Inquirer Editorial: Must cut, but with care

Washington needs a long-term plan to reduce deficits, but risking the nation's financial standing by handcuffing its ability to handle its debt is the wrong road to that goal.

The federal government will soon reach its legally authorized debt limit of $14.29 trillion, an embarrassing milestone that could come as early as April 5. Most lawmakers in both parties agree that, despite tea-party opposition, Congress will likely vote to raise the debt ceiling before then.

The debate is whether to link that vote to spending cuts, an idea supported by many congressional Republicans.

The Obama administration wants a vote only on raising the debt ceiling. The president argues that imposing cuts now would imperil the fragile economic recovery and job growth, and that he will propose spending reductions for the fiscal year that begins Oct. 1.

There's no question the government needs to get spending under control - the deficit this year will reach about $1.5 trillion. The debate is over how quickly to proceed.

The rhetoric is growing heated. Treasury officials warn that failing to authorize more debt would be "catastrophic." Unless Congress permits more borrowing, they predict, the government will default on its obligations, financial markets would be thrown into turmoil, interest rates would soar, and dangerous spending cuts would be required.

Sen. Pat Toomey (R., Pa.) has accused the administration of being "alarmist" and undermining investor confidence. He has proposed a measure to prevent default by requiring the government to pay the principal and interest due on federal debt before making other payments. But an economist at a Senate Budget Committee hearing Wednesday told Toomey he was "playing with fire."

Toomey doesn't expect the government to default; he says he just wants an "honest discussion" about the consequences of failing to raise the debt ceiling. He argues the fallout wouldn't be as drastic as some portray it, but he seems to be searching for the line between catastrophic and risky. That's not much comfort.

When the discussion focuses on the likelihood of the crisis of a government default, the country loses. Without a long-term strategy for lowering debt, Congress is likely to engage in this type of alarming debate every few months. That message will make investors less eager to loan the government money and discourage corporations from creating jobs.

Even House Republicans, who in taking control last month set out to cut at least $100 billion from the budget, are finding a piecemeal approach difficult. They unveiled a plan last week that would cut only $32 billion.

The president's bipartisan debt commission late last year recommended a long-term strategy for reducing annual deficits and getting the nation's fiscal house in order. The plan would include spending cuts, elimination of certain tax breaks, and trimming the growth of entitlement programs such as Social Security.

Both parties found fault with the plan, and to date Congress has failed to accept the recommendations. There was a ray of hope, however, last week when Senate budget chairman Kent Conrad (D., N.D.) urged his panel to begin crafting a plan based on the commission's report.

The president and Congress must commit to a thoughtful, orderly blueprint for debt reduction. Otherwise, expect haphazard decisions and quarterly alarm bells.