In the first closed-door meeting of the Republican majority in the new Congress, newly reelected House Speaker John A. Boehner on Friday promised a robust fight with President Obama to cut spending in exchange for raising the nation’s debt limit.
The Ohio Republican doubled-down on his insistence that there must be at least a dollar-per-dollar match between spending reductions and continued borrowing.
“With the cliff behind us, the focus turns to spending,” Boehner said, according to a source in the room who requested anonymity to discuss the private meeting. “The president says he isn’t going to have a debate with us over the debt ceiling. He also says he’s not going to cut spending along with the debt limit hike.”
Rep. Dave Camp (R-Mich.) called for spending cuts and entitlement reform in the GOP weekly address on Saturday.
Camp, who chairs the tax-writing Ways and Means Committee, said Democrats have not been wiling to put real spending cuts on the table in deficit-reduction negotiations, including the most recent talks to avoid the “fiscal cliff.”
“That position is irresponsible and fails to acknowledge what every family in America already knows – when you have no more money in your account and your credit cards are maxed out, then the spending must stop,” Camp said.
[W]hat is Obama going to do when he reveals his budget next month? What is his position going into budget showdowns over the course of his second term? There’s still room for him to push for more taxes, but he has conceded setting the threshold for increased income taxes at $400,000 instead of $250,000. If he wants to avoid new tax increases on 98-99 percent of households, and has already raised $617 billion, there’s an upper limit to how much additional revenue he could propose. Maybe he can come up with another few hundred billion, or approach $800 billion, by getting rid of various deductions and loopholes in the tax code. But there isn’t much room beyond that. The few hundred billion in savings he could theoretically find by tweaking mandatory programs and health care in a way Democrats may be able to swallow would largely be offset by the stimulus spending he still wants to push. It’s harder to argue that intransigent Republicans are standing in the way of deficit reduction when most of his deficit reduction proposal has already been enacted.
The truth of course is that it’s Congress that has incurred the debts, not the president. The only reason the president appears to be in the position of being the one seeking the increase is that any sitting administration (its Treasury Department) is the one that actually has to pay the bills. That’s a pretty sweet deal for Congress. They run up the bills, and then, when the president asks them for the money to pay off the bills that they incurred, they say no!
Obama, in my memory, never once pointed this out in 2011, but he has already done so this time around: “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,” he said on New Year’s night, after the House passed the cliff bill.
He needs to bang this home with an intensity like it’s October in a presidential campaign. First and foremost, he has to get the business world on his side, such that they’re willing at least privately to come down on the Republicans like a ton of bricks. In 2011, these titans had to hedge their positions because most of them were hoping a Republican president would be elected the next year. But Obama is in the captain’s chair for four more years. There’s no political point to such hedging now.
Second, he should use the State of the Union to drive home the absurdity of the situation, and the outrageousness of it. He needs to turn and face the assembled Republicans and say directly to them: “You fooled me once in 2011. I won’t get fooled again. No negotiating means no negotiating.”
So there are the GOP’s choices:
1. Give Obama his way on the debt ceiling, in which case the USA accelerates towards becoming Greece and the GOP become pointless as a political party.
2. Fight but cave, as they have done so often, in which case the USA accelerates towards becoming Greece and the GOP become pointless as a political party.
3. Find a way to throw the steering window out of the window of their car.
4. Convince Obama that they really are crazy (like a fox).
In the long run, options 3 and 4 are not just brave politics but also good economic policy…
The last time we went through this exercise, I counseled the GOP not to play chicken with Obama. But when facts change, I change my opinions. It’s become clear that Obama and the Democrats cannot be trusted to cut spending. It’s become clear from what Obama and Schumer are saying that the Democrats are going to insist on turning the debt ceiling into a chicken game.
