The U.S. Congress will not wait for the country's debt crisis to reach the levels of Southern Europe, David Schweikert, a republican congressman and part of the bipartisan commission on budget told CNBC on Tuesday.
In Washington DC, Republicans and Democrats are debating on where and how to cut US budget and on whether or not the $14.3 trillion debt ceiling should be raised. The clock is ticking as the deadline for negotiations is set on August 2nd, 2010.
“This is kind of the dance of legislation,” Schweikert said. “What we’re asking the president and the Senate, and obviously our representatives to do, is something that almost has never been done before. And that’s actually cut spending and do what’s absolutely necessary to save us from this avalanche of debt that this country is dealing with,” he said.
Congress is finally taking the debt issue seriously, Schweikert explained, as it doesn’t want to wait until the situation is as bad as it is in Portugal, or even Greece, whose debt rating has been lowered to a CCC grade — the lowest in the world— by Standard and Poor’s.
“It is crucial that we telegraph to the world and to our own markets that this Congress is deadly serious on bending the debt curve,” Schweikert said. “When you look at the demographics in this country, the curve gets much, much worse over the following decade,” he added.
But which spending sector should be prioritized, as well as what room is there for coupons, will be questions the commission needs to tackle.
“I understand it was a negotiating technique, that ‘the hair is on fire’, ‘the world is coming to an end,’ ‘Congress must just go out and do a clean debt ceiling’,” Schweikert added, “but a clean debt ceiling as a first wanted, would, I believe, have been a bad, bad thing, because how do you tell the world we’re taking our debt seriouslybut now for Treasury to say ‘oh, we get this cash flow, but we can’t prioritize it to our coupons.’ It’s just borderline silly.”