Lawmakers squared off Tuesday as the House ways and means committee heard debt ceiling options ahead of a key vote on the issue.
Republicans argued that if the debt limit is raised without corresponding spending cuts, the country will find itself in an unsustainable fiscal position.
Democrats pushed back, agreeing with the president that the debt ceiling should not be tied to other issues, and complaining that a protracted fight will hurt the federal government’s credit standing globally.
“This hearing is about how to create chaos,” Washington Democratic Rep. Jim McDermott said.
“This crisis is manufactured by Republicans,” he added. “Survival of the fittest put into policy.”
Lee Casey, a partner at Baker Hostetler law firm, emphasized Congress’ power of the purse in his testimony to the committee. Congress alone has constitutional the authority to tax and borrow.
Looking into the future, G. William Hoagland, senior vice president of the Bipartisan Policy Center, estimates the debt-to-GDP ratio to reach 77 percent by 2022, and puts the debt level at that point around $27 trillion.
The debt limit is estimated to hit earlier than anticipated, on February 15, according to the Bipartisan Policy Center. At that time, the government will lose its legal authority to borrow and be forced to prioritize payments.
More than half of U.S. debt securities are currently held by foreign entities, which some lawmakers raise as an issue of national security and sovereignty.
“Financial markets can easily become unsettled,” Simon Johnson, professor of entrepreneurship at Massachusetts Institute of Technology, said in his testimony.
“In this context, continuing uncertainty around the U.S. federal budget in general and the debt ceiling in particular is not helpful – and may prove destabilizing both at home and around the world.”
All four experts who testified at the hearing agreed that the debt could not be stabilized by tax revenues alone.
As a senator, Barack Obama voted against raising the debt ceiling and called it a failure of leadership. Ohio Republican Rep. Pat Tiberi argued that the leadership failure now belongs to Obama.
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