Republicans and Democrats have grown far apart in their visions for the country’s future and how to get there. As a result, the government is not merely divided; it is dysfunctional. The leaders of the two parties, President Obama and Speaker John Boehner, having reached an impasse in the negotiations, addressed the nation on Monday night to present their cases to the American people.
The differences between the two men wasn’t limited to their proposals — they also differed sharply in tone. The president was on a charm offensive and Boehner was combative. Obama credited Boehner with putting politics aside to work alongside him and admitted that “neither party is blameless.” Boehner credited Obama with creating “the ‘crisis’ atmosphere.” He characterized the Democrats’ “balanced approach” as “we spend more . . . you pay more.” (Nancy Pelosi later said about the difference between the budget proposals, “We get the sacrifice, they get the wealth.”)
Obama and Boehner had different audiences. In addition to influencing voters, Obama was trying to calm the fears of governments and individuals worldwide who are invested in U.S. Treasury bonds. Boehner’s task was more difficult. He had to speak to both the moderates and the radicals in a divided Republican caucus, the seasoned legislators and the newly arrived freshmen who have yet to learn the art of governing. To appease these radicals, Boehner used fiery rhetoric and twisted the truth somewhat out of shape. The high unemployment rate, he said, was largely a result of the Democrats’ “spending binge.” He called the vote on the Republican Cut, Cap and Balance Act bipartisan, even though only five of the 186 Democrats in the House joined 229 Republicans in voting for the measure.
The president wound up his talk with an appeal to citizens to call their representatives in Congress and let them know what they wanted. The congressional switchboards were shut down by the ensuing deluge of calls.
Boehner’s position and his political future may well depend on his ability to reconcile two mutually exclusive aims. He has to craft a bill that will be acceptable to Democrats and also have it approved by the many in his caucus who don’t want to raise the debt ceiling under any circumstances. On Tuesday, Boehner was faced with the certainty that he didn’t have enough Republican votes to pass his budget proposal. Later in the day he was hit with bad news from the Congressional Budget Office: his plan as written missed a key Republican goal — to cut spending by a greater amount than the new debt ceiling. Instead of saving $1.2 trillion in 10 years through spending cuts as predicted, Boehner’s plan would save only $850 billion. Senate Majority Leader Harry Reid’s plan saved more than the Republican plan, even though it didn’t save as much as advertised. Boehner had to postpone the vote he had scheduled in the House until a quickly rewritten plan could be ready.
On Wednesday, the threat of a downgraded credit rating receded when Standard & Poor’s president revealed he thought it unlikely that the United States would default on its debt. The financial markets, however, registered their dismay at the inability of Congress to approve the debt ceiling and avoid default. All the indices closed sharply down from the day before.
Yet the threat of default is a manufactured, self-inflicted crisis that can be resolved immediately with a bill containing a single line authorizing an increase in the debt ceiling. The debt limit itself is superfluous. It has nothing to do with the deficit or future expenses incurred by future programs. The deficit exists because Congress created it by enacting programs that must be paid for. In that sense, the debt limit has already been set. It applies to money that is already spent in the same way a consumer incurs debt by charging purchases to his credit card with the understanding that he will pay for them at a later date. The bank that issues the credit card sets the consumer’s debt limit for current and future purchases. It can’t set a retroactive limit, which is akin to what the Republicans are attempting to do.
James Surowiecki notes that the debt ceiling places Obama in a paradoxical bind: If the debt limit isn’t raised, the president will have to either cut back or eliminate programs authorized by Congress, i.e., he will unconstitutionally override Congress. And if he spends the money that is already authorized, he will violate the debt ceiling law.
The debt limit has nothing to do with the deficit, which is the negative difference between the government’s revenue and the money it is already committed to pay. Linking the two is a political ploy. The Republicans know that avoiding default matters more to the Democrats. A default would wreak havoc on the economy and thereby jeopardize Obama’s and many Democrats’ chances for re-election. Obama wants to raise the ceiling enough to ensure the government will be financed past the 2012 elections. The Republicans want to raise it only enough to last until early next year, so that another conflict like the current one will consume the Democrats during the election season.
Except for that major difference, the two plans have a lot in common. Neither calls for an increase in revenue, a key demand of the Democrats until now. The Boehner plan as outlined before it was withdrawn late Tuesday had two phases. In the first phase the debt limit would be increased to $1 trillion and spending would be cut by $1.2 trillion, actually $850 billion as scored by the CBO. Future spending would be capped. In addition, it would require Congress to vote on a balanced budget amendment. In the second phase a bipartisan committee would have to find an additional $1.8 trillion in savings, for a two-phase total of $3 trillion. Only then could the debt limit be raised to $1.6 trillion. The Reid plan proposed to cut spending by $2.7 trillion (but $2.2 trillion per the CBO). All projections are for a 10-year period.
By late Wednesday, the two sides seemed to be if not coming together, at least cautiously approaching. Both worked on refining the numbers in accordance with the CBO estimates, and Boehner sharply warned his caucus in the House that they had to pass the bill in its final form. “I think we’re going to solve this,” said Sen. Richard J. Durbin (D-Ill.).
It is by no means certain. But difficult to contemplate that we might not.