GOP's Debt Fight Strategy Backfires
A very strange thing happened this week—truth appeared in Washington, D.C.
After President Obama met with House Republicans, both sides told the media that the meeting had gone poorly, that no common ground was found, that House Budget Committee Chairman Paul Ryan had expressed anger to the President, and that progress on a deal to get the federal debt ceiling raised never materialized.
Now, in the good old days, even a meeting that involved the direst of enemies (think Israel and Syria) would result in positive boiler plate spin. Something like this: “We had a frank and open discussion of the issues. We found some common ground that holds promise for some further discussion in the future. We continue to believe that we can find a solution to the most vexing of problems.”
In other words, “blah, blah, blah.” But last night, no “blah, blah, blah.” More than any other event of the past four months of talk on the debt extension, last night’s quotes revealed the true state of affairs.
Three things seem obvious.
First, House Republicans have been burnt by the Medicare attack from the White House and other Democrats.
Second, House Republicans don’t believe that the White House intends to have a comprehensive debt reduction plan of any serious magnitude before the 2012 elections.
Third, House Republicans now realize that failure to pass an increase in the debt ceiling (and any attendant consequences) will fall squarely on them.
As the GOP struggles to find some path to reverse these three “facts,” it seems to search further and further into unreality.
Initially, many in the caucus seemed to believe that the President would be blamed for any disruptions that occur if the debt ceiling isn’t increased. That wishful thinking flies in the face of overwhelming evidence from past events. The President always wins these kinds of confrontation, whether it is Ronald Reagan or Bill Clinton. The House has to pass a debt ceiling increase or not. Not the President. Not the Senate. And as the GOP has told, loudly, anyone within in shouting distance, it now controls the House and has the mandate to act from the people.
Some believe that following the “Toomey Plan” is the way out. Secretary of the Treasury Tim Geithner has enough cash flow each month to pay principal and interest on outstanding debt. After that, he will have to decide what departments to close down and what bills and salaries go unpaid. When these folks realize the impact of such a decision on their individual districts, and the economic turmoil that will result, this fanciful idea will evaporate, also.
Finally, several Senators believe they can force President Obama into unveiling a “post debt ceiling failure” budget. Then, they can attack that kind of budget. The White House won’t fall for this kind of obvious gambit.
Where does that leave things?
In all likelihood, after delay and debate, the debt ceiling will increase. The terms of “settlement” will be along these lines: a meager “down payment” of $1 trillion or so in savings over the next decade and some form of “draconian” enforcement language that will compel savings in the future.
Of course, $1 trillion over the next ten years is little more than a rounding error compared to the size of the debt numbers projected, but it may make enough of a headline back home that Congressmen can survive such an obvious failure.
And, this occurs when the following facts prevail: slowing economic growth, continued turbulence in European debt markets, recession in Japan, further housing value declines, 9 per cent unemployment, and a huge majority of Americans both losing confidence and saying that they believe that the nation is on the wrong track.
You don’t have to be a dour Scot to be pessimistic about any progress on getting the American fiscal house in order any time soon or any renewal of American voter faith in the federal government.