Lead, Mr. President, Lead.

07/29/2011 02:09 pm ET | Updated Sep 28, 2011
  • Pat Choate Economist, author and public policy commentator

The federal debt "crisis" is undermining the stability of the U.S. economy and must be ended quickly.

Thus, the president needs to immediately exercise his executive responsibilities under the 14th Amendment to the Constitution, which provides,

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

All of this existing public debt -- the entire $14 trillion plus -- was authorized by vote of Congress -- that is, "authorized by law." To repeat the point: as the 14th Amendment makes clear, all this U.S. government debt is valid and the federal government is constitutionally obligated to pay all of it.

If the Congress chooses not to increase the federal debt, which is within their Constitutional power, then it needs to immediately cut spending to the level of revenues collected and/or increase revenues. But so long as expenditures are not paid for by appropriations, the president is obligated to issue federal bonds to pay the difference -- that is, increase the national debt.

Again, what Congress and the president cannot do is default on this national debt. We must pay for what we spent -- past, present and future. That is the Constitution speaking loudly and clearly.

A major problem in all this is the internal politics of the House and Senate Republicans. Today, 236 Republican Members of the House and 41 Republican Members of the Senate have signed a pledge that they will not increase taxes or cut tax loopholes. Only six House members and seven senators have not signed and thus are free to act as they decide what is best for the nation.

President Obama naively keeps trying to negotiate with the GOP leadership on some "grand strategy" that involves cutting social expenditures and raising revenues. What he does not seem to grasp is that the Congressional Republicans cannot and will not vote to increase revenues because they have signed the Grover Norquist "no-new-tax" pledge. I cannot locate a single instance of a Congressional Republican voting for a tax increase since 1992.

Until voters replace these "Pledged Republicans" with people whose only loyalty is to the Constitution, these "Pledgees" can only reduce the debt or the deficit by cutting federal spending, regardless of how essential it may be.

The programs the GOP wants to cut most, of course, are Social Security and Medicare. Yet, both these insurance programs are self-financing. Because prior Congresses and presidents structured these programs so they collected more premiums than were expended, each program has a large surplus. Those annual surpluses, under the unified federal budgetary accounting, actually reduce the annual federal deficit.

A seemingly forgotten fact is that until the late 1960s, the Social Security and Medicare trust funds were stand alone operations, but President Johnson persuaded Congress to make them part of the unified federal budget so that their surpluses could hide the deficit he was creating with the financing of the Vietnam war.

Social Security can continue to pay full benefits to all recipients, existing and new, until the year 2035. Medicare's surplus will allow full payment until the year 2024. Then, these funds will be pay-as-they-go, which would provide about 70 percent of current benefits.

Thus, the programs that President Obama and the Republicans want to cut are in fiscal surplus. If they want to cut programs that are increasing the federal deficit, then defense expenditures and tax expenditures (loopholes) are what require their attention.

Longer-term, two actions seem appropriate. One is for Congress and the president to move Social Security and Medicare out of the unified budget and make them independent trust funds, as they were originally.

The second step is for voters. If President Obama is too timid to exercise his 14th amendment responsibilities and allows a default on the national debt, we should fire him in the 2012 elections, and do the same with all those in Congress who are responsible for this costly fiasco.

We are in tough times and we cannot tolerate weak or irresponsible leaders who play games with our national future.