Whoever represents the north country in Congress next year could have a difficult decision to make right after his or her term starts: a vote to let the U.S. government continue to borrow money.
What's at stake in the debate over whether to pay off spending from the past? No less than America's economic economic present and future.
The two candidates running for the Republican Party's nomination on June 26 to take on Democratic Rep. William L. Owens in November have differing views on how they'd vote on what used to be a procedural chore. The debt ceiling debate came to the forefront after a debate in 2011 that ended with the country's credit downgraded and its debt approaching $16 trillion. Matthew A. Doheny, an investment fund manager who lives in Watertown, said he'd vote for a hike to the country's borrowing authority only under certain circumstances. Kellie A. Greene, a recent graduate of seminary school who lives in Sackets Harbor, said that there's no way, no how she'd vote to raise the debt ceiling, going against warnings from top officials that economic calamity could result.
No matter their views, all three candidates expressed dismay with the vote coming up in the first place.
“The whole idea of just continuing to raise the debt ceiling just because that's what everyone does, that's not the answer,” Mr. Doheny said. “I don't know what the specific calculus would be, but at a minimum, we have to show substantial progress” in deficit reduction before he'd vote to increase the debt ceiling.
The budget deficit is the annual difference between what the government takes in and what it spends. In the fiscal year that ended on Sept. 30, the budget deficit was $1.3 trillion, according to Bloomberg News.
The debt is essentially the budget deficits that the government has accrued over the years, in both Republican and Democratic control of Washington. It now stands at $15.8 trillion. Congress must give the Treasury Department the authority to keep borrowing money if it hits a certain limit. It could hit that limit — and need a vote — in late 2011 or early 2012.
House Speaker John A. Boehner, R-Ohio, has said that any future vote to increase the debt ceiling has to be accompanied by spending cuts of greater value.
Mr. Doheny said that any debt limit increase would have to come with serious cuts — not just “rounding errors” or decreases in future growth, he said, but real cuts. He supports to an amendment to the Constitution that would require the country to balance its books every year, with some exclusions. Lauded by conservatives, some economists and Mr. Owens have called the proposal fiscally reckless.
“Sometimes , you're going to have to cut some programs,” Mr. Doheny said.
Such quotes could open Mr. Doheny up to criticism, he acknowledges, particularly in a year when the debate about priorities for social programs is in the fore.
“All we can do is put our message out there and make sure people understand the true facts, and that we're in a precarious position. You've got to have some courage, and realize that you've got to do the right thing by the American people,” Mr. Doheny said. “If the programs are belly up, they're not going to work for people.”
Mr. Doheny had previously said that he wouldn't have voted for the 2011 debt ceiling deal because it didn't do enough to get the country's debt under control and he was skeptical of the doomsday scenarios that Treasury officials an other economists had laid out. The August 2011 debt ceiling hike raised the ceiling by more than $2 trillion and slashed federal spending by slightly more. Mr. Owens had voted for that agreement.
Now, Mr. Doheny said that he'd say to someone who was against raising the debt ceiling: “I would say, 'OK, that's a principled stand, but let's talk about what conditions you would ever vote to approve it under.' At some point in time, you have to make sure you have a deal and we as a country don't default on our obligations. Let's figure out a way to do this.”
But Ms. Greene has a one-word answer to that: “No.”
She repeats it when pressed about the consequences of such an action.
Said Timothy F. Geithner in a 2011 letter to congressional leaders: “Even a very short-term or limited default would have catastrophic economic consequences that would last for decades. Failure to increase the limit would be deeply irresponsible.”
Said Ms. Greene: “No.”
She said that to cut the deficit, a balanced budget amendment is a good idea. And she said that before the country starts cutting social welfare programs like food stamps and Social Security — many of which she unflinchingly described as “socialism” — it should work to get people off the rolls and back to work.
Ms. Greene said that the nation's credit was downgraded by the Standard & Poor's rating agency from AAA to AA+ as a result of the nation hiking its debt limit.
That's not the case, according to the rating agency, which cited the “weakened” political institutions in Congress, and the country's growing debt load, for the downgrade.
Mr. Owens, a Democrat of Plattsburgh, is quick to note that he's voted against raising the debt ceiling without cuts to make up for it. He said that if he were to vote for it again, he'd want to see dollar-for-dollar cuts to the deficit.
Unlike Mr. Doheny and Ms. Greene, Mr. Owens thinks that the deficit should be reduced via tax increases along with those spending cuts. He wants to eliminate tax expenditures for oil companies, he said, and to end the Bush-era tax cuts for those who make more than $500,000.
He's also unwilling to commit to cuts that impact programs and people, he said — an unrealistic prospect, some conservatives argue.
“I honestly believe, I look at how the government operates, that we could take out hundreds of billions of dollars through better management of government operations,” he said.