Last night the U.S. House of Representatives voted on and rejected a “clean" bill that would have raised the $14.3 trillion debt limit without any attached spending cuts, 97 to 318.  House Ways and Means Committee Chairman Dave Camp (R-MI) introduced the bill last week that would have raised the debt limit by $2.4 trillion.  The symbolic vote (which was designed to fail) suggests that government spending cuts to control our nation’s rising deficits must be made to generate congressional support necessary to raise the debt ceiling and thus prevent defaulting on our debt and the harsh economic consequences we would encounter as a result.   

Our country cannot afford to not have the debt limit increased.  We can also not afford to put off addressing the impending budgetary concerns brought about by continued and large deficit spending.  Our leaders must make tough decisions like these to restore and promote the stability and soundness of our country's financial system.  Failure to raise the debt limit is likely to have a detrimental effect on job creation and the economic recovery.

Financial regulators have also urged that failing to raise the debt limit by August 2^nd and ultimately defaulting on our debt would be disastrous for the markets and the country as a whole.  Secretary Geithner has said that defaulting on our debt would cause the federal government to default on its obligations, an event which would have catastrophic consequences for U.S. economic growth, job creation, home prices, retirement savings and the value of the U.S. dollar.  Federal Reserve Chairman Ben Bernanke has cautioned that a default would be a “recovery-ending event,” would cause interest rates to spike, and would make our deficit problems “even more intractable.”   And FDIC Chairwoman Sheila Bair has said that “a technical default on U.S. government obligations would prove to be calamitous.”

Acknowledging the critical and urgent importance of raising the debt limit, of equal importance is tackling our debt and deficit problems and achieving real spending restraint.