The Debt Ceiling Antagonists
The debate over the federal debt limit ceiling sheds light on a structural problem of the American political system. Policymakers, liberal and conservative alike, use key issues like raising the federal debt ceiling to their political advantage as opposed to negotiating a solution for the nation’s well being. “This is the natural gamesmanship you end up with in a highly-polarized political system in which neither side trusts each other or is willing to seriously compromise,” says Larry Sabato of the University of Virginia’s Center for Politics. This political obstinence is a political ploy in order to advance a particular wedge issue knowing full well what the consequences might be of pursuing that tract. The business community, including the U.S. Chamber of Commerce, not considered to be a close ally of the Obama administration, is publicly calling for a vote to raise the debt limit or risk economic collapse.
“We’ve got a very few days to fix this debt, or we’re going to be running around with very serious problems,” said Tom Donohue during a Q and A with reporters at a U.S. Chamber of Commerce hosted jobs forum. While ultimately Donohue believes that Congressional leaders and the White House will hash out an agreement, the debate over raising the federal debt ceiling is occurring at the same time as prominent Republican policymakers and presidential candidates are openly challenging claims by the administration that by not raising the debt ceiling economic ruin will ensue.
According to prominent Tea Party Republicans, Rep. Michelle Bachmann, Rep. Ron Paul and Sen. Jim DeMint, the U.S. will not go into default if the debt ceiling is not raised. While this talk is mostly political bluster, a number of voters hold these three policymakers in high regard and consider their positions to be fact based and wise economic policy.
“I’m questioning what he’s (Obama) saying because we are not going to default. We’ve got enough tax revenue to pay our bills. It certainly will be disruptive if we continue on the track we’re going right now. But we have enough assets and Social Security, Medicare trust fund to pay those benefits for several years if necessary. It’s not ideal but we don’t need to panic and rush into a deal,” DeMint told “Today” show host Ann Curry.
Some politicos consider such dismissive talk ludicrous, bordering on dumb. Larry Sabato recently stated that the mere fact that policymakers are considering holding the debt ceiling vote hostage in pursuit of legislative priorities strikes many economists as dangerous. Sabato said he “wouldn’t call those who say it shouldn’t be raised insane, they are just dumb and ill-informed.”
Ron Paul has joined 20 other members of Congress and others in advocating for a pledge promising to block passage of any vote that raises the debt ceiling unless spending cuts are coupled along with it. “More than 40 conservative groups and 20 members of Congress will announce later Wednesday that they have signed a pledge to block a vote on raising the debt ceiling unless it is coupled with plans to cut, cap and balance federal spending…Ten Republican senators — including Jim DeMint, Marco Rubio and Orrin Hatch — along with 10 members of the House…have agreed to the ‘Cut, Cap, Balance’ pledge,” according to reporting by Politico’s Jennifer Epstein.
While this year’s debate over raising the federal debt limit is being hamstrung by the GOP, Democrats have in the past used the debt limit vote to generate political winds of their own. The most prominent example was then-Senator Obama’s vote in 2006, when he voted against raising the debt limit. While the White House insists that the president now regrets his vote, he did so at the time for political calculations.
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies…Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better,” Obama said in 2006 in explaining his vote. With the August 2nd deadline fast approaching before the U.S. will potentially default on its financial obligations, both the GOP and Democrats have essentially dug themselves into their respective trenches and are now lobbying allegations at each other.
Reminiscent of the Somme in 1916, both sides have been unwilling as of late to agree to a negotiated compromise and are engaging in trench warfare. There initially had been some promise of an agreement, a “grand bargain” between Obama and Speaker Boehner but this was quickly shelved once House Majority Leader Eric Cantor, and de facto head of the Tea Party, assumed the role as House lead negotiator with the White House during the negotiations.
Tensions between Obama and Cantor reached a pivotal moment when the president instructed all parties to come back to the White House with a workable solution and abruptly ended negotiations on Wednesday evening. While Cantor is describing Obama at the closed meeting at the White House as “abruptly walking out” the White House insists that the president has been more than amendable to spending cuts coupled with some new revenues. “The president told me, ‘Eric, don’t call my bluff. You know I’m going to take this to the American people,’…He then walked out,” Cantor recalled to the press after the negotiations broke down for the day.
To the Obama’s credit he has made concessions to the GOP over several trillion in spending cuts. To his detriment, only recently has he been receptive to trillions in spending cuts coupled with new revenues. Further, what has potentially hurt his argument during the White House negotiations is that these cuts have not been put on paper. Therefore the GOP assumes that his position is “smoke and mirrors” and not genuine.
If neither side is willing to take the necessary baby steps to come to an agreement, the U.S. will default and coupled with the financial apocalypse that is enveloping the Eurozone states, many developed and developing nations could be faced with financial Armageddon. Politically, the current debate is benefiting the president in gaining favor with independents which will help his reelection prospects.
However, what may be good politics for the president could be bad for the country.