U.S. Sen. David Vitter today questioned Federal Reserve Chairman Ben Bernanke in the U.S. Senate Banking, Housing and Urban Affairs Committee about the effects an increase to the debt limit will have on the financial markets.
"My gut says that if we don't have significant cuts but still increase the debt limit, that the markets will respond very negatively. Bernanke agreed that's possible. He also agreed that the situation we're in is a good opportunity to tackle our levels of spending and debt, and that it would be a mistake to just raise the debt limit without doing anything about the debt itself," Vitter said.
Vitter supports the "Cut, Cap, Balance" plan, which would address the underlying causes of the federal government's massive debt by cutting federal spending, placing caps on annual spending levels and requiring the passage of a balanced budget constitutional amendment.
He also introduced the Full Faith and Credit Act earlier this year with Sens. Pat Toomey (R-Pa.) and Jim DeMint R-(SC), which would remove the fear mongering from the debt ceiling negotiations. This legislation would ensure that the U.S. government does not default on its debt by requiring the Treasury to prioritize payments on the debt in case the debt ceiling is not raised. It also ensures that Social Security benefits for seniors would also be protected.