Response from Senator Menendez
Dear Mr. Reinke:
Thank you for contacting me to express your concerns regarding the federal government’s debt limit. I appreciate hearing from you on this critical issue and having the opportunity to respond.
The national debt is the total amount of money borrowed in order to fulfill the requirements imposed by current and past Congresses and Presidents, during periods when both Republicans and Democrats were in control of different branches of government. These are legal obligations, and the responsibility for meeting the Nation’s obligations must be shared by both parties.
Raising the debt limit is necessary to allow the Treasury to meet obligations of the United States that have been established, authorized, and appropriated by Congress. Also, it is important to note that increasing the debt limit does not authorize a single penny of new spending— it only allows the government to pay bills already incurred.
If Congress fails to act before the debt limit is reached, the Treasury would default on the legal obligations of the United States, causing far more devastating damage to the economy than the financial crisis of 2008 and 2009. A few consequences of defaulting could be a substantial tax increase on all Americans, and the potential loss of millions of American jobs.
The Secretary of the Treasury, Timothy Geithner, said that because Treasuries represent the benchmark borrowing rate for all other sectors, default would raise all borrowing costs. Interest rates for state and local government, corporate and consumer borrowing, including home mortgage interest, would all rise sharply. Equity prices and home values would decline, reducing retirement savings and hurting the economic security of all Americans, leading to reductions in spending and investment, which would cause business failures on a significant scale. Additionally, payments on a broad range of benefits and other U.S. obligations would be discontinued, limited or adversely affected, such as military salaries and retirement benefits; Social Security and Medicare benefits; veterans benefits; and unemployment benefits to states.
I share your desire to see our country headed down a more sustainable fiscal path, and I am committed to making the tough choices that will reduce the gap between our commitments and our resources. I believe that reducing our deficit will require a balanced approach to spending cuts; reforming tax policies, such as closing corporate tax breaks that allow oil companies to avoid paying billions of dollars in taxes; and controlling health care costs. As your federal representative, I take very seriously my responsibility to work with colleagues on both sides of the aisle to enact sound fiscal policy that that invests in our future and protects the economic security our nation’s children.
Again, thank you for taking the time to express your thoughts on this important matter. Rest assured that I will keep your views in mind. I invite you to visit my website (http://menendez.senate.gov) to learn more about how I am standing up for New Jersey families in the United States Senate.
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Yea, I say don’t raise the “debt ceiling” and I get back “default”. No, not default. You have to cut the spending! Argh!
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