Debt ceiling must be raised

The Congress seems to forget what would be the cost of not raising the debt limit.

Let’s remember what happened during the Clinton Administrations. As is well known, and based on a 2010 Congressional Research Service report, the untold impact of the few days of government shutdown included, and was not limited to, curtailment in health and welfare services for military veterans; reduction in funding for the Centers for Disease Control and Prevention for disease surveillance; and new clinical research patients not being accepted at the National Institutes of Health.

Toxic waste clean-up work at 609 sites was halted; closure of 368 National Park sites resulted in the loss of some seven million visitors; 200,000 applications for passports and 20,000 to 30,000 applications for visas by foreigners went unprocessed each day; U.S. tourism and airline industries incurred millions of dollars in losses; and more than 20% of federal contracts, representing $3.7 billion in spending, were affected adversely.

Some 400,000 newly eligible Medicare recipients were delayed in applying for the program. Claims from 112,000 new Social Security applicants were not processed. 212,000 new or replacement Social Security cards were not issued. 360,000 office visits were denied. 800,000 toll-free calls for information were not answered.

Delays occurred in the processing of alcohol, tobacco, firearms, and explosives applications by the Bureau of Alcohol, Tobacco, and Firearms. Work on more than 3,500 bankruptcy cases reportedly was suspended. Cancellation of the recruitment and testing of federal law enforcement officials reportedly occurred, including plans to hire 400 border patrol agents; and delinquent child-support cases were delayed.

Members of Congress must not forget that the debt ceiling is to enable the government to pay what Congress has already approved and to meet its obligations. Whether or not those obligations are subject of negotiation is a totally different game.

Does responsible budgeting have anything to do with one’s ability to borrow and go into debt? A few weeks ago my bank sent me a letter notifying me that my credit card limit was increased by a significant amount. That does not mean I went out on a shopping spree to spend it.

The long-term socio economic effects of not being able to pay our obligations will go much deeper. The U.S. dollar is the most trusted currency in the world market -- do we really want to put a question mark on its ability to function?

Hormozi is an economist and chair of the Public Administration Department at Pace University in New York.

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