WASHINGTON -- When Congress returns from its two-week recess, one of its top priorities will be voting on whether to raise the federal government's debt limit. A few Republicans have already said they're not going to approve an increase.
In a town hall meeting on Thursday, though, Rep. Rick Crawford (R-Ark.) saw just how hard that position will be to defend. Crawford's constituents pressed him on his statement that the country can avoid default without raising the debt ceiling.
"I don't think we solve our debt crisis by incurring more debt," Crawford told attendees at the town hall in Jonesboro. When a constituent asked him if he was therefore going to allow the country to default on its debt, Crawford insisted, "No, I'm not."
A couple of constituents at the event became increasingly exasperated as Crawford insisted that he could somehow stop the country from defaulting on its debts without giving itself license to accumulate more:
CRAWFORD: Well, I don't think we're going to default.
Q: We're not going to default?
CRAWFORD: No.
Q: And you're not going to increase the debt limit?
CRAWFORD: What I'm saying is, I don't think it's the prudent thing to do to incur more debt to solve the debt crisis.
Q: I hear that. What are you going to do? You did not answer the question.
Q: Is it true that we'll be defaulting if you don't raise that debt limit? There's not anything we can do that soon except raise the debt limit?
CRAWFORD: So you want me to incur more debt for the country?
Q: It's one or the other. Which is it? Default or raise the limit? Which do you want?
CRAWFORD: We're not going to default.
Q: So then you'll raise the limit on the debt?
CRAWFORD: I'm not saying that either --
Q: It is one or the other! That's a fact! You can't have it both ways. That's what we're saying.
Treasury Secretary Timothy Geithner has warned Congress that the U.S. debt limit will be hit no later than May 16, but that he can take "extraordinary measures" to make sure that all debts are paid until roughly July 8, at which point the government would default on some of its obligations.
When asked by constituents what the country could do to avoid going into default without raising the debt limit, Crawford replied, "We haven't even addressed what's in the Federal Reserve. The assets we're holding in private businesses that we have no business carrying assets that belong to debtors. GM stock and things of that nature. There's a whole lot of liquidating that we can do before we have to start making overtures about raising the debt limit."
WATCH (Video posted by Blue Arkansas):
Crawford is technically right. The country could keep the debt limit at its current level of $14.3 trillion and avoid going into default. But the third option is, as Crawford's upset constituents seem to sense, not very reassuring.
Michael Linden, director for tax and budget policy at the Obama administration-linked Center for American Progress, argues that this option is "just as bad as defaulting." "It's economic calamity or raise the debt ceiling," he told The Huffington Post.
Essentially, the country would roll over its existing debt but not be allowed to borrow any more. Such a move would require cutting spending by about 40 percent, sharply raising taxes or some combination of the two.
"We simply stop funding everything," said Isabel Sawhill, a senior fellow at the Brookings Institution. "And then it would depend how long this went before the ceiling was lifted. But let's suppose it went on a whole year. Then we could only spend 60 percent of what we're spending now. And we'd have to pay some interest on the debt, otherwise we'd be in default. Then the question would be, what would we spend on? Would we send out Social Security checks, would we raise taxes suddenly? The hole would be huge. ... Can you imagine cutting $1.5 trillion to $2 trillion in one year's time? It's just ridiculous."
Linden pointed out that the Republican budget put together by Rep. Paul Ryan (R-Wis.) doesn't even immediately require the United States to operate under a balanced budget.
"It does not balance the budget until 2040," he said. "It relies on borrowing for the next 30 years. ... We can't get by without borrowing a little bit of some amount. Since everybody knows that, we all know we have to raise the debt ceiling. If we aren't able to do that, it sends a terrible message to the markets that these problems are unsolvable and the federal government is no longer a safe place to put your money."
In a recent interview with ABC News, Geithner said Republican congressional leaders have reassured the White House that the party will vote to raise the debt limit. He warned that the effects of not raising the ceiling would be "catastrophic."
"What will happen is that we'd have to stop making payments to our seniors -- Medicare, Medicaid, Social Security. We'd have to stop paying veterans' benefits," Geithner said. "We'd have to stop paying all the other payments on all the other things the government does. And then we would risk default on our debt -- and if we did that, we'd tip the U.S. economy and the world economy back into recession -- depression."
Bill Gross, the co-chief investment officer of Pimco who runs its bond fund, the world's largest, has also used the word "catastrophic" to describe what would happen if happen if the United States does not raise the debt limit, predicting that "global investors would move money at the margin to countries which have their act together, interest rates might rise by 50 basis points overnight, the stock market would plunge."
Crawford's office did not return a request for comment. As ThinkProgress noted, Crawford also received heated questions about why the GOP budget reduces spending for social services while lowering taxes for wealthy Americans.