You’ve no doubt run into the current conservative meme that President Obama is to blame for the debt ceiling crisis, because Republicans offered him a “clean” raise-the-debt-ceiling bi-partisan deal, and he turned it down. Senate Minority Leader Mitch McConnell (R-KY) said a solution to the crisis was “literally within our reach,” but that Obama “rejected it out of hand.” Actually, it never happened.
First, and least important, is the “out of hand” remark: It means Obama rejected a proposal without giving it any thought. It’s disingenuous and it’s juvenile, calculated to create an unflattering image of the president rather than advance the debate or share useful information with the public.
Second, and most importantly, the assertion that a clean solution ‘” that is, one unsullied by unrelated budget demands, policy demands or tricks meant to influence the upcoming campaign ‘” was never offered.
Worse, the TeaPublicans are actually engaging in the opposite behavior: they are attaching extreme demands to raising the debt ceiling. The debt ceiling has never before been used as a leverage point for partisan political demands. As Obama observed in his July 25 address, presidents from Eisenhower to the younger Bush have regularly raised the debt ceiling without controversy and without facing anything like the current Republican intransigence.
Teapublicans are holding the debt ceiling hostage because
they don’t have the votes to enact their preferred policies into law are threatening to throw the nation into economic chaos by refusing to increase the debt ceiling unless the President accedes to their demands. By threatening to wreak havoc with the national interest, they areattempting to coerce rather than persuade the nation into doing what they want.
Here is a timeline of the debate, combining information from the Reuters news service, the Wall Street Journal and other sources:
- April: After a last-minute deal in April averted a government shutdown, Republicans focused on the need to raise the debt limit, making it clear that they would not approve an increase without at least $2 trillion in spending cuts. Tat was the first shot across the bow, indicating the battle was engaged.
- The first debt ceiling offer was on May 9: The hostage was taken when House Speaker John Boehner said any increase in the debt ceiling must be matched by an equal amount of spending cuts.The Treasury Department estimated it needed at least $2 trillion to cover previous borrowing through the November 2012 elections.
- May 31: The House of Representatives rejected a measure to raise the debt limit in a vote staged by Republicans to pressure Obama to agree to accompanying spending cuts. Knowing the bill would die by their own hands'” the Republicans are the ruling majority in the House ‘” they held the vote anyway as a trick, a stunt to get the president to meet their unrelated demands. That’s called blackmail. It’s important to keep in mind that there is no logical or legislative connection between what the House Republicans say they want (a future budgetary path toward national solvency) and the bonds and notes the Treasury must keep issuing for programs this and previous Congresses have already voted into law (additional debt).
It is a quirk of legislative history, not a principle of sound budgeting, that we calculate a “debt ceiling” at all, those debts being a predictable consequence of the programs Congress enacts. That’s why increases in the ceiling in the past have been routine measures, or occasions for minor grandstanding. These minor episodes include then-Senator Obama’s vote against an increase in 2006. That one passed, as of course did six other increases under George W. Bush (along with 17 18 under Ronald Reagan, nine under George H.W. Bush, and six under Bill Clinton). You can read historical details from the Congressional Research Service in PDF form.
In short, the crisis is happening only because the TeaPublicans are demanding unrelated things in exchange for what is routine housekeeping. That makes it blackmail; that makes it hostage-taking.
A related misunderstanding of too many ‘” a misunderstanding fostered by the TeaPublicans consistently and repeatedly linking talk of the debt ceiling with talk of future spending ‘” is that raising the debt ceiling allows Congress to spend more. As the president explained, that impression is false:
It’s not a vote that allows Congress to spend more money. Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up. It gives the United States of America the ability to keep its word.
- June 9: Obama’s Treasury Secretary Timothy Geithner tried to reach a compromise with the Republican demands for spending cuts (that are unrelated to the debt ceiling crisis) argued that tax increases (also unrelated the the debt ceiling crisis) needed to be part of the equation, but Republicans remained unmoved.
- June 23: Republicans declared an impasse in negotiation, saying that Democrats were insisting on closing tax breaks for the wealthy and certain business sectors.
- June 29: The International Monetary Fund said the United States must lift its debt limit soon to avoid a “severe shock” to global markets and a still-fragile economic recovery. Obama called for new steps to spur job growth, irking Republicans who remained opposed to closing tax loopholes for the wealthy and supportive of spending cuts.
