2:44 PM EST, January 3, 2013
With the fiscal cliff surmounted, at least temporarily, a new Congress sworn in and Republicans licking their self-inflicted wounds, it is tempting to theorize that a new political reality has taken hold in the nation's capital — one where the American economy won't be taken hostage by the House GOP and Washington won't bounce around from one trumped-up crisis to another.
The best evidence of this would be the lopsided and bipartisan votes in favor of the final tax package approved by both the House and Senate. Permanent higher taxes on the rich, something that seemed impossible one year ago because of Republican intransigence, are now the law of the land. A majority of Americans supported this policy when they cast their ballots for President Barack Obama in November, and, finally, Congress seemed to notice.
But it's also quite possible that this was merely a one-time aberration involving a sufficient number of conservatives finally recognizing that plunging the nation into a recession isn't good for anyone — not for debt reduction, not for job creation and especially not for their chances of re-election. Within a matter of weeks, the familiar stalemate and mutually assured destruction of the past may reassert itself by means of the debt ceiling.
President Obama recognized this and said something worth noting after the tax bill was passed: "While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they passed."
While some have suggested that "this Congress" renders the statement moot (Mr. Obama's remarks having been made before new members were sworn in), we think the meaning is clear. Congress is welcome to start spending less money, but refusing to pay its outstanding bills — which is what refusing to raise the debt ceilings represents — is off the table.
We strongly agree. Just as an individual who is overextended doesn't start economizing by refusing to pay the mortgage, Congress can't jeopardize the nation's credit like some terrorist with a gun to his own head. Want to reduce the deficit? Stop spending so much money. Negotiate a long-term deal — a "grand bargain" — that steers the U.S. toward a reasonable, sustainable balance of taxes and spending.
It's clear Republicans are counting on the debt ceiling as leverage to get Democrats to agree to bigger spending cuts. But we've seen that strategy before, and here's how it ends: economic uncertainty that causes businesses to withhold investment and reduces consumer confidence, and a lowered U.S. credit rating that raises borrowing costs ($18.9 billion so far from the last go-round). What it definitely does not lead to is a rational, long-term strategy for addressing those issues Republicans claim they want to focus on, like reform of the tax code or entitlement programs such as Medicare.
House Republicans and Fox News commentators may scoff at Mr. Obama's line in the sand, but we suspect the public feels exactly the same way after the long, painful negotiations over taxes. Should Democrats fail to deliver needed spending cuts before the midterm election, they are certain the pay the price in 2014 and perhaps in 2016 as well.
If, however, Republicans overplay their political hand and drag the nation deeper into a financial crisis by refusing to raise the debt ceiling between now and mid-March (or taking similar self-destructive actions in the months to come), voter anger will be directed at them. Give the public some credit as scorekeepers — they read more than GOP talking points, as New Jersey Gov. Chris "Give my own party hell over Sandy aid" Christie might say.
We don't deny that the nation's debt situation requires some unpleasant medicine. And we have doubts over Democratic resolve to face up to the challenges facing popular programs like Medicare and Social Security. But holding the debt ceiling hostage is playing with fire that could prove even more destructive to the U.S. and world economies than the fiscal cliff. It's simply the wrong instrument to use as political leverage.
If the House Republicans fail to recognize this fact, Mr. Obama should not negotiate, he should circumvent. That may even require embracing fanciful-seeming, alternative measures postulated by experts — minting trillion-dollar platinum coins among them — to preserve the nation's fiscal integrity. Anything would be better than the U.S. defaulting on its debts.
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