The Debt Ceiling Debacle

It was Winston Churchill who is reputed to have remarked that the best argument against democracy is a five-minute conversation with the average voter.  Were he alive today and witnessing the great debt ceiling debate, Churchill might well form a different conclusion.  Because there can be little doubt that the best argument against democracy is witnessing a 5-minute cable TV interview with the average member of the Tea Party caucus in the U.S. House of Representatives.

I don’t know whether these people lack the capacity to understand the fundamentals of the economic system we live in, or whether their unrelenting hatred of Barack Obama simply makes them oblivious to the facts.  Whatever the cause, they seem to inhabit a world disconnected from the realities of the economy and of government. They are incapable of even discussing the issue other than through meaningless clichés – about government “living within its means” (which it was doing, by the way, before George W. Bush took office), cutting off “Obama’s blank check”, etc.  Until last night, there was hope that the Republicans in the Senate would finally show some semblance of responsibility and agree to negotiate a debt ceiling increase based on the bill proposed by Majority Leader Harry Reid.  But to the surprise of all pundits, his Republican counterpart Mitch McConnell announced he would not negotiate with Reid and that the Republicans would actually filibuster the debt ceiling bill – which has 59 votes in support, 1 shy of the number required to pass almost any legislation in the Senate these days.

What makes McConnell’s action so inexplicably irresponsible is that the Republicans have already won the debate but don’t seem to know it.  In the past, debt ceiling increases have been routine measures, as they should be.  All they do in effect is permit the Treasury to borrow the money necessary to fund the programs Congress has already authorized, and which the President is constitutionally required to carry out.  That’s why all of this talk about “blank checks” is such nonsense.  In this case, the Republicans demanded at an early stage in the debate that a debt ceiling increase be linked to deficit reduction, and Obama’s agreement to negotiate with John Boehner established that the battle would be fought according to the Tea Party rules.  It was the equivalent of taking the “public option” off the table before the health care negotiation had started.  But it got worse.  Rather than demanding that cuts in spending be matched dollar-for-dollar by revenue increases, the White House’s opening gambit was a three-to-one ratio, and over time Obama retreated further, eventually demanding only the repeal of accelerated depreciation allowances for corporate jets and the elimination of largely unspecified tax benefits for oil and gas companies.  There was even talk that Obama would agree to changes in Social Security benefits – an unacceptable prospect for most Democrats and ironic given that the Social Security trust fund is one of the principal domestic creditors of the Federal government.  But none of this was good enough for the Republicans.

For someone supposedly schooled in the art of brass knuckles Chicago politics, Obama has demonstrated remarkable ineptitude and timidity in negotiating with the Repubicans.  Time after time, the velvet glove has concealed merely a velvet fist.  And in this case, Obama lacks any real moral authority to preach against the dangers of a default by the United States, since he also voted against raising the debt ceiling during his short tenure in the U.S. Senate.  Perhaps he did so comfortable in the knowledge that the measure would pass anyway because others would act more responsibly, but that would differentiate him from the Tea Party only to the extent that they can at least can claim the courage of their convictions.

What we now are now left with is a bill proposed by the Senate Majority Leader that gives Republicans everything they had originally asked for, and more.  Trillions in spending cuts, no revenue increases and a mechanism for further deficit reduction down the road.  But it lacks the component that the Tea Party has decided, within the last few days, is necessary if they are to support any increase in the debt ceiling -  a constitutional amendment to require a balanced budget.  This is a foolish proposal that was last seriously mooted by Ronald Reagan, who, in his eight years in office, never once actually submitted a balanced budget to Congress.  The way to a balanced budget is not by amending the constitution, but by looking at what was done the last time the budget was balanced - by Bill Clinton - and by reversing the measures taken by the inept Bush administration that were responsible for taking it back into deficit.

But back to the debt ceiling.  There is and always has been a simple and straightforward solution.  Obama should instruct Harry Reid to let his compromise legislation die.  He should then act unilaterally, using the authority apparently granted under the 14th Amendment to the Constitution, and instruct Treasury Secretary Geithner to go out and borrow as much money as needed to pay the bills Congress has already racked up.  This is a post Civil War measure not invoked in recent times, and Obama foolishly questioned, at a news conference some weeks ago, whether it could be used in this case.  But he should heed the advice of Bill Clinton, who knows much more about the art of government than Obama ever will;  invoke the amendment, raise the debt ceiling, and dare the courts to stop him.  The United States would avoid default, the spending cuts would be off the table, and deficit reduction could be addressed in a mature and measured manner.  It might also teach the Tea Party crowd a lesson about the nature of government and the consequences of just saying “no”.