Republicans haven’t gone wobbly on the debt ceiling debate, but in the House they are laying a trap for themselves that will leave them holding the bag for any downgrade or default on America’s sovereign debt.
President Obama, as he indicated Friday, still demands that significant tax hikes be a part of any debt ceiling deal. But as Senate Minority Leader Mitch McConnell said on Thursday, “Republicans will not be reduced to being the tax collectors for the Obama economy … We won’t be seduced into calling a bad deal a good one.” So far, so good.
But there’s a lot of loose Republican talk — magnified a hundredfold by the media — that we shouldn’t worry about a default. That plays into Obama’s hand. He’s perfectly willing to drive our economy into a downgrade or a default as long as he can blame it on Republicans. Conservatives mustn’t position themselves as fiscal “dead-enders.” They have to force Obama to avert these disasters on their terms, and they can.
The threatened downgrade will make more costly all direct U.S. borrowing immediately and indirect borrowing (such as guaranteed mortgages) soon after. The interest we’ll have to pay on government debt will rise — perhaps dramatically — adding tens or hundreds of billions to the national debt. The value of the dollar will be reduced by inflation causing accelerated borrowing and increased unemployment. If there’s a default, even for a day, it will wreak havoc in our economy for many years to come.
To all my friends among the House members, please take a moment to think about how the public sees you. Don’t ask each other or your political consultants. Ask some people back home. You’re still seen as principled conservatives, but you’re flirting with being labeled “bumblers.” You voted down a bill that would have authorized Obama’s Libya adventure and — on the same day — voted for another one that funded it. Have you made up your minds yet?
You were elected to reduce the cost and size of government. You’ve taken some significant votes on Obamacare and the Ryan budget plan, but Obama and Senate Dems have prevented you from really achieving anything. On the debt ceiling you have the opportunity to do something significant that they can’t entirely stop. But that’s not what you’re doing.
The “Cut, Cap and Balance” plan is almost precisely what I warned against in this column a week ago. I say “almost” because it’s not a Democratic trap Republicans are falling into. It’s worse: a self-inflicted wound.
“Cut, Cap and Balance” cuts only $111 billion in this year’s spending — so small inside $14.3 trillion in debt as to be ridiculous — and then promises caps on future spending and a balanced budget constitutional amendment. But caps on future spending are susceptible to future congressional spending hikes. The BBA — as Sen. Jim DeMint (R-SC) said yesterday — may not be ratified by the states for a decade. A balanced budget amendment is a great idea, but it’s not going to do anything to help fix this month’s debt ceiling crisis.
And then there’s more bumbling. After listening to Republican Study Committee Chairman Rep. Jim Jordan (R-Ohio) on Fox News Sunday yesterday, you would have understood that the Cut, Cap and Balance bill actually includes a balanced budget amendment. But it doesn’t. I received a copy of the CCB legislation — HR-2560 — late Sunday afternoon. It requires that a BBA has to be passed before a debt ceiling increase, but it doesn’t include one.
You gotta be kidding me.
Why waste a critical week debating the need for a balanced budget amendment that won’t be voted on and a cap on spending that any future Congress can change? Why not spend those days working on a plan the House can pass that will actually solve the debt ceiling crisis?
You can do better, and you must. There’s a bill that you can write and pass this week. It’s in three parts.
Part one is Sen. McConnell’s original plan to raise the debt ceiling in three stages and force up to six votes on both the debt ceiling increases and spending cuts, shifting the political blame for increasing the national debt to Obama and congressional Democrats. It’s brilliant but it doesn’t work without the other two parts.
(McConnell’s “Plan B” isn’t a good idea. It proposes a congressional commission that will be a vehicle for tax hikes, not massive spending cuts.)
Part two would add to McConnell’s original plan specific spending cuts — as a precondition to each increase in the debt ceiling — in a ratio of $3 in cuts for every $1 in debt ceiling increase. You know the list of programs that should be cut in dozens of agencies. Some agencies shouldn’t just be cut: zero their budgets out altogether. Obama wants another $400 billion in defense cuts without basing that on what threats exist now or are foreseeable in the next decade. Before a thorough analysis is done, no further cuts should be made. How about taking that amount — and more — from the Departments of Education, Interior, Health and Human Services, Labor and such?
Part three is calling Obama’s bluff on entitlement programs. In his Friday presser, Obama said he’d consider means testing for Medicare and raising the Social Security retirement age, knowing that his congressional pals will block any legislation to accomplish those reforms. Both of those ideas are already in law, but they’re so weak and time-stretched that they don’t do anything to help in the debt crisis. Raise the Social Security retirement age to 70 years immediately for everyone under 45 and lower the income level for Medicare means testing from the current $85,000 per year to half that. Let those under 45 choose to invest their own money for retirement and opt out of Social Security.
You need to act this week to reduce the cost of both entitlement programs because you probably won’t get another chance before November 2012. You certainly won’t get another chance before August 2, because Moody’s and Standard and Poor’s may downgrade our debt rating before the default date is reached.
Obama and congressional Dems (and their media cohort) will panic if faced with this plan because it deals effectively with the debt problem and shifts the burden to them if a downgrade or default occurs because they won’t support it. If you draft this bill and pass it this week, you’ll corner Barry into the short-term deal with big spending cuts he now refuses. And you’ll make a huge contribution to cutting the size and cost of government, which is the mandate you received from America last November.
If you try to pass “Cut, Cap and Balance,” you’ll fail. You’ll strengthen Obama’s hand and take the blame for any downgrade or default.
Stop wasting time, ladies and gents. Get serious, and get it done. People want results, not an elegantly packaged plan that never gets off the drawing boards. Voters may not give you a second chance, and right now you don’t deserve one.
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