The looming debt ceiling vote is already a partisan battle. The President insists he will not debate conditions on raising the ceiling to pay incurred debt. Republicans demand spending cuts as conditions. Circular firing squad forms around economy.
In his weekly radio address on Saturday morning January 5 the President said, “One thing I will not compromise over, is whether or not Congress should pay the tab for a bill they’ve already racked up. If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic. The last time Congress threatened this course of action, our entire economy suffered for it. Our families and our businesses cannot afford that dangerous game again.” In a bid to reinforce that message on all fronts, top aides were made available for press interviews in which they reiterated the President’s resolve on that issue. President Obama has no intention of allowing the debt ceiling to become a hostage permanently to decisions on other budgetary issues. Congress will not be permitted to create a standard of leveraging the nation’s economic standing, perhaps even the world’s economy against approval for payment of debt already incurred.
Republicans, having once tasted the power of getting America’s debt rating lowered by most international debt rating services (e.g., Standard and Poor, Moody, etc.), rendering it unmarketable to some sovereign debt purchasers and increasing the interest rate to all others, immediately struck back. In their rebuttal to the President’s Saturday message, House Ways and Means Committee chairman Rep. Dave Camp, R- Mich. said, “Many of our Democrat colleagues just don’t seem to get it. Throughout the fiscal cliff discussions, the President and the Democrats who control Washington repeatedly refused to take any meaningful steps to make Washington live within its means. That position is irresponsible and fails to acknowledge what every family in America already knowsÂ—when you have no more money in your account and your credit cards are maxed out, then the spending must stop.”
On “Morning Joe,” former House Speaker Newt Gingrich (is he already running for President again?) said that a hard line on tying the ceiling to deficit reduction would be “a dead loser” for the GOP. Wait… what? Yes, that’s what he said, and he’s not alone. There is dissension in the Republican ranks, with Majority Whip Representative John Cronyn advocating taking the government to full shutdown, while Billy Long, a Missouri TEA Party Republican elected in declared such an idea “impractical” while the country is still fighting, and paying for, two wars.
Obama has declared he will not “play that game again,” if the Republican House attempts to get a dollar plus in spending cuts for every dollar in debt limit increase, but newly reelected Speaker Boehner has declared that it is his intent to do exactly that. Whether he can hold the Republicans together in the end as the nation careens into another crisis over paying debt already incurred, or will lose enough of them to an up-or-down vote on a stand-alone ceiling increase bill to get it passed, remains to be seen. He has two months to persuade his outliers. It may not be enough.
What the President has said he will do is tie the debt reduction (not the ceiling) to a more comprehensive tax reform. He may find actual Republican allies on this one. Rep. Camp endorsed a review of the tax code, saying, “I believe in a simple principle. When it comes to the tax code, everyone should play by the same rules. Your tax rate should be determined by what’s fair, not who you know in Washington.” The devil is in the details, of course, but some Republicans do seem to believe that part of the revenue side of the President’s promised “balanced” approach to deficit reduction can be accomplished through revision of the tax code and elimination of special favors built into it. He will not, however, tie any of this to increasing the debt authorization ceiling.
A witching hour approaches. In two months, the ceiling must be increased, the initial “sequestration” amounts from the pre-election ceiling compromise must be dealt with, and a month after that (the end of March) the government runs out of funds for day-to-day operations. The Republicans want to create a grand package of correction to cover all of these together. The President sees too much opportunity to hold each segment hostage to the others. Congress and the President together have fewer than 90 days to come to agreements on all of these. They are going to have to quit behaving as if they are the winners and losers in this contest. The winners and losers are American citizens and businesses; but those stakeholders, while having the only skin in the game, have no say in the outcome… unless, of course, they write, e-mail, fax or call their representatives and senators and make a say for themselves.