Peggy Noonan has written recently that the country has reached an “existential challenge” regarding the debt ceiling, yet our leaders in Washington choose to dither instead of engaging in order to resolve this impending crisis. Past precedent is not promising. Democrats view cuts in Medicare spending as an issue they can club the opposition with while the Republicans, led by the Tea Party and Grover Norquist, stand as an immovable object.
Choice facing our citizenry: individual hardship or collective catastrophe.
Failure to raise the debt ceiling is a recipe for unprecedented disaster. Government revenue will decline forty-percent. The value of the dollar will drop and interest rates will soar. Domestic and international lending markets will become frozen. Pensioners and Social Security recipients will not have money to spend and the fragile economy then falters again. The menu for averting this event is as simple as a hamburger and fries: entitlement reform and revenue enhancement. That’s it, nothing more, nothing less. Our political system, however is not nimble or wise enough to respond until something has to happen. Until then, there will be posturing on cable and theater in Congress, because re-election is everything in politics.
House rejects debt limit increase without cuts
By David Espo
AP Special Correspondent / May 31, 2011
WASHINGTON—House Republicans dealt defeat to their own proposal for a $2.4 trillion increase in the nation’s debt limit Tuesday, a political gambit designed to reinforce a demand for spending cuts to accompany any increase in government borrowing.
The vote was lopsided, with just 97 in favor of the measure and 318 against.
House Democrats accused the GOP of political demagoguery, while the Obama administration maneuvered to avoid taking sides — or giving offense to majority Republicans.
The debate was brief, occasionally impassioned and set a standard of sorts for public theater, particularly at a time when private negotiations continue among the administration and key lawmakers on the deficit cuts Republicans have demanded.
The bill “will and must fail,” said Rep. Dave Camp, R-Mich., the House Ways and Means Committee chairman who noted he had helped write the very measure he was criticizing.
“I consider defeating an unconditional increase to be a success, because it sends a clear and critical message that the Congress has finally recognized we must immediately begin to rein in America’s affection for deficit spending,” he said.
But Rep. Sander Levin, D-Mich., accused Republicans of a “ploy so egregious that (they) have had to spend the last week pleading with Wall Street not to take it seriously and risk our economic recovery.”
He and other Democrats added that Republicans were attempting to draw attention away from their controversial plan to turn Medicare into a program in which seniors purchase private insurance coverage.
The proceedings occurred roughly two months before the date Treasury Secretary Tim Geithner has said the debt limit must be raised. If no action is taken by Aug. 2, he has warned, the government could default on its obligations and risk turmoil that might plunge the nation into another recession or even an economic depression.
Republicans, who are scheduled to meet with Obama at the White House on Wednesday, signaled in advance that the debt limit vote did not portend a final refusal to grant an increase.
The roll call vote was held late in the day, and there was little, if any discernible impact on Wall Street, where major exchanges showed gains for the day. At the same time, it satisfied what GOP officials said was a desire among the rank and file to vote against unpopular legislation the leadership has said eventually must pass in some form.
Republicans said they were offering legislation Obama and more than 100 Democratic lawmakers had sought.
But Rep. Steny Hoyer of Maryland, the second-ranking Democrat, accused the GOP of staging a “demagogic vote” at a time lawmakers should work together to avoid a financial default.
All 97 votes in favor of the measure were cast by Democrats, totaling less than a majority and far under the two-thirds support needed for passage.
For its part, the administration appeared eager to avoid criticizing Republicans.
“It’s fine, it’s fine,” presidential press secretary Jay Carney said when asked about the Republican decision to tie spending cuts with more borrowing.
“We believe they should not be linked because there is no alternative that’s acceptable to raising the debt ceiling. But we’re committed to reducing the deficit,” Carney said.
The government has already reached the limit of its borrowing authority, $14.3 trillion, and the Treasury is using a series of extraordinary maneuvers to meet financial obligations.
By no longer would making investments in two big pension funds for federal workers and beginning to withdraw current investments, for example, the Treasury created $214 billion in additional borrowing headroom.
At the same time, the Obama administration and congressional leaders are at work trying to produce a deficit-reduction agreement in excess of $1 trillion to meet Republican demands for spending cuts.
Political maneuvering on legislation to raise the debt limit has become common in recent years, as federal deficits have soared and presidents of both political parties have been forced to seek authority to borrow additional trillions of dollars.
Because such legislation is unpopular with voters, presidents generally look to lawmakers from their own political party to provide the votes needed for passage. In the current case, though, Republicans control the House, and without at least some support from them, Obama’s request for a debt-limit increase would fail.
However, House Speaker John Boehner, R-Ohio, announced months ago that he would demand spending cuts as a condition for passage.
“It’s true that allowing America to default would be irresponsible,” he said on May 9 in a speech to the Economic Club of New York. “But it would be more irresponsible to raise the debt limit without simultaneously taking dramatic steps to reduce spending and to reform the budget process.”
He added that any spending cuts should be larger than the increase in borrowing authority, a statement meant to lay down a marker for the deficit-reduction talks led by Vice President Joe Biden.
Few details have emerged from those negotiations, although Biden said recently the negotiators had made progress. He expressed confidence they would be able to agree on specific cuts in excess of $1 trillion over the next decade, and then look to procedural mechanisms known as “triggers” to force further automatic deficit cuts adding up to another $3 trillion or so.
House Majority Leader Eric Cantor, a participant in the talks, said afterward, “I am confident that we can achieve over a trillion dollars in savings at this point, and hopefully more.”
Earlier, Sen. Jon Kyl, R-Ariz., had said the discussions centered on deficit cuts totaling in the range of $150 billion to $200 billion over a decade, but that was from a relatively small category of programs.
Among the areas eyed for spending cuts is the federal pension program, where the White House has signaled it is receptive to a Republican proposal for employees to make greater contributions.
Its nice to see big spending rinos got religion. Maybe the tax and spend liberals will follow. Its doubtful though
5/31/2011 7:05 PM EDT
“…ploy so egregious that (they) have had to spend the last week pleading with Wall Street not to take it seriously and risk our economic recovery.”
Or, maybe your power to spend without practical limit isn’t in the interests of our economic recovery.
5/31/2011 7:06 PM EDT
I can’t be out of money, I still have checks left. The US Gov’t does not have a “sugar daddy” other than the taxpayers, to pay off the credit cards.
5/31/2011 7:18 PM EDT
I don’t care from which party a politician is, just somebody, anybody, stop the bleeding and let this economy heal!
5/31/2011 7:21 PM EDT
Amazing – the voted GOP raised the debt ceiling 7 times during the Bush disaster and never said a word. Now they want to give more hefty tax breaks to the wealthy, refuse to stop the unneeded large government cash giveaways to oil companies or to end the giant tax gifts we give to companies who ship jobs out of this country to overseas. They tell us returning the tax rate for the wealthiest people in this country what it was during the Clinton years isn’t even open for discussion. So what does the GOP and their baggie friends want to do? They want to put this country into danger of creating a world-wide economic crisis because they want to cut programs that help senior citizens, children, the disabled, the poor and the middle class.
5/31/2011 7:24 PM EDT
Lots of Dems ran and hid from this bill. Where is the leadership from obama?
5/31/2011 7:32 PM EDT
The R’s should ALL be voted out because of this action! How can any R think this is funny, or productive? You keep voting these Jacks in and then they waste time and do nothing (again). This is insanity. Should they even accept pay for this action? They didn’t DO anything. They proposed something, then voted against themselves. Just shows you they are a complete waste of time and money!
5/31/2011 7:36 PM EDT
Know what is worse than tax and spend Democrats. Tax cut for the rich and spend Republicans. Get your story straight. See how Regan and the Bush’s did in GDP to national debt. Very ugly. Trickle down is a theft from the middle class
5/31/2011 7:39 PM EDT
Just goes to show that today’s Tea Party driven GOP doesn’t understand the fundamentals of how a capitalist economy works. You don’t grow a capitalist economy by severely contracting short term spending. The stupidity behind that idea is already starting to rear it’s head in terms of the quarterly numbers. Growth in the U.S. economy is slowing down at a time when it can ill afford it. Just look at the United Kingdom for a quick lesson in what you can expect from severe short term austerity: an even crappier economy.
5/31/2011 7:48 PM EDT
Even Paul Krugman acknowledges that at some point–some point–spending has to be reigned in–some day.
But Krugman keeps thinking there’s a better time to do it. Apparently an even better time than the time seven or eight years ago, or 12 or 13 years ago.
5/31/2011 7:52 PM EDT
masscom, when oh when are you liberals gonna realize that WE’RE BROKE!
Although I agree with many bloggers that BOTH sides are just grandstanding while getting paid an unholy amount of money, at least SOMEONE is trying to put the brakes on our “out of control” spending.
One of the biggest problems with our legislature is that there is just no leader to be found, especially in the White House.
Say what you want about that idiot Pelosi but at least she “led” liberals on their merry, irresponsible spending sprees.
This is gonna end ugly one way or the other so get ready liberals because no matter what your gonna get your pet projects cut, either by the congress or by the simple fact that WE’RE BROKE!.
5/31/2011 7:55 PM EDT
Republicans defeated their own bill? And they believe Americans WANT them running the White House AGAIN?! Bush was a disaster; why would we want that again?
5/31/2011 7:59 PM EDT
@e67 “Even Paul Krugman acknowledges that at some point–some point–spending has to be reigned in–some day.”
Here’s the problem: debt isn’t really just created by spending, but also by lost revenue. In other words, if your country already has a large projected debt and then experiences a severe recession which sheds millions of jobs and significantly contracts revenue from income tax, capital gains tax, and sales tax, that’s also going to raise debt.
And you’re not going to help yourself pay off that debt by falling back into a recession by slashing the amount of money flowing into the economy. Capitalist economies require overall spending to INCREASE, not decrease, in order for growth to occur. There’s no realistic reason currently to expect private sector and consumer spending to suddenly rise at the same time government spending is being slashed, which means you’re risking another recession and even higher debt.
Again, look at the U.K. Short term austerity was supposed to increase “confidence” and make the economy grow. That hasn’t happened, and they started slashing spending long before the U.S. did.
5/31/2011 8:13 PM EDT
If government spending puts money flowing into the economy, let’s build Bridges to Nowhere in every American city. Shovel ready stimulus, right?
It isn’t enough to just spend money. Nor is it enough to conjure more currency out of thin air and buy back bonds with it. Spending must create value to be of any use to the economy. Incidentally, the government sucks at creating value.
5/31/2011 8:21 PM EDT
What’s the problem? Raise taxes, print more and borrow more. Let someone else clean up the mess as long as I get what’s coming to me.
5/31/2011 8:25 PM EDT