit. Concord recommended that such
legislation should be advanced on its own without awaiting agreement on other
contentious issues, such as the FY2002 supplemental spending bill, and that the
amount of increase be substantially less than the full $750 billion requested by
the Bush Administration. An increase of roughly $250 billion would be sufficient
for now without providing a blank check.
“The bottom line is that the debt limit must be
increased quickly, even if voting to do so causes embarrassment for politicians
who last year boasted that they would eliminate the publicly held debt by the
end of the decade. The desire to avoid embarrassment does not justify playing a
game of political chicken with the nation’s creditworthiness at stake,” said
Robert Bixby, Executive Director of The Concord Coalition.
Because fiscal policy in the post-surplus,
post-September 11 environment still is quite uncertain, The Concord Coalition
emphasized that no large scale increase in the debt limit should be approved
until Congress and the President agree on a new plan to balance the budget again
without using the Social Security surplus. Such a plan should use prudent
economic and fiscal assumptions. It should also include an extension of the
discretionary spending caps and the pay-as-you-go provision for tax cuts and
entitlement spending that expire this year. The rationale for this trade-off is
clear: greater flexibility to increase the debt is allowed, but only within the
context of a fiscally responsible policy goal.
“Concord shares the concerns of those who are
reluctant to approve a debt limit increase in the absence of a broader balanced
budget agreement. But this concern is better dealt with by immediately approving
a smaller increase than the Administration requested, not by threatening a
damaging and totally unnecessary default. It should also be noted that dubious
policy decisions, including last year’s 10-year series of escalating tax cuts,
had much less to do with the recent surge in borrowing needs than did a slumping
economy and its effects on the federal budget. Moreover, the majority of the
debt increase over the past year is attributable to intergovernmental trust fund
debt, which would have grown by about the same amount regardless of fiscal
policy decisions. The unique circumstances of the past year justify a modest,
immediate debt limit increase even as politicians engage in a needed debate over
fiscal goals and policies,” Bixby said.
The Concord Coalition is a nonpartisan, grass
roots organization dedicated to balanced federal budgets and generationally
responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob
Kerrey (D-NE) serve as Concord’s co-chairs and former Secretary of Commerce
Peter Peterson serves as president.
