There has been significant discussion of the possibility that the nation could default as the federal government reached its $31.4 trillion debt ceiling.
The Biden administration and most Democrats are calling for the debt limit to be increased while a number of prominent Republicans want to ensure there are significant budget cuts in place before agreeing to such a concession.
Although some economists warn that a default might cost millions of jobs and trillions of dollars in wealth for Americans, U.S. Sen. Rand Paul (R-KY) dismissed such concerns as unfounded.
“They’re completely dishonest and worry the markets and are bad for the country and bad for all of us,” he said of dire warnings about a default, adding: “There is absolutely no reason for us to default.”
During a recent Fox Business Network interview, the Kentucky Republican explained that the nation’s interest payments total around $400 billion compared to the roughly $5 trillion that the federal government makes.
“So we have plenty of money to pay our interest payments,” Paul added. “We have plenty of money to pay our soldiers, to pay our Social Security, and to pay for Medicare.”
He went on to echo the advice of others in his party, elaborating on his plan to balance the budget.
“We’re about a third overdrawn, so there’s an enormous amount of government we’d have to trim,” he said. “Now, if you do it over a five-year period, what I proposed recently, you bring the baseline down, you cut $100 billion immediately, and then you freeze spending for about four or five years.”
Following that plan, Paul advised, would allow the nation to “achieve balance through growth.”
Many on the left are not interested in considering such a plan, however, with the White House economic adviser Jared Bernstein claiming that the GOP is trying to “hold the economy hostage” with its demands for budget cuts.
Our nation is now $31 TRILLION dollars in debt. We need to use every lever we have to stop this out-of-control spending and debt! pic.twitter.com/JeTwaSvbZD
— Senator Ted Cruz (@SenTedCruz) January 25, 2023
Treasury Secretary Janet Yellen sounded the alarm in a letter to Congress, claiming: “Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”
For his part, House Speaker Kevin McCarthy (R-CA) is calling for a comprehensive approach to the budget that involves input from both parties.
“Let’s sit down together,” he said. “Let’s look at the places that we can change our behavior. Why would we sit back and be so arrogant to say, ‘No, there’s no waste in government?’”