Neither the Teapublicans’ call for cutting spending nor the president’s attempt to “balance” those cuts by closing tax loopholes for the rich have anything to do with raising the debt ceiling, but it’s worth stopping to note that during a recession, raising taxes and cutting budgets are bad for the same reason: They both reduce demand and make a recession worse.
You can argue that taxes shouldn’t go up in a recession. But if you make that case, as the Republicans (and most Democrats) do, you look like a hack or ignoramus if you insist on short-term budget cuts during the same economic hard times. Most House Republicans argue both sides of this case.
You can be for the tax cuts, or you can be for cutting the deficit, but logic, addition and subtraction all say you can’t be for both. Most TeaPublicans defy math and logic and support both. And, no, despite the Ronald Reagan Myth,cutting taxes does not increase tax revenue.
- July 3: Obama and Boehner met secretly to discuss a more ambitious “grand bargain” that would save roughly $4 trillion over 10 years through an overhaul of the tax code and changes to popular benefit programs.
- July 5: Obama invited top lawmakers to the White House to restart negotiations and clinch a deal by July 22.
- July 7: After hosting lawmakers at White House, Obama said Republicans and Democrats were still far apart on many issues but that all agreed on the need to raise the debt ceiling.
- July 9: Boehner said a “grand bargain” was out of reach because Republicans would not accept the tax increases Democrats were demanding, and he called for a $2 trillion package built on spending cuts. (Don’t forget, both are unrelated to the debt ceiling crisis, and both are a bad idea during a recession.)
- July 11: The follow-up meeting breaks little new ground, but Obama pressured both Democrats and Republicans to make concessions that would clear the way for a deal.
- July 12: Senate Republican leader Mitch McConnell offered a backup plan for raising the debt limit if there is no agreement on a broad ‘” and unrelated ‘” deficit-reduction plan. Unfortunately, the plan was weighed down by both strange, convoluted tactics and political game-playing meant to influence the next presidential election by giving Republicans the chance to look “good” and the president to look “bad” eight times between now and the election. Republican sources said the McConnell proposal was designed to reduce the likelihood that Republicans could be blamed for a default and a subsequent potential fiscal crisis. In fact, McConnell’s plan was both an attempt to flee cowardly from responsibility and a obvious attempt to play the debt ceiling crisis for political gain.
A Republican Senate staff member said the plan was unconstitutional and unsupported by the Senate Republicans. Under siege from conservatives over his opt-out proposal for the debt ceiling debate, he defended the idea in crassly political terms:
My first choice was to do something important for the country. But my second obligation is to my party and my conference to prevent them from being sucked into a horrible position politically that would allow the president, probably, to get reelected —
During one of the first interviews he gave after the 2010 elections he called the defeat of Obama’s reelection campaign a top party priority.
- July 14: Ratings agency Standard & Poor’s said there was a one-in-two chance it could cut the United State’s top-notch AAA credit rating if talks remain stalemated. Obama suspended debt talks and gave party leaders 24-36 hours to deliver deadlock-breaking “plan of action.”
- July 17: McConnell and Senate Democratic leader Harry Reid worked on McConnell’s fallback plan to allow Obama to raise the debt limit. Obama met Boehner and his deputy, Eric Cantor, secretly at White House but no progress was made toward a deal.
- July 18: Republicans ‘” defying all calls for, and ignoring the need for, compromise ‘” increased their hostage demands by pushing for a measure that would cut and cap government spending and require an amendment to the U.S. Constitution requiring a balanced budget.
- July 19: The “Gang of Six” resurfaced with a deficit reduction plan that proposed $3.75 trillion in savings over 10 years and contained $1.2 trillion in new revenues. Obama seized on it and called on leaders in Congress to start “talking turkey.” Instead, House Republicans once again increased their hostage demands by passing a more drastic $5.8 trillion deficit-reduction plan with a balanced budget amendment.
- July 22: Boehner stopped taking calls from the president, because Boehner couldn’t sell the president’s budget-cut-balancing tax increases on wealthy Americans to his caucus. Obama had agreed to a sweeping $4 trillion deficit-reduction deal that would include the Teapublicans’ demands for reductions in Social Security, Medicare and Medicaid.
- June 23: Representative Eric Cantor, the House majority leader, petulantly walked out on negotiations.
