December 10, 2012
With President Barack Obama holding his ground on tax increases for the wealthy, congressional Republicans appear intent to make a tactical retreat from the fiscal cliff to an issue where they believe they have more leverage: the nation's debt ceiling. It's the same trick they pulled to disastrous effect in 2011, and they try it again at their — and the nation's — peril.
As we lurch toward the automatic tax increases and spending cuts that go into effect on Jan. 1, it's worth a brief recap of how we got here. In the spring of 2011, the newly emboldened Republican majority in the House of Representatives threatened to shut down the government unless President Obama agreed to a level of spending cuts that would have plunged the nation back into recession. They agreed to a budget for that year but not to the increase in the federal debt limit that would be necessary to actually pay for the spending they had just authorized.
During the summer, House Republicans insisted on tying any increase in the debt ceiling to the passage of a balanced budget amendment — a political nonstarter and an economically foolish idea. On the very last day before the federal government would have defaulted on its debts, the White House and Congress agreed on a complicated compromise that allowed the debt to be increased in stages over the next 18 months, cut spending by $917 billion over a decade and impaneled a so-called "supercommittee" to find another $1.2 trillion in cuts.
The upshot of all this maneuvering: Standard & Poor's reduced the nation's credit rating for the first time, public approval of Congress plummeted, the stock market tanked, the supercommittee failed, and we wound up with the mandatory, across-the-board budget cuts known as "sequestration" that are due to hit starting in January.
Republican posturing on the debt ceiling got us in this mess and likely tamped down the economic recovery as global financial markets, businesses and consumers alike lost confidence in the United States government. And now they want to do it again.
The Republicans are in a box because the Jan. 1 expiration of the Bush tax cuts means Mr. Obama can achieve his goal of higher rates on the wealthy without taking any action, and Treasury Secretary Timothy Geithner indicated last week that the president is willing to let that happen. Republicans simply have a choice of passing tax cuts for the middle class now or after Jan. 1, and increasingly, they are recognizing that they have a losing hand.
The president also warned this week against Republicans trying to beat a tactical retreat to the debt limit, which will need to be increased again in February — but the GOP, it seems, just can't help itself. "We do have some leverage with the debt ceiling increase, more than we do right now," South Dakota Republican Sen. John Thune said Friday on Fox News, expressing the thoughts of many. "The debt ceiling at least requires Congress to take action."
It's a cynical move because the debt ceiling has nothing to do with controlling the level of federal spending, just the government's ability to fund appropriations Congress and the president have already authorized. Fighting over the debt limit is like trying to control your cholesterol not by stopping eating cheeseburgers but by refusing to pay for them.
Democrats, to paraphrase President Obama, aren't playing that game again. Mr. Obama has set as part of his conditions for avoiding the fiscal cliff a version of an idea originally proposed by Senate Minority Leader Mitch McConnell that would allow the president to raise the debt ceiling unless Congress could muster a veto-proof majority for a resolution to stop him. Mr. McConnell tried to rush the idea to a vote on Thursday, thinking that he could show that even many Democrats oppose that idea. But Democratic senators were prepared to call his bluff, and the Kentucky Republican wound up filibustering to stop a vote on his own bill.
And there are signs that the public isn't buying it either. The president of the Business Roundtable, a group representing big corporations, suggested extending the debt limit enough to last for five years to avoid the kind of damaging standoff we saw last summer. Other business leaders appear to be warming to the president's proposal to take Congress out of the equation.
Whether the answer is a procedural change or just another agreement to raise the limit, the debt ceiling needs to be part of whatever fiscal cliff deal President Obama and the Republicans strike. We can't allow the resolution of one manufactured crisis lead us into another.
Copyright © 2014, The Baltimore Sun