President Barack Obama, July 6, 2011. Photo credit: Geoff Livingston
It’s become a hallmark of the Obama Administration, perhaps through no fault of its own, perhaps not: Dramatic, cliffhanger style debates that lead America to the edge of oblivion only to pull back at the last second. Remember the last budget debate, when a total government shutdown loomed? Consider the protracted debate over raising America’s debt ceiling just part two.
The basic situation is this: America has until August 2, a self-imposed deadline, to make a decision on whether to raise its $14.3 trillion debt ceiling, the limit set by Congress defining the government’s maximum borrowing power, sort of like an upper limit on a credit card. If America does not raise its debt ceiling, then the government may not be able to borrow enough money to pay its debts; alternatively, it may continue to meet its debts, but discontinue social benefits, such as Social Security. This concept of a Congressional limit of governmental borrowing has been around since 1917 and it has been raised several times, usually without this kind of political theatre.
The American public, however, is less concerned about the debt ceiling and more concerned about things like jobs and the distinct lack of them.
This time around, however, not only are the numbers rather higher, but the political stakes are as well. Partisan bickering has marred the debate, and mired it in a larger discussion about America’s spending: The Republicans want to use the opportunity to demand more spending cuts, while President Barack Obama wants to use it to wrangle higher taxes on wealthier Americans. With the House controlled by the Republicans, and the Senate controlled by the Democrats, the discussion has only lead to deadlock.
Tuesday, for example, the House is expected to vote on a Tea Party-lead “cut, cap and balance” plan, which would allow the debt ceiling to rise and the government to borrow more money, but only in exchange for spending cuts and a Constitutional amendment requiring that Congress balance the budget. The plan has, as The Associated Press noted, no chance of making it through the Senate and is even less likely to pass presidential muster, given that the White House has said it will veto it.
So, are Congress and the Obama Administration “making progress”, as President Obama claimed after yet another meeting with Congressional leaders on Sunday night? Maybe, maybe not.
- Where we stand now. Still no sign of light at the end of this tunnel, The Associated Press reported: The Republicans want spending cuts and want to rule out any tax increases, while the Democrats want tax increases and promise to enact spending cuts later. The Republicans control the House, the Dems control the Senate, so passing any plan not amenable to both is unlikely.
- The Tea Party plan. The “cut, cap and balance” plan proposed by the freshman Tea Party-aligned Congressman, asking for spending cuts and a budget balancing amendment, has not chance. “That makes the effort primarily an opportunity for House Republicans, particularly dozens of new lawmakers elected with the support of the small government tea party movement, to symbolically show their steadfastness in demanding huge cuts in government spending, opposition to higher taxes and ideological purity in balancing the budget,” The Associated Press explained. The budget balancing amendment isn’t also terribly popular outside conservative and Tea Party circles. Norman Ornstein, scholar at the American Enterprise Institute, claimed at The Washington Post that such an amendment would be “too risky”, warning that “countercyclical policy” – basically, stimulus – of the kind that kept America from spiraling further into recession would no longer be able to come from Washington. This amendment is largely political and “the effects should this amendment be adopted would be frightening.”
- This is getting ridiculous – and voters don’t care about the politics. “Like the sounds of a crying child on an airplane, partisan bickering has become unavoidable background noise. Confidence in politicians on both sides of the aisle remains abysmal,” noted Kristen Soltis, director of policy research at the Winston Group, a political strategy and polling firm, in a Room For Debate column for The New York Times. Voters are less concerned with the political bickering and more concerned about what an inability to reach a resolution will mean for their wallets. Republicans may be right to push for spending cuts and no tax increases, Soltis said, but voters won’t remember that a year and a half from now; they’re less worried about the effect of raising the debt ceiling and much more worried about the consequences of not.
Obama on a ‘balanced approach’:
- Actually, the GOP should demand more. Even if voters don’t care about the politics, the Republicans should still use this debate as an opportunity to demand more “business-like budgeting” as part of any deal, declared Emil Henry, CEO of Henry, Tiger, in an op-ed for The Wall Street Journal. “Such a change would give leaders the tools for better-informed decisions and deter demagoguery enabled by incomplete data.” And if you want to talk about “irresponsible”, an allegation that the White House has been laying at the GOP’s feet in this debate, “isn’t this charge more logically leveled at an administration that, rather than assuring the markets and the world that the full faith and credit of the United States will never be compromised under any circumstance, takes seemingly every opportunity to suggest that it might? Or to suggest to seniors that their Social Security checks are at risk, when the means to preserve their benefits are so readily available?”
- So, what if America defaulted? It might not be Armageddon, but it would be pretty unfortunate. Explained The Associated Press, “Default likely would produce higher interest rates for consumers on mortgages, car loans and credit cards. It also would make U.S. government borrowing more expensive and could stop government checks from going out to elderly Social Security recipients. All that holds the potential for turmoil not only domestically but also in world financial markets and international economies.” Voters will remember that in 2012, make no mistake.
More on the debt ceiling debate, US economy
- US risks credit downgrade in debt ceiling stalemate
- Debt talks floundering, partisanship blamed
- The US’s dismal June jobs report: Smells like recession