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Debt ceiling fix needs to include plan for austerity

The U.S. government surpassed its $14.294 trillion debt ceiling Monday, and the Treasury Department began taking steps to deal with the problem, including suspending planned transfers into public pension plans.

Treasury Secretary Timothy Geithner sent a letter Monday to congressional leaders, saying unless the Congress acts by Aug. 2 to increase the debt ceiling, the government will default on its debts, something it has never done in recent history.

It's a classic rock-and-a-hard place problem. If the Congress does not raise the debt ceiling, a default could cause catastrophic problems to the domestic and world economies, and cause bondholders to lose confidence in U.S. treasuries, which would mean higher borrowing costs and even worse deficits. On the other hand, if Congress gives a blank check and raises the debt ceiling again, we will likely find ourselves back in the same position soon, looking to borrow more to fund our operations.

The solution, of course, is to raise the debt ceiling by Aug. 2 as part of a larger fiscal package that involves spending cuts and/or tax increases that would reduce both the deficit and debt substantially in the long term.

The truth is there's very little that can be cut in the short term to avoid having to raise the debt ceiling, as distasteful as that may be. But if a deal can be struck to put our financial house back in order as we go to borrowers one more time, it's worth it in the long run.

The Pioneer Journal editorial represents the collective voice of the paper's editorial board. Today's editorial was written by Steve Schulz, editor and publisher.