Stop the Next Bad Deal: The Debt Ceiling Fight
Wednesday 08 December 2010
If you think the tax cut fight led to a bad deal… it may also lead to an expectation by conservatives they will finally be able to cut, gut or shut the government in the coming fight over raising the debt ceiling. The President and Democrats in Congress should take steps now to keep them from thinking they can win that.
Early next year the country’s debt ceiling has to be raised – or else. Conservatives are likely to push for “or else” and hold the “full faith and credit of the United States” hostage to their demands to gut the middle class and democratic government. They will claim they want “budget cuts” because of the deficit but the results of the tax cut fight -- $700 billion more borrowing – show that cutting deficits is not their real agenda. Plutocracy – government of, by and for the wealthy few – is their agenda and they are willing to threaten the world economy to get what they want.
Background – What Is The Debt Ceiling?
Since the Reagan and ‘W’ Bush tax cuts for the rich and dramatically increased military spending, the United States does not bring in enough revenue from taxes to pay for everything it does. But the government can’t just go ahead and borrow without a specific authorization from the Congress and then only up to a limit called the “debt ceiling.” With this authorization the Treasury can sell bonds to raise the money that is needed beyond what taxes bring in, but once this limit is reached the government is not authorized to borrow any more.
If the debt ceiling is reached and Congress does not authorize an increase the government can still fiddle around a bit – move money from one place to another, not pay some bills, a few gimmicks like that – but fairly soon a large amount in T-bills will mature and that money will have to be paid. If there is not enough cash to pay off those T-bills the government will be forced to default. That could upend the economy not just of this country but of much of the world. And it will forever destroy the idea of the dollar as the safest currency in the world, with consequences including forever after having to pay higher interest rates.
Conservatives have tried to use this as a bargaining chip in the past and backed down, and now they have talked themselves into using it again to try to gut or shut the government.
A Looming Disaster
The Center for American Progress, in an issue brief titled, The Big Freeze, calls the debt ceiling limit fight a “Looming Disaster,”
Led by the advice of Newt Gingrich, the former House Speaker who was the architect of the 1995-96 debt ceiling crisis, many conservatives are clamoring for a repeat of this past episode in recklessness.
. . . such a move could lead to a panic in the international financial markets. Following the 2008 financial crisis, we have seen debt crises hit Ireland, Greece, and Italy, with fears that this could spread further and cause a global economic downturn. The financial markets are on edge today, with U.S. Treasury bonds being the safe haven for most investment capital. Refusing to raise the debt ceiling would recklessly disrupt the sale and purchase of new Treasury bonds, and could potentially cause a run on outstanding Treasurys as well, as investors sought other investments. This could have catastrophic consequences for our economy as well as the economic stability of the rest of the world.
So a disaster looms. And the conservative response to looming disaster? Many conservatives are just salivating at the opportunity this presents them with. They just can’t wait.
Shutdown Confrontation Pushed by Conservative Leaders
If you are listening to the radio, watching Fox or reading the right’s press and blogs you understand conservatives are talking themselves into blocking a debt ceiling increase. Raising the debt ceiling is popularly understood as “authorizing more borrowing” and this is going to cause a real problem in the new “Tea Party” Congress. Many describe a refusal to raise the limit as "cutting up the credit cards." Others call voting against raising the debt ceiling a “test of courage.” They are drawing a line in the sand. Many are going to insist on either deep, deep, deep cuts eliminating most of what the government does or complete shutdown and default.
This thinking is pushed by conservative leaders. Rush Limbaugh last November, when the ceiling was raised a bit,
Every little commie SOB on liberal cable networks is asking every Republican guest, "What about the debt ceiling? What about the debt ceiling? Are you gonna raise the debt ceiling next week? Gonna raise the debt ceiling?" We're gonna run out of money. We're reaching a debt limit, and of course they want guys like Cantor and Pence, whoever the guests are to come on television, "Oh, yeah, we gotta raise the debt ceiling to keep the government going." Well, then, if you say that we gotta raise the debt ceiling, how can you possibly talk about cutting the deficit? How can you possibly talk about reducing the size of government? Why don't you just let the debt ceiling not be raised?
Conservative movement leader Grover Norquist also called recently for a shutdown (video at link).
The head of the influential Americans for Tax Reform is encouraging the new House Republican majority to adopt a take-no-prisoners approach to federal spending — and if that leads to a 1995-style government shutdown, so be it.
