It’s only the middle of January, but the maneuvering is already well underway to see who will get the blame when the GOP refuses to raise the debt limit sometime in the middle of March and, shortly thereafter, declines to authorize a continuing resolution that would fund the government for the next year.
In the real world where one plus one equals two, the Republicans may have a point. They are dealing with a president who doesn’t believe we have a spending problem, and someone has to break through Barack Obama’s myopic worldview to set him straight.
But reality is not the way many of us would describe life in Washington, D.C. In our capital city, ordinary mathematics don’t apply. One plus one may or may not equal two depending on who’s doing the adding and how much pretending the rest of Congress wants to engage in. Hence, a $500 billion cut in reimbursing doctors and hospitals for Medicare expenses can actually be counted twice — once as a cut and once as a source of revenue for Obamacare.
The question then becomes, should the GOP House take the risk of blowing up the economy by refusing to authorize the Treasury Department to borrow money that has already been legally appropriated? In this, as with the virtual promise by many Republicans to shut down the government when the current continuing resolution runs out at the end of March unless they can convince the president to deal with the entitlement problem, the GOP is faced with unpalatable choices. And here, we must look at the question of proportionality. Is the drastic action on the debt limit and government funding threatened by Republicans justified? What imminent crisis — economic collapse, or depression, or any other calamity — is in front of us today that would warrant playing Russian roulette with the economy?
The fact is, there is none. We know that the path we are on is unsustainable. But that doesn’t mean catastrophe is imminent. And without a clear and present danger to the republic, it is extremely difficult to condone risking economic Armageddon to achieve so little. It is imprudent, even irresponsible, to take such a risk.
Is a reluctance to kick the can down the road reason enough to gamble that our already anemic economy won’t be plunged back into recession if the debt limit isn’t raised? House Republican Conference Chairwoman Cathy McMorris Rodgers thinks it is:
We always talk about whether or not we’re going to kick the can down the road. I think the mood is that we’ve come to the end of the road.
Have we really? Many in the GOP caucus are talking as if this is our last chance to save the economy. Rep. Jason Chaffetz:
No one wants to default, but we are not going to continue to give the president a limitless credit card.
Forget the idea of default — it won’t happen. We will continue to pay off our bonds month by month if necessary, using tax revenue that continuously comes into the Treasury. That doesn’t mean that the perception in the markets and overseas won’t be extremely negative. A downgrade of our paper is almost certainly in the offing and a roiling of the stock market is a virtual certainty as well. Besides that, anyone who says they are certain nothing much will happen — or that we face economic ruin — is just guessing. Simply paying bonds as they come due might mean we won’t default on our obligations, but what other psychological effects might a failure to raise our debt limit have?
Other budget obligations besides rolling over our debt won’t be met, however, and that probably means huge layoffs at companies doing business with the government. The rest is unknown. Might a refusal to raise the debt limit spark another banking crisis? No one is ruling it out. Foreign investors may flee the dollar, dumping massive amounts of greenbacks on the world market. No one is ruling that out either.
Is it prudent, responsible governance to risk this?
Republicans rightly took the president and Democrats to task for ignoring any potential unintended consequences from passing the massive Affordable Care Act. Are we now to turn around and ignore unintended consequences from not raising the debt limit?
The point is, given the possibility of disaster, and the absence of a contemporary crisis, what justifies Republican threats? Why does the GOP think they have to take a suicidal stand now, at this moment?
The rationale that if we wait until a real crisis is upon us it will be too late makes sense, but that explanation fails to address the question of “why now?” Why not six months from now? Why not next year? There is no compelling reason other than a deliberate choice by House Republicans to force the issue here and now. And without any more justification than that, the actions by the GOP would appear petulant — even unbalanced.
No doubt the president’s recalcitrance in facing up to his responsibilities is extremely troubling. But as Ross Douthat points out, the GOP, in reality, has very little leverage to force him to deal:
Note that it’s perfectly sensible for Republicans to negotiate over how the debt ceiling is to be raised — to haggle over the extension period and the combination of Democratic and Republican votes, for instance, and to look for a small-ball deal on spending to give cover to the legislators who cast those votes. But there simply isn’t a way for the G.O.P. to win anything big here, given the correlation of political forces in Washington D.C. and the country as a whole. And the fantasy of leveraging the debt ceiling to “force” the White House to dramatically cut entitlements, if actually pursued rather than just entertained, would quickly put the Republican Party on the path to losing the more modest leverage that it currently enjoys.
There simply aren’t the votes to deal with comprehensive entitlement reform — a “fantasy” as Douthat points out. Democrats in the Senate would filibuster any attempt to cut Medicare or reform Social Security even if it were attached to a debt limit bill or continuing resolution on funding the government. It should go without saying who would win that political argument with voters — Republicans would still get the blame for an economic downturn and anger seniors in the process.
To that end, the president is pushing the notion that unless Republicans raise the debt limit, they will be turning the U.S. into a “deadbeat nation”:
“Republicans in Congress have two choices here,” the president said. “They can act responsibly and pay America’s bills. Or they can act irresponsibly and send America into another economic crisis.” He added, “To even entertain the idea of this happening, of America not paying its bills, is irresponsible. It’s absurd.”
“The full faith and credit of the united states of America is not a bargaining chip,” Obama said. “And they better choose quickly, because time is running out.”
Of course, there have been few increases in the debt ceiling over the past 20 years that weren’t tied to some kind of deficit reduction. But Obama is not seeking to persuade, he is seeking to lay blame if the economy goes south. In this, he has a distinct advantage largely due to the fact that to most Americans, there is no rhyme or reason to Republican obstinacy. The president is successfully portraying Republican threats as a political ploy to make him look bad, or to blame him if the country slides back into a recession — or worse.
Speaker Boehner has said publicly that he wants a one-for-one deal on the debt limit: one dollar cut for every dollar added to the national debt. If he was dealing with reasonable people, it would be a reasonable idea. But the president doesn’t want to cut much spending. As he said at yesterday’s press conference, he wants to “invest”:
I’m happy to have a conversation about how we reduce our deficits further in a sensible way, although one thing I want to point out is that the American people are also concerned about how we grow our economy, how we put people back to work, how we make sure that we finance our workers getting properly trained and our schools are giving our kids the education we deserve. There’s a whole growth agenda which will reduce our deficits that’s important, as well.
Spending God knows how much on his “growth agenda” will reduce the deficit? Since Obama is doing the adding in this case, he says one plus one equals two when objective reality says something entirely different.
If the Republicans were to signal a willingness to negotiate a much smaller package of cuts in exchange for lifting the ceiling on the debt, they would put pressure on Obama to come to the table, and possibly saddle him with the blame if the economy tanks. It’s really all the leverage they have — especially if they want to make far more significant cuts in the showdown over government funding that will happen a few weeks after the debt limit vote. But the rank and file in the House show absolutely no desire for such a deal and seem willing to take their chances that the economy won’t melt down as a result of the government’s inability to borrow money to pay for obligations already accrued.
It took us 40 or more years to get into the mess we are in now. We are not going to solve it overnight or in one fell swoop of budget cuts. Simply put, the GOP House must take a more realistic and prudent view of reducing the deficit. This is the responsible path to deal with our fiscal problems, unlike taking unwarranted risks with our economic future by rolling the dice on the debt limit.