Brady Disputes Short Term Debt Limit Extension Will Raise U.S. Borrowing Costs
Incoming Joint Economic Committee Chairman says past extensions failed to raise borrowing costs 40% of the time
Rep. Kevin Brady (R-TX), incoming Chairman of the Joint Economic Committee and a senior member of the House Ways and Means Committee, took issue with the claim made by Rep. Sander Levin, ranking member of the House Ways and Means Committee, that “The Treasury was forced to spend $1.3 billion more in interest payments” because of the dispute over raising the debt ceiling in 2011. Levin based his claim on a Government Accountability Office estimate. Levin also cited a projection by the Bipartisan Policy Center of higher borrowing costs of “almost $19 billion over the next decade.”
“The claim that a short-term extension of the debt limit may raise U.S. government debt service costs is highly speculative at best,” Brady said. “The Bipartisan Policy Center’s projection is based upon two questionable GAO studies.”
Brady continued, “The 2011 GAO study showed mixed results, with no significant impacts in 40% of the extensions. The 2012 GAO study was based on only one event – which is statistically inconclusive. But even if these findings were true, they miss the point. It’s uncontrolled federal spending over time that will significantly boost our debt service costs. President Obama must get the backbone to challenge his party to work with us to control non-interest spending now, by capping it as a percent of the size of our economy.”