For conservatives, all of this should come as a relief. With Mitt Romney’s defeat in November, most recognize that any big deals favoring their positions are impossible. Barack Obama is no Bill Clinton, and there is no hope of a grand center-right bargain with him, let alone the Democratic Senate. Obama, Boehner, and Reid are not going to cut a deal on entitlement reform in the way Clinton, Newt Gingrich, and Trent Lott made a deal on welfare reform in 1996. But to say that there will likely be no big breakthroughs means that the left can expect to be stultified as well.
The Beltway punditocracy will, of course, bemoan gridlock. But the blame is misdirected. Our system of government is designed to impede reforms not backed by a broad majority, and the country remains deeply divided. While most Americans agree that the status quo is unacceptable, there is no consensus on what to do about any major issue. Thus, for the next two years, we should expect Washington to accomplish little.
Unfortunately, all of this is a consequence of the last election. Conservatives had hoped to provide the public a clear contrast on the issues of spending, taxes, and economic growth, and that the electorate would come down definitively on one side or the other. The people declined to do that, and the result of their demurral will be at least two more years of stagnation.
Democrats want more revenue so that the entitlement system doesn’t have to be reformed, while Republicans want to reform the entitlement system so that the government doesn’t have to take up more of the economy. This means that doing a good deal of each at the same time would not give both parties what they want—it would give both parties what they are trying to avoid.
A grand bargain with far higher taxes in return for a thoroughly transformed entitlement system would give each party the means it is after but at the cost of the end it is after. That would be a foolish bargain for both of them. They would rather do nothing, and so in fact they have done nearly nothing—reaching agreements to put off deadlines and avert self-inflicted pain but otherwise not changing the basic fiscal circumstances much. These tiny steps are worth taking, but they do not address the underlying problem. Since our deficits and debt grow larger in the meantime, there will always need to be another deadline set, and another crisis scheduled, but it is hard to see why those should turn out much differently, at least as long as either party has the electoral power to stop the other.
At some point, in other words, the fiscal question dividing the parties will be decided by voters. It will likely not happen in some dramatic fashion with one decisive election fought over the future of America, but in the normal and gradual course of our politics. It may even happen by accident—after an election fought mostly on other issues that gives one party or another enough control of the elected branches to advance its fiscal reforms. Until then, both parties will likely continue their defensive efforts, and seek whatever modest incremental steps are possible in an era of divided government.
President Obama can make a better argument. Congress has given him an impossible task: to implement a large number of costly public projects with less money than those projects cost. If he cuts spending, then he violates constitutional norms that give Congress the power to determine spending. If he raises revenues by borrowing or trying to tax people, then he violates constitutionals norms that give Congress the power to borrow or tax. In the face of contradictory instructions from Congress, the president can’t avoid choosing—by virtue of his administrative role as collector and disburser of revenues, the president must do something. Where Congress fails to provide him with consistent instructions, he has the discretion to do what he believes is in the public interest. If the economy were to be on the point of collapse, he could cite emergency powers sanctified by tradition as his authority for borrowing beyond the debt ceiling on his own. But a less drastic argument is that the power to resolve conflicting congressional orders is inherent in the president’s administrative role. Indeed, presidents frequently face conflicting statutes as they govern, and they have long enjoyed a great deal of discretion in resolving them…
[F]or government to function, the dysfunctional institutions within it must give way. The president has spoken softly for long enough; now it is time for him to wield the big stick and raise the debt ceiling on his own.
We still need to do more to put Americans back to work while also putting this country on a path to pay down its debt. And our economy can’t afford more protracted showdowns or manufactured crises along the way. Because even as our businesses created 2 million new jobs last year – including 168,000 new jobs last month – the messy brinksmanship in Congress made business owners more uncertain and consumers less confident…
And as I said earlier this week, 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.
“We blame politics — always [saying] Washington is all dysfunctional,” Brooks said. “They’re responding reasonably efficiently to what the American people want, which is to take the future’s money and spend it on ourselves. … So I do think it starts with the American people.”