As the nation anxiously awaited resolution of the debt limit crisis last week, Pennsylvania congressman Scott Perry took to a podium outside the Capitol to say he opposed the compromise bill struck by House Speaker Kevin McCarthy and President Joe Biden.
But he also said the so-called crisis was fabricated and the nation did not risk defaulting.
“There was no chance of ever defaulting, not paying on our debt, not paying Social Security, not paying Medicare, not paying veterans benefits. That was never going to happen,” Perry said. “We were not going to default. We are taking in record revenues… This is a scare tactic.”
This, however, contradicts figures published by both the U.S. Treasury Department and the Congressional Budget Office, a nonpartisan federal agency founded in 1974 to provide unbiased financial reports to Congress.
The CBO doesn’t recommend policies and is required by law to provide independent, fact-based analysis. The agency hires analysts irrespective of their political affiliations, and upholds a stringent code of ethics to prevent conflicts of interest and safeguard the impartiality of its analyses.
Perry tried unsuccessfully to slash that department’s budget in half in 2017.
The CBO projects the government needs to borrow about $2 trillion this year — and has only $316 billion available in cash.
President Biden signed a bipartisan bill to suspend the debt limit until 2025, ending weeks of political infighting and narrowly preventing the U.S. from defaulting on its loan payments for the first time.
Had Congress failed to reach a deal before Monday’s deadline, borrowing rates could have skyrocketed, government programs could have been slashed, and international credit markets — which rely on the stability of U.S. Treasury bonds — could have crashed.
The Treasury Department said failing to raise the debt limit would have brought “catastrophic economic consequences.”
“It would cause the government to default on its legal obligations — an unprecedented event in American history,” the department wrote. “That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession.”
Treasury Secretary Janet Yellen underscored the consequences of defaulting on payments on $34 trillion in outstanding loans.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” Yellen wrote.
However, Perry doesn’t trust Yellen’s figures.
“She comes with zero credibility to this discussion. She didn’t see inflation coming. She didn’t know that we were going to breach the debt ceiling when she supported the $1.7 trillion omnibus on December 23, passed by the Democrats,” he said.
Janet Yellen and Federal Reserve Chair Jerome Powell initially regarded inflation as “transitory” due to pandemic-related factors in June 2021. However, Yellen admitted to underestimating the threat of inflation the following year.
Yellen wrote to Kevin McCarthy about the need to raise the debt ceiling three weeks after Congress passed the 2023 omnibus appropriations bill.
Since 1960, Congress has voted to “raise, temporarily extend, or revise the definition of the debt limit” 78 times.
President Biden signed the bill over the weekend suspending the debt limit until 2025.
