Let’s get past Obama’s scare tac­tics on the debt

Tim Paw­lenty, a likely GOP can­di­date in 2012, of­fers his so­lu­tion to our fis­cal cri­sis

The Washington Post Sunday - - OUTLOOK - Tim Paw­lenty served two terms as gover­nor of Min­nesota, from 2003 to 2010. He is the author of “Courage to Stand: An Amer­i­can Story.”

Five years ago, a fresh­man sen­a­tor made a case against al­low­ing the fed­eral govern­ment to go deeper into debt.

“ The fact that we are here to­day to de­bate rais­ing Amer­ica’s debt limit is a sign of lead­er­ship fail­ure,” he said. “It is a sign that the U.S. govern­ment can’t pay its own bills.”

That was Sen. Barack Obama in 2006, when he stri­dently voted against rais­ing the fed­eral debt limit. Things have changed a lot since then — for starters, our debt has in­creased by al­most $6 tril­lion — but as the say­ing goes, some­times where you stand de­pends on where you sit.

As pres­i­dent, Obama now em­bod­ies the “ lead­er­ship fail­ure” he once de­cried. Af­ter grow­ing the debt by $3.4 tril­lion since mov­ing into the Oval Of­fice, his ad­min­is­tra­tion now says we ab­so­lutely must raise the debt ceil­ing or risk “cat­a­strophic” eco­nomic con­se­quences.

But the Obama ad­min­is­tra­tion is of­fer­ing a false choice be­tween more debt and de­fault. The chaos that un­folded when Greece risked de­fault last sum­mer can and should be avoided here with­out rais­ing the debt limit this spring. There is a bet­ter op­tion avail­able.

Con­trary to what many peo­ple are say­ing, when the na­tional debt ap­proaches the limit set by Congress, as it could by March, it will not mean that the fed­eral govern­ment sud­denly won’t be able to pay its bills. In fact, the govern­ment has enough pro­jected cash flow and other re­sources to pay its out­side debt obli­ga­tions on time and in full for much longer — at least sev­eral more months — than the ad­min­is­tra­tion has been let­ting on.

De­fault on such debt need not oc­cur if Congress passes and the pres­i­dent signs a law di­rect­ing the Trea­sury to se­quence our spend­ing and pri­or­i­tize the pay­ment of in­ter­est and prin­ci­pal on the debt, as well as other crit­i­cal

bud­get items such as the mil­i­tary.

Such a mea­sure would mark only the be­gin­ning of the de­bate over our na­tional debt limit. Sim­ply guar­an­tee­ing that the govern­ment will pay its out­side debts would not solve our fis­cal cri­sis. But it would prop­erly frame our fis­cal chal­lenge — as a choice not be­tween more debt and de­fault, but be­tween more debt and re­spon­si­ble spend­ing re­duc­tions that would en­sure we don’t trig­ger a de­fault. And by sig­nal­ing to world mar­kets that the United States is se­ri­ous about its fis­cal sit­u­a­tion, it would buy us time to re­struc­ture en­ti­tle­ment spend­ing and end the Ponzi scheme be­ing run by the fed­eral govern­ment.

Washington in­sid­ers act as if this is im­pos­si­ble, but or­di­nary cit­i­zens who man­age their per­sonal fi­nances ev­ery day know bet­ter. Amer­i­cans have credit cards, and many have run up too much debt on them. But when in­di­vid­u­als reach their credit limit, the bank doesn’t just raise it. Congress, un­for­tu­nately, does.

When I was elected gover­nor in 2002, Min­nesota faced a his­toric bud­get deficit. Rec­og­niz­ing that taxes were too high al­ready, we used pri­or­ity bud­get­ing to cut spend­ing. From 1960 to 2002, state spend­ing in Min­nesota had in­creased by an av­er­age of 21 per­cent ev­ery two years. Dur­ing my two terms in of­fice, we low­ered the growth of spend­ing to about 1.5 per­cent per year.

It wasn’t easy. We had govern­ment shut­downs, spe­cial leg­isla­tive ses­sions, nu­mer­ous law­suits and one of the long­est tran­sit strikes in Amer­i­can his­tory. It was a bat­tle, but we changed the state’s spend­ing pat­tern dra­mat­i­cally.

Set­ting aside the false threat of de­fault­ing on our debt pay­ments, the up­com­ing de­bate over rais­ing the debt limit is a sim­i­lar moment for Washington. The so­lu­tions are ob­vi­ous: En­ti­tle­ment pro­grams need to be dra­mat­i­cally re­formed. Given no other choice, I be­lieve a bi­par­ti­san con­sen­sus could be cre­ated around ideas such as means-test­ing the cost-of-liv­ing in­crease in So­cial Se­cu­rity ben­e­fits, cap­ping and block-grant­ing Med­i­caid pay­ments to states, and mov­ing Medi­care to a more ef­fi­cient, pay-for-per­for­mance model.

Re­fus­ing to raise the debt limit would force hard choices about dis­cre­tionary spend­ing, too. Washington should do what we did to re­duce spend­ing in Min­nesota: Set some pri­or­i­ties, and then cut fund­ing for just about ev­ery­thing else. While na­tional de­fense is ob­vi­ously a top pri­or­ity, even the Pen­tagon needs to pur­sue greater ef­fi­cien­cies by us­ing pri­or­ity bud­get­ing to en­sure that our mil­i­tary re­mains the most ca­pa­ble and ef­fec­tive in a dan­ger­ous world. Any sav­ings that are achieved from belt-tight­en­ing at the Pen­tagon should be rein­vested to­ward the most

Last year’s midterm elec­tions demon­strated that the pub­lic is ea­ger to cut the deficit. We can suc­ceed only if law­mak­ers are given no other choice.

im­por­tant de­fense needs, not redi­rected to pay for run­away do­mes­tic spend­ing.

Last year’s midterm elec­tions demon­strated that the pub­lic is ea­ger to cut the deficit. But ev­ery pro­gram has an in­ter­est group that will fight hard to de­fend it. We can suc­ceed only if law­mak­ers are given no other choice. That’s why it is so im­por­tant that we use the debt limit de­bate to force hard choices now.

We may have fol­lowed Greece into democ­racy, but that does not mean we should or will fol­low the Greeks to the brink of bank­ruptcy.

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