Will Republicans Play Chicken With The Debt Ceiling