Breaking the Debt Ceiling Cycle

Senator Mike Lee (R-UT)

It's amazing how the "flip-flop" label never seems to stick to Barack Obama, but the debt ceiling debate is where it is most obvious.

While a junior senator from Illinois, he regaled George W. Bush when he proposed hiking the ceiling. He said Bush lacked the leadership to resist spending more. What a laugher! Now as POTUS, he insists that it has to be done or the U.S. faces "catastrophic consequences."

There is at least one U.S. Senator, the junior Senator from Utah, Mike Lee, who is determined to stop the cycle before it gets any worse than it is. Today, he penned an online article for the National Review Online. All it takes is 66 more Senators of like mind and he will veto-proof the proposed Hatch-Lee Balanced Budget Amendment and send it out to the states for ratification.

There's a report I just saw today from the International Monetary Fund in The Wall Street Journal predicting the end of U.S. dominance in the world as early as 2016. The IMF is saying China will overtake the U.S. as the world's number one economy. A forecast is not infallible, but it indicates one thing -- the sharks are circling the blood in the water. When I was in business school the 10-year Treasury note was considered to be the benchmark for risk-free investment. How much longer can that perception last unless the U.S. gets its fiscal house in order?

What's at stake? In just the last three years the national debt load has burgeoned from 64% to 93% of the GDP. Mike Lee and the other 46 Senators in the Senate Republican caucus are absolutely right in their refusal to vote for an increase in the debt limit without insisting on the BBA. So far it looks like he's got 5 Democrats who have agreed to go along, leaving the need for 5 more to sign up for the veto-proof majority. Don't rule it out. There should be no doubt what the people back home are expecting their elected representatives to do, and that's to stop the presses printing more worthless currency and issuing more Treasury notes. Investors in Treasuries are already cooling off, and it won't be long before the perceived adjusted risk will push interest rates for U.S. borrowing higher and higher.

That's why we sent Mike Lee to the Senate in place of Bob Bennett. He won't back down in the face of the forces aligned against him. Forcing the vote on the BBA will finally force Senators to declare themselves in the showdown, and that's not a bad thing for anyone.