Following the April 8 agreement between President Obama, House Speaker John Boehner and Senate Majority Leader Harry Reid, the debate over government spending in the short term is now centered on whether Congress should vote to increase the statutory limit on federal borrowing – the “debt ceiling” – in May.   

The new Republican majority in the House of Representatives has made cutting federal government spending a top priority.  One day after voters elected 87 new Republicans to the House, then-Minority Leader John Boehner stated the American people had delivered “a mandate for Washington to reduce the size of government and continue our fight for a smaller and less costly and more accountable government.”  President Obama and many congressional Democrats have also emphasized the need to cut spending and pay down the debt. Last week S&P downgraded its outlook on U.S. sovereign debt to “negative.”

Congress cannot fail to increase the debt ceiling.  Failure to raise the debt ceiling would lead to the United States defaulting on its debt, which would be catastrophic for financial markets – here in the United States and across the globe.  

Default would, as Fed Chairman Bernanke has warned, “be extremely dangerous and likely a recovery-ending event.”  As Secretary Geithner has noted, “the full faith and credit of the United States is a unique asset that serves as the foundation for our global financial leadership.”  As it undertakes efforts to stabilize the U.S. economy and promote job creation, Congress should work hard to protect that valuable asset.  Jeopardizing our standing in the world as a global financial leader – and the U.S. dollar’s status as the global reserve currency – is not a strategy Congress should pursue. 

The American people are facing a massive amount of federal debt and courageous leadership from Congress and the Administration will be required to solve that problem over the next few decades.  But before we can begin to meaningfully address that issue, we must ensure the stability of our recovery and the soundness of our financial system.  Congress must do what is right for the strength of the U.S. economy and its ability to create jobs, and that means voting to increase the federal debt ceiling.