D-Day on the Debt Ceiling (Update: The president speaks)
July 15, 2011 - 7:46 am
The GOP House caucus leaders gave a brief press conference a few minutes ago as I write this, showing a very unified front on the debt ceiling talks. Their message was two-fold: No tax increases, and the president needs to step up and lead already. They noted that the president doesn’t seem to have a plan, which isn’t exactly news, and that it’s time to act — also, not exactly news.
They delivered the press remarks to get out ahead of the president’s own speech, planned for later in the morning. He is likely to pin the blame for the impasse on the Republicans. But it’s worth remembering just how we got to this point in the first place. Take it away, WSJ:
On spending, it is important to recall how extraordinary the blowout of the last three years has been. We’ve seen nothing like it since World War II. Nothing close. The nearby chart tracks federal outlays as a share of GDP since 1960. The early peaks coincide with the rise of the Great Society, the recession of 1974-75, and then a high of 23.5% with the recession of 1982 and the Reagan defense buildup.
From there, spending declines, most rapidly during the 1990s as defense outlays fell to 3% of GDP in 2000 from its Reagan peak of 6.2% in 1986. The early George W. Bush years saw spending bounce up to a plateau of roughly 20% of GDP, but no more than 20.7% as recently as 2008.
Then came the Obama blowout, in league with Nancy Pelosi’s Congress. With the recession as a rationale, Democrats consciously blew up the national balance sheet, lifting federal outlays to 25% in 2009, the highest level since 1945. (Even in 1946, with millions still in the military, spending was only 24.8% of GDP. In 1947 it fell to 14.8%.) Though the recession ended in June 2009, spending in 2010 stayed high at nearly 24%, and this year it is heading back toward 25%.
This is the main reason that federal debt held by the public as a share of GDP has climbed from 40.3% in 2008, to 53.5% in 2009, 62.2% in 2010 and an estimated 72% this year, and is expected to keep rising in the future. These are heights not seen since the Korean War, and many analysts think U.S. debt will soon hit 90% or 100% of GDP.
Congress controls the purse strings, and the spending run-up occurred when the Democrats controlled both houses of Congress and the White House. I’m sure everyone here in the Tatler audience knows that, but it’s worth a reminder and mentioning to friends and such who don’t hang on every headline. The Democrats love to pin the blame for the nation’s debt crisis on George W. Bush, but they took his excessive spending and turned it up to 11. As I used to say when confronted about this question as a GOP comms director, the answer to too much spending is not to pile on more spending — unless you’re one of today’s Democrats.
Now, as to what the Republicans are doing and should do. The unified front on display today was good for the caucus and was a probably a good first move to set the stage for the president’s remarks. They called on him to lead — will he?
Writing in the Atlantic, Megan McArdle says the GOP should call the president’s bluff. Her premise is that he won’t let a default happen because it will cost him his job. I’m not so sure about that. We’ve heard the Democrats, over the last few months, mention the 1995 government shutdown showdown between Newt Gingrich and Bill Clinton. They credit that shutdown (wrongly, in my opinion) with resuscitating Bill Clinton’s presidency. President Obama’s poll numbers are in the mud now; he needs a revival that even the killing of Osama bin Laden didn’t deliver. He may well see this crisis as his opportunity for that. I suspect he does. I also suspect that he’s enjoying the chaos a bit. This is the kind of thing a community organizer thrives on. He’s just trying to figure out how to master it and make it useful to him.
In the midst of all this, the Reid-McConnell plan is emerging as a possible compromise. I considered that idea a dead letter a few days back, but it’s still out there and, oddly enough, getting a bit better as a deal as time goes on. So it’s not dead yet, and may come around. Or not — Sen. Jim DeMint is dead set against it.
It’s likely to be a long day. The Pelosi Democrats are delivering their remarks on the situation as I write. They’re still all about the grand bargain, and Pelosi is touting a bipartisan approach. But she used a lot of code talk about “our values,” by which she means the political left’s point of view, from a group that failed to pass a budget when they had the chance, and whose own spending got us to where we are. Those values are part of the problem.
The president is up shortly after the Democrats are done.
Update: President Obama followed the Democrats, but I missed the first part of his remarks. He seems to have offered his usual “sacred cow” routine, by which he puts GOP sacred cows up for slaughter while feinting that he’s doing the same with his own. He declined to answer directly on the plan the GOP proffered earlier, which was a $2.5 trillion or so package that included a Balanced Budget Amendment. He didn’t take that on directly immediately, then went into a riff on “oil company subsidies” (which are in reality corporate tax breaks not unique to the oil industry) before suggesting that the GOP plan isn’t serious. Note, that he hasn’t actually read their plan. He also did say that we don’t need an amendment to the Constitution to get spending under control. His own presidency, and in fact every presidency before his save the years when the GOP controlled Clinton’s purse strings, suggests otherwise.
Jake Tapper just went for O’s jugular, asking if he has any regrets about his role. Tapper, I like the cut of your jib. The president denied that things have gotten “ugly.” And then he lunged into the press corps and threw Tapper to the ground.
Kidding, obviously. He actually zeroed in on cutting defense, which is always his cut of first choice, before feigning a willingness to cut domestic spending. He tends to take those cuts back as the meeting wear on; that’s what Cantor was asking about in that meeting in which the president told him “Don’t call my bluff.”
Update: As I write this, Obama is on a tear about all the over-spending that preceded his presidency: “We cut taxes on the wealthy and didn’t pay for them, we rolled out a prescription drug benefit that we didn’t pay for, we had two wars that we didn’t pay for.” Stipulate that all of that is true (leaving aside the net revenue effect of tax cuts). This president then accelerated the excessive spending well beyond what he inherited. It’s these moments that reveal his character — he is addicted to shifting blame onto anyone but himself. He then threw out “Let’s avoid Armageddon” on the debt ceiling, a line that’s likely to generate some headlines. But he is the one who is threatening to withhold Social Security checks, and he is the one who failed to lead for three years, and he is the one who is stubbornly insisting on tax hikes. Armageddon is in his hands, but he knows the media is inclined to carry his narrative no matter what.
Update: Heh, the president claimed that most of his proposals are “traditionally bipartisan.” I guess that’s why both of his signature accomplishments, the stimulus and ObamaCare, attracted no GOP support at all and have divided the country while making the budget problems worse. I guess that’s why, when his initiatives like cap and trade fail, he pushes them through via the federal bureaucracy. It’s fair to wonder at times whether Barack Obama believes his own lines.
Update: The president didn’t come with a plan. He refused to name a single entitlement he is willing to cut. His sacred cows are still sacred, but yours are up for slaughter.
Update: Here’s some detail on the GOP plan, which is $2.4 trillion over 18 months and comes up for a vote next week. I would link to the president’s plan so you could compare them side by side, but…he doesn’t have one.