Hoping for a Bloodbath
So conservatives believe that the coming need to increase the debt ceiling – or else – gives them the opportunity to either cut the government to the bone by extorting a deal from the President – or to just shut down the government. Those familiar with current conservative thinking understand this will be a tough choice for them; both are long-time conservative objectives. And since either one is a desired objective, they don't care much for the fallout.
Former Senator Alan Simpson recently gave a preview of conservative thinking. From Politico,
“I can’t wait for the bloodbath in April,” Simpson said, relishing the prospect of political turmoil. “When debt limit time comes, they’re going to look around and say, ‘What in the hell do we do now? We’ve got guys who will not approve the debt limit extension unless we give ‘em a piece of meat, real meat” in the form of spending cuts.
“And boy, the bloodbath will be extraordinary,” he said.
And just how crazy will the incoming Tea Party Congress be on this? Fox News reports,
Rep.-Elect Bill Johnson of Ohio told the Wall Street Journal this week about his sense of the more than 80 freshman members: "Most of us agreed that to increase the limit would be a betrayal of what we told voters we would do."
Think Progress calls these conservatives in Congress the “shutdown caucus.” They want the government stripped bare or closed, and don't much care which. And with conservative leaders egging them on, as described above, it is no surprise that the conservative base will see anything less than stripping or shutting down the government as a "betrayal."
Responsibility to Govern?
This level of expectation presents a problem for those conservatives who might want to govern responsibly -- if there are any. In his press conference Tuesday President Obama said that the next House Speaker has a responsibility to govern, saying,
“…I'll take John Boehner at his word that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. ... But once John Boehner is sworn in as Speaker, then he's going to have responsibilities to govern. You can't just stand on the sidelines and be a bomb thrower."
If he truly believes that today's Republicans want to “govern,” the President is just not understanding the goals or the nature of the “Tea Party” and the conservative movement. And even if Boehner & McConnell's agreement to this week's tax deal suggests they might not be inclined to take the shutdown route, this does not mean they will be able to control their caucus.
Steps to Take
What can the President and Democrats in Congress do to avoid this "looming disaster? They are going to have to risk the wrath of the Fox News/Rush Limbaugh/Chamber of Commerce conservative noise machine, talk to the public and tell it like it is. They are going to have to stop being afraid they will be called "socialists" or "anti-business." They are going to have to understand that conservatives and the Chamber of Commerce are going to say that about them no matter what they do and start doing the right thing for working people instead of trying to please the wrong people.
- Use the Bully Pulpit. First, they can start talking to the public about the situation. President Obama gave a great explanation of the choices that led him to make the tax cut deal this week. But if he had been using his "bully pulpit" in the weeks and months leading up to this week to say many of the things he said at the conference, many think he would not have had to make such a bad deal at all.
- Make the Progressive case. Talk to the public. Tell them what the benefits to them are of a progressive approach. Repeat and repeat and repeat the story of good government helping We, the People. Then repeat it again. And again. Explain that we are all in this together, taking care of and watching out for each other, and that the government is We, the People doing just that. Contrast that with the conservative vision of everyone on their own, alone, with no help from community or others, fighting for what scraps they can get from the rich and powerful who will control everything without government (We, the People) to watch out for and take care of us (each other).
- Fight. Sometimes when you fight you win. Even if you don't win there is a benefit to being seen as someone who will fight for what you want. If you demonstrate that there is a cost for opposing you it makes your opponents think twice before deciding to be your opponents. Understanding that there is a cost to opposing you makes bipartisanship and cooperation more likely, not less.
- Tell the public about the threat to them from conservatives. Along with making the case for government and democracy, explain to the public what the conservatives are really about. The President did that a bit in today's press conference, explaining that conservatives are fighting for the interests only of a wealthy few. He explained that millions of people had been held hostage, threatened with being thrown out on the street. Had he been doing that all along, maybe the election would have gone differently, and maybe this week's hostage-taking to secure tax cuts for the wealthy as well.
This apparently goes very much against the President's nature. He wants everyone to just get along. He wants to work with the opposition. But it takes two to tango and the conservatives have made it clear that their goal is to destroy his Presidency and bring about plutocratic rule by the wealthy few -- and that it does not matter to them what this means for the working people or economy or this country. They have and will again hold these all hostage to get what they want.
Now a much bigger threat looms with the coming fight over the debt ceiling. The right intends to gut or shut the government and the President and Democrats need to go out and make the case for stopping them. They owe it to the people who fought for them to fight for us now.
All republished content that appears on Truthout has been obtained by permission or license.