January 26th, 2009, Fairfax, VA—Americans for Limited Government President Bill Wilson today urged the House of Representatives to vote against the proposed $825 billion spending bill being considered “to restore confidence that the United States will be able to live up to its financial obligations at home and abroad.”
“Congress is running the serious risk that the United States will default on the national debt, now nearly $10.7 trillion,” said Wilson. “Today’s bill will only add to it, and the nation’s creditors overseas may be unable to continue funding our unsustainable government spending.”
The national debt of $10.7 trillion includes $4.3 trillion owed in the form of unfunded obligations to Social Security, Medicare, and other commitments, and $6.4 trillion held privately, $3 trillion of which is held overseas.
40 percent of the debt held privately comes due this year, and the only way for the government to pay it is to borrow more money.
“The current economic downturn was caused in large part because of government policies: easy credit and loose dollar policy by the Fed, the government sponsored enterprises Fannie Mae and Freddie Mac pushed loans on those who could not afford them, and the trillions of dollars of bailouts to date have only made it worse,” Wilson said.
“Now, government returns to the scene once again, not to fix the problems it created, but to exacerbate them by adding another $1.2 trillion to the debt when interest and other considerations are calculated,” Wilson added.
Wilson believes that extraordinary government interventions to date have completely spooked markets and discouraged savings, investment, and capital creation.
“The United States will not be able to get off the road to serfdom until the government actually constructs a plan to retire the debt and put an end to big government programs that hinder economic growth,” said Wilson.
Wilson warns of hyperinflation should creditors stop lending to the United States and the nation therefore defaults on the national debt.
“This is a catastrophe waiting to happen,” Wilson warned.
“Right now, countries overseas are trading real goods for paper. But that trend will reverse should the U.S. default, because a run on the dollar will ensue rapidly. Those dollars will come back home, and the people here will want to turn those dollars into real goods, but there will be too many dollars chasing too few goods,” Wilson explained.
“That’s the perfect recipe for hyperinflation. Prices would soar, and the economy would be wrecked,” Wilson added. “America would no longer be an economic superpower.”
“This must not come to pass. Congress must stop the madness by voting ‘no’ on the so-called ‘stimulus,’” Wilson concluded