I must vehemently concur with President Obama (D-IL) and Governor Engler (R-MI) regarding intolerable brinkmanship with the full faith and credit of the US. The debt limit does not restrain Congress’ ability to spend but the Treasury’s ability to pay obligations already incurred. If Congress does not want to borrow more, then Congress should not enact the appropriations necessitating it. Of course, that would entail draconian discretionary spending cuts and caps (e.g. Budget Control Act of 2011) because mandatory spending (Social Security, Medicare and Medicaid) has already been enacted.
Let me make one last point and then I’ll start taking questions. There had been reports – and these are not necessarily confirmed, and maybe some of you have more insight than I do on this – that perhaps the Republicans go ahead and let the middle-class tax cuts get extended, the upper-income tax cuts go up, otherwise we don’t get a deal, and next year we come back and the thinking is Republicans will have more leverage because there will be another vote on the debt ceiling and we will try to extract more concessions with a stronger hand on the debt ceiling.
I have to just tell you that is a bad strategy for America. It is a bad strategy for our businesses. And it is not a game that I will play.
Most of you were involved in discussions and watched the catastrophe that happened in August of 2011. Everybody here is concerned about uncertainty; there’s no uncertainty like the prospect that the United States of America, the largest economy that holds the world’s reserve currency potentially defaults on its debts; that we give up the basic notion that the United States stands behind its obligations.
And we can’t afford to go there again. And this isn’t just my opinion; it’s the opinion of most of the folks in this room. So when I hear some on the other side suggesting that to resolve the possibility of a perpetual or a quarterly debt ceiling crisis that there is a price to pay – well, the price is paid by the American people and your businesses and the economic environment worldwide. And we should not accept going through that.
John Engler, who is, I think – he and I philosophically don’t agree on much – (laughter) – no, I’m just being honest about John, and he’s a great politician but he – he originally comes from the other party – but John is exactly right when he says the only thing that the debt ceiling is good for as a weapon is just to destroy your credit rating.
So I want to send a very clear message to people here: We are not going to play that game next year. If Congress in any way suggests that they’re going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation – which, by the way, we had never done in our history until we did it last year – I will not play that game. Because we’ve got to break that habit before it starts.
cf. Letter on Debt Limit to Congressional Leadership | Business Roundtable
U.S. GAO - Debt Limit: Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market
U.S. GAO - Debt Limit: Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs