When I wrote on this issue previously, I tried to make two points, which Republicans didn’t follow:
1.) The debt ceiling has to be raised.
There are many things that Obama is wrong about. Yet the President was right on one thing. Default isn’t an option. You have to raise the debt ceiling eventually. Some Republicans (especially Tea Party Freshman) seem to think you don’t have to honor your debts, that American can simply walk away from them. They are just like Obama in one aspect: both sides would sacrifice everything as long as it meant destroying the other. Rep. Paul Broun (R-GA) even said we should lower the debt ceiling, forcing Americans to make massive European-style austerity cuts. The entire point Republicans made when passing Paul Ryan’s budget was that forced austerity was bad, and that we can manage our finances without resorting to such economy-killing measures. Then again, Mr. Broun was one of the few open birthers in Congress, so this shouldn’t be surprising.
2.) Focus on the way money is spent in the future, not current spending
The temptation to demand huge spending cuts is indeed very tempting. We want to get something out of Obama right away. Yet spending cuts now do nothing to change the bad system currently in place where it is far too easy to raise spending. Republicans for the most part ignored this, and demanded serious spending cuts to current programs, including entitlement reform. Part of me admires their bravery. Yet I’m far more concerned about preventing future presidents, whether they be Democrats or Republicans, from going on spending benders the way the last two Presidents (one Democrat, one Republican) went on.
President Obama, give him credit, played his response nicely. He professed to offer serious spending cuts and entitlement reform, but offered tax increases alongside it. That tax increases would torpedo the economy is beside the point. Obama knew they wouldn’t back tax increases. Yet he understood that spending cuts and entitlement reform in exchange for raising the debt ceiling was a bad deal for him. Republicans need the debt ceiling raised just as much. (See #1.) Since they wouldn’t back tax increases, the entitlement reforms he was professing to propose would never occur, so he would never actually have to be specific. That must be remembered. To this date, nobody has offered any specifics of what is going to be done. President Obama figures his plan needs no substance.
This is all about politics. He wants the debt ceiling raised just long enough to get him through the election. Part of him I am sure would not mind a default, if it meant Republicans were damaged. Such a default wouldn’t be long, and once Republicans capitulated, he would get his way. Sam Nunn famously said about politics “Never take a hostage you aren’t willing to shoot.” President Obama has proven time and time again, he is not afraid to shoot the hostage. In a fight between the President and Congress, the President has the advantage.
This became apparent when Senator Mitch McConnell (R-KY) offered a very convoluted plan in response to Obama’s act. In short, it would give Obama the authority to raise the debt ceiling unilaterally. Democrats could vote against it or for it, but in the end, Obama would get what he wanted. This was a retreat. Republicans weren’t surrendering, but they clearly wanted out of the situation they dug themselves into.
Then Obama got sloppy.
Part of the entire charade was to have a sense of calm and coolness that is befitting the President. Since he holds all the power, he needs to act like it. He forfeited this earlier this week. During negotiations at the White House with congressional leaders, he became visibly enraged by House Majority Leader Eric Cantor. (R-VA) Cantor offered a short-term debt ceiling increase that gave them the breathing room to work out a long-term deal and debt reduction thrown in. The reasoning made sense. President Obama had been stating that not only must we raise the debt ceiling, but we must also put forth a credible deficit reduction package, otherwise the debt ceiling won’t matter, our credit would still get downgraded.
President Obama boldly refused, stating a deal must have tax increases, and must get him through the election. Announcing he would hang his Presidency on the issue, he vowed to veto a short-term move. Threatening that Republicans better not “call his bluff”, he angrily stormed out of the room. With this move, Republicans suddenly had life again. The President dismisses you from a meeting. He doesn’t storm out of his own meeting. Why was he so angry with a move that would’ve given him everything he needed? Simply put, the move wasn’t politically expedient. Once Republicans saw this, they knew what they had long suspected: Obama had no plan.
The past two days have only confirmed that. During a press briefing, Press Secretary Jay Carney explicitly said he couldn’t figure out what was worse: a default or having to vote on the debt ceiling again in six months. The answer to this question is: of course a default is worse, that is why we are doing our best to prevent it! The question became, worse for the country, or Obama’s re-election prospects? This image was reinforced during today’s press conference. Given ample opportunity to do so, Obama refused to reveal one dollar or one program he would cut. This was the perfect time to at least show a little bit of what he wanted to do, putting pressure on Republicans.
Since he has no plan, events are moving on without him. As of right now, Barrack Obama is irrelevant in the debt ceiling debate. Sensing the moment, Speaker Boehner and Majority Leader Cantor have announced they will vote next week on the finally revealed House Plan to raise the debt ceiling. The plan would raise the ceiling by 2.4 trillion dollars, but also include 2.4 trillion in spending cuts. A vote on a balanced budget amendment would be held right after. (To prevent the two from being coupled.) Are they bluffing? I am led to believe that if they are bringing forth a plan, they have the votes to pass it.
The Democrats in the Senate are in the works for offering their own plan in the absence of leadership from Obama. Senate Majority Leader Harry Reid has announced he has entered into negotiations with Senator McConnell over his plan on the debt ceiling. He does so out of naked self-interest, and I’m okay with that. He sees how vulnerable his colleagues are in 2012. They need to say they voted to increase the debt ceiling, as well as offering spending cuts. So far, it appears that 1.5 trillion in spending cuts have been attached to McConnell’s plan. Both raise the debt ceiling by 2.4 trillion. McConnell’s plan does it over 3 installments, whereas the House does it all at once. Either way, tax increases are off the table, and spending is cut.
If the house plan passes (which is likely) then Democrats are faced with a choice. The Senate Republicans will support the House measure first. (McConnell’s plan is a last resort.) Does Harry Reid obstruct it or permit it to a vote? If it comes to a vote, it will pass. If he blocks it without an alternative, Democrats have chosen default. Or he can choose to cut 1.5 trillion instead. This isn’t a compromise between the Republican Party and the White House. It’s a compromise between the Senate GOP and the House GOP. Does Obama dare veto it? He would have to offer a plan of substance instead. Reveal that plan, and he faces a revolt from his base. Admit you don’t have a plan, and he has no credibility. Pass the plan, and you must sell to your base that Republicans beat you a third time since December 2010. He would come out of this with nothing. Republicans will have thwarted his goal of raising taxes, and they managed to enact serious spending cuts.
Of course, the House could fail to pass the plan, doubtful as that may be. If they pass it, they called Obama’s bluff, and realized he had nothing. Your move, Mr. President.
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