In a letter sent to Members of Congress yesterday Treasury Secretary Tim Geithner revealed once again that the administration’s threat of government default on the debt is proving more empty by the day. The letter, the third evaluation this year by Treasury of the country’s debt, Secretary Geithner said the country’s borrowing authority will not expire until August 2, almost a full month later than his previous prediction. All but erasing the President’s only leverage in the debate – the looming exigency of a default – the Secretary is evidently switching tactics, alleging instead that:
I want to emphasize that, contrary to a common misperception, the debt limit has never served as a constraint on future spending, nor would refusing to increase the debt limit reduce the obligations the country has already incurred.
There are two ways to interpret this statement. The first is to believe the Secretary is claiming the debt limit has never been raised in exchange for cohesive reform, as both Republicans and Democrats in Congress are currently requesting. This is simply untrue. The Congressional Review Act, which the administration has been so keen on flouting, was a product of the 1996 debt limit debate; the same is true for the Gramm-Rudman-Hollings budget reforms in 1985 and their subsequent revision in the debt limit debate of 1987. It is anachronistic, not to mention irresponsible, to consider a vote on raising the debt ceiling without first addressing the government spending driving the debt.
The second interpretation of this statement is that the cabinet member charged with safeguarding the country’s finances doesn’t believe the debt limit serves as an actual limitation on the country’s debt. Small wonder, then, the President keeps projecting economic catastrophe ahead of the debt limit debate – a serious debate on the debt limit is sure to bring the façade that his spending spree has no consequences to an end.