Pat Toomey, Pennsylvania's newest senator and the former president of the anti-tax Club for Growth, has a predictably hawkish but particularly ill-conceived idea for focusing Congress's wandering minds on dealing with the federal budget deficit. Writing in the Wall Street Journal, Toomey breezily informs readers that they need not be worried about raising the U.S. debt ceiling, which caps how much the U.S. is able to borrow:
[If] Congress refuses to raise the debt ceiling, the federal government will still have far more than enough money to fully service our debt. Next year, for instance, about 6.5% of all projected federal government expenditures will go to interest on our debt, and tax revenue is projected to cover about 67% of all government expenditures. With roughly 10 times more income than needed to honor our debt obligations, why would we ever default?
In fact, Toomey goes on, the federal government will have enough tax revenue left over after paying its interest costs to fund (a whopping?) two thirds of projected 2011 expenditures.
Toomey is right that the federal government's total revenues of $2.6 trillion scheduled for 2011 are "more" than its interest payments of $225 billion. But what he neglects to point out is that almost $2.1 trillion of this $2.6 trillion is mandatory spending (on programs like Medicare, Medicaid, and Social Security). This means that Toomey's claim that tax revenue exceeds interest payments by a factor of 10 is grossly overstated: After mandatory spending is included, tax revenue exceeds interest by a factor of two. Worse, after interest payments and the fulfillment of mandatory spending obligations, in Toomey's brave new world the federal government would only have about $330 billion to meet its projected $1.4 trillion in outlays for discretionary spending.
At some level, Toomey recognizes this and notes that, unable to borrow, Congress would be forced to enact "severe" and "disruptive" spending cuts. But in the end he concludes that "it would be even worse simply to raise the debt ceiling without regaining control of federal spending."
In other words, Toomey would slash the federal budget by something like $1 trillion without regard to the actual causes of the budget deficit while imposing a massive anti-stimulus on the American economy. (State and local budget cuts, for instance, largely counteracted the American Recovery and Reinvestment Act.) This, in Toomey's world is preferable to raising the debt ceiling. While soberer Republican minds now admit the necessity of raising the debt ceiling, Senator Toomey is that particular kind of deficit hawk that sees budgets as things to slash, not to balance.
This blog post is cross-posted at the Chicago Policy Review blog.