Obama, Geithner Hold All the Face Cards in Debt Ceiling Fight

There are still a number of conservative voices — including some presidential contenders — who are smugly watching the approach of the debt ceiling deadline and treating it like a paper tiger. Their argument, in essence, is that our spending addicted government is in need of a rehab style intervention, having all of its credit cards cut up in front of it and locking Washington up in a Betty Ford Center for Terminal Shopaholics. This, they conclude, is precisely the sort of foul tasting, cod liver oil style medicine which will put the system to rights and strong-arm us back onto the path of reason.


I have a confession to make here. In some of my darker moments, I find the idea appealing. But then I recall the law of unintended consequences and remind myself to be careful what you wish for.

But when does this remarkable transformation begin, and what happens when it arrives, both in practical and political terms? The date is somewhat cloudy, though the White House continues to insist that it falls on August 2nd. Other analysts feel that there could be anywhere from an additional one to two weeks before the bean counters finally run out of tricks. But regardless of when it happens, our date with destiny is on the way.

By most estimates, barring some sort of 11th hour deal, the federal government’s revenues in August will come up approximately $135B short of the total bills coming due. Thirty days after that, in some hypothetical world where we never again increase the debt ceiling, we’ll reach the end of Fiscal Year 2011 and can start working 2012 numbers. By current CBO projections, Washington revenues for next year will be approximately $2.6T with spending currently estimated at $3.7T. This works out to an average monthly shortfall of just over $91B allowing for seasonal variances.

The bottom line is that some checks won’t be going out. So how does that work and who will be figuratively receiving the short end of the financial stick?


This is where the situation begins to get sticky for the Republican Party, and seasoned hands in the establishment GOP have doubtless already begun pondering the problem. Congress is, of course, responsible for setting the future spending agenda. (Or they would be, had the Democrats bothered to actually pass a budget in the last 800+ days.) But once the deal is done, the revenues have been collected, and the bills come due, they really don’t retain much control beyond that point. The sad fact of the matter is that it will be pretty much exclusively the executive branch bean counters — under the watchful eye of President Barack Obama — who will be sending out those checks and deciding who gets paid and who doesn’t.

Now, I understand that most of you reading this have nothing but the utmost respect for the office of the presidency and would never suspect Mr. Obama of having political ulterior motives when making these decisions. But what if he and the leaders of the Democratic Party did? Well, the president actually has quite a few options on the table.

He’s going to pay the interest on the debt, as well as sending out all of the Social Security checks. It would be essentially illegal and/or politically suicidal not to do so. From there, one of the first and easiest choices would be to furlough some government workers. At first blush, conservatives might nod approvingly, noting that the federal government is too darned large anyway. But those are real people with real families, friends and relatives. When it’s you losing your job, long held political beliefs may sail out the window, the conversation becomes much less theoretical, and you may rest assured that they will be tuning in to the news every day to hear Barack Obama saying, “I really didn’t want to send you all home, but the Republicans wouldn’t…”


You know how the rest goes.

After that, the president finds himself in a truly target rich environment. Randall Hoven at the American Thinker has done a lot of the leg work on this, breaking out the various pockets of bills coming due and how they might be trimmed. One of the biggest targets on the radar will be defense spending. Clearly Obama would not be foolish enough not to pay the troops, but more than $575B of the estimated $738B defense budget goes to things other than military pay. These possible targets could include:

  • “Yard bird” pay for civilian workers at shipyards and military installations
  • Maintenance, refitting, and salvage of the “ghost fleet”
  • Civilian base workers in maintenance and related fields

The president could also reduce checks or simply fail to pay any number of defense contractors for work already performed or scheduled. This would hit a lot of major Republican donors, not to mention potentially leading to layoffs in that industry for lack of work. And once again, Jay Carney will be out on the White House lawn every day at noon with his big, sad puppy dog eyes detailing how it’s all the fault of the GOP.

Next up we find a clever way to get the seniors out in the streets. As previously noted, Obama would obviously send out all of the Social Security checks, but he doesn’t have to pay everything associated with Medicare. One immediate option would be to reduce or cancel some reimbursement payments to doctors. Might that result in physicians cancelling appointments or refusing to take new patients who are in the program? This one hits seniors right in the breadbasket, traditionally a demographic that supports the Republicans disproportionately.


But it’s not just direct payments to providers that might be on the table. There’s a lot more gold to be mined in them there hills. There are a multitude of secondary programs in Medicare which take up resources every month. They take care of a host of mundane programs such as reducing the cost of prescriptions to subsidizing bulk items like ace bandages, disinfectants or… replacement oxygen tanks.

As I recently wrote in piece titled “Plan Nine from the DNC,” there are political opportunities aplenty waiting in all of those bookkeeping nooks and crannies, assuming the Democrats are willing to play politics with something like this. (Not that I’m insinuating Debbie Wasserman-Schultz’s crew would ever stoop so low, mind you.) But if you stop and think about it, it’s a fairly simple matter to fail to send out a check or two to some medical supply companies. And when that happens, the Democrats find a young boy named Timmy in a wheelchair that didn’t get his replacement oxygen bottle this week, and suddenly he and his bedraggled, single working mom are instant television stars in political advertisements which run non-stop until the Republicans finally cave in.

But the Democrats would never actually do that… right?


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