- July 26: Boehner floated a more modest hostage demand for raising the debt ceiling ‘” cutting roughly $850 billion over the course of 10 years and just $1 billion in 2012 ‘” and was met by such rebellion from his own TeaPublicans that he delayed a vote on his own proposal.
- July 27: Republican Senator and most recent GOP presidential candidate John McCain called out the Teapublicans’ hostage demands, including the demand for a balanced budget amendment to the Constitution: “That is worse than foolish. That is deceiving many of our constituents.”
- The Arizona senator regarded the situation unfolding as “unfair” and “bizarre,” adding that “There are Republicans who are committed, like Michele Bachmann, to vote against raising the debt ceiling under any circumstances.” Not seeing his own vulnerability for nominating Sarah Palin, McCain also jeered: “This is the kind of crack political thinking that turned Sharron Angle and Christine O’Donnell into G.O.P. nominees.”
The Teapublicans have become zealots, showing utter disregard for the consequences of their actions.
A Republican demand for $16 million in cuts from the FAA budget (plus some anti-union provisions) has led to an FAA shutdown that has in turn, as the NY Times reports, led to a $25 million per day loss in fees the airlines paid to the FAA. That is, zealotry on this point has already cost the government more than ten times as much as the cuts would have saved. The most predictable consequence of a federal default, in the name of “reducing the deficit,” would be a huge increase in the deficit ‘” through higher interest costs and lower revenues because of the resulting disruption to the economy. It doesn’t matter.
The president pointed out a couple of other zealous positions demanded by Teapublicans in exchange for releasing the debt ceiling hostage:
The debt ceiling should not be something that is used as a gun against the heads of the American people to extract tax breaks for corporate jet owners or oil and gas companies that are making billions of dollars because the price of gasoline has gone up so high.
- July 29: The president addressed the nation and asked, again, for a clean vote on the debt ceiling:
We can end it with a simple vote ‘” a vote that Democrats and Republicans have been taking for decades —
- July 30: The bill just passed by the House is both dead on arrival in the Senate and full of partisan policy: it arbitrarily sets limits on Social Security, Medicare and “discretionary spending” outlays for years 2012 through 2016, then freezes all three categories from year 2017 through 2021 (freezes mean cuts, as costs increase each year); in an amazing swipe at the democratic process, the bill includes a clause banning future Congresses from passing a budget that would exceed this bill’s spending limits; the bill dictates to the Senate its procedures; sets up McConnell’s convoluted “disapproval” process for making the president look bad and the Teapublicans look good; and makes an oddly specific attack on Pell Grants for low-income college students. Worse, while it mandates a massive spending cut, it leaves it up to a future committee to determine where those cuts will be made.
Perhaps the ugliest part of the Teapublican zealous hostage demands is its ambiguity: Much of what they want cut has not been spelled out. As the Economist noted:
Although the bill does little to specify where the axe should fall, it would entail cuts of over 10% to everything but defence, the White House says. The bill also limits federal spending to 20% of GDP from 2015 (it is 24% at the moment) and requires Congress to approve an amendment to the constitution that would, once ratified, require all future budgets to be balanced and bar any tax hikes unless approved by a two-thirds majority.
So, no, the meme is false. No clean deal has been offered by the GOP, much less offered and rejected by the president. And, no, it’s not a “both sides are at fault” scenario.
Paul Krugman made a good point about how poorly the news media has handled the debate:
President Obama initially tried to strike a “Grand Bargain” with Republicans over taxes and spending. To do so, he not only chose not to make an issue of G.O.P. extortion, he offered extraordinary concessions on Democratic priorities: an increase in the age of Medicare eligibility, sharp spending cuts and only small revenue increases. As The Times’s Nate Silver pointed out, Mr. Obama effectively staked out a position that was not only far to the right of the average voter’s preferences, it was if anything a bit to the right of the average Republican voter’s preferences.
But Republicans rejected the deal. So what was the headline on an Associated Press analysis of that breakdown in negotiations? “Obama, Republicans Trapped by Inflexible Rhetoric.” A Democratic president who bends over backward to accommodate the other side ‘” or, if you prefer, who leans so far to the right that he’s in danger of falling over ‘” is treated as being just the same as his utterly intransigent opponents. Balance!
Where the blame should, and will, fall. David Brooks (whom I cannot tolerate) was finally correct:
If the debt ceiling talks fail, independent voters will see that Democrats were willing to compromise, but Republican were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. The will conclude that Republicans are not fit to govern.
And they will be right.