Cut, Cap, and Balance: The GOP Debt Ceiling Strategy

With nearly half of all Americans, according to the latest CNN poll, saying they fear America is on the verge of another “Great Depression,” Barack Obama and Congress continue their debt-ceiling tango.

It’ not just that the various groups involved — the Keynesians, the Cloward-Pivenists, the green eye-shade deficit hawks, and the supply-siders — want to lead, it’s that they all want to conduct the band.

The debt ceiling, the legal limit on borrowing by the federal government, is a critical issue. Currently it’s just over $14 trillion, and with all the borrowing the Obama administration has engaged in to fund initiatives like the stimulus program, total U.S. indebtedness is rapidly approaching that number. If the debt ceiling is not raised, the federal government would have to cease borrowing — meaning it could, for the first time ever, default on its obligations.

Some people — especially adherents to the strategy developed in the mid-1960s by sociologists Richard Cloward and Francis Fox Piven — would likely cheer the chaos that would result from a default, as their stated objective is to overload the social welfare system until it collapses under its own weight.

For the rest, however, the need to increase the debt ceiling has created a debate between those who want to key the country on the course Obama has set for it and those who want to use it to trigger major reforms in government spending.

Right now all the action is in the U.S. House of Representatives, where The Hill newspaper recently reported that a majority of the House Republican Conference sent a letter to House Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) “laying out conditions to be met before a higher debt ceiling is agreed to.”

The letter “called for discretionary and mandatory spending cuts to halve the budget deficit next year, spending caps to hold Washington’s spending to 18 percent of gross domestic product, and passage of a balanced-budget amendment.”

The strategy, which is known by its nickname “Cut, Cap, and Balance,” is expected to dominate the discussion surrounding the debt ceiling as events move forward.

Conservatives have embraced the plan, which is expected to be put forward in the Senate by the likes of South Carolina’s Jim DeMint and freshman Utah Senator Mike Lee. They especially like the part about securing passage of a balanced budget amendment to the U.S. Constitution, but only if it includes a supermajority requirement to raise taxes and strict spending limitations pegged to U.S. GDP. Says Colin Hanna — president of Let Freedom Ring, a group that promotes constitutional values and economic freedom (disclosure: I am a senior fellow at Let Freedom Ring):

It’s our goal to form a coalition of as many conservative groups as we can find that would support a pledge to commit the signers not to vote for a debt-ceiling increase unless three conditions are met.

It’s a strategy that puts Obama supporters in a box. The president and his treasury secretary have been very clear that they want a “clean” debt ceiling bill, one that is not encumbered by any provisions that will limit the federal government’s ability to spend money now and in the future. That approach failed to pass, however, when it was offered as a stand alone bill in the House last week. Nearly half the Democrats joined all the Republicans in voting “No.”

The “Cut, Cap, and Balance” measure is almost certain to pass the House. If it fails in the Senate, then the blame for default can be placed at the feet of the Democrats. Hanna tells The Hill:

This provides a remarkable opportunity, because you’ve got a Democrat leader of the Senate who must deliver to a Democratic president a vote to support a debt-limit increase. It puts them in a pressure cooker we haven’t seen before.

This aggressive strategy is also likely to mollify members of the Tea Party movement, some of whom have been critical of Boehner and Senate Republican Leader Mitch McConnell for what they see as a failure to challenge the White House in a more confrontational way.

With so many Americans focused now on the issue of government spending, the iron is hot in a way it has never before been. The chance to enact real reform before the next election, when the White House may change hands, exists. It may even be, some Republicans suggest quietly, that Obama will seize upon some version of “Cut, Cap, and Balance” as his version of Bill Clinton’s welfare reform — a way to embrace a signature GOP issue in such a way that it cuts the knees out from under his Republican opponent in the next election, caps his potential vote, and on balance, wins him re-election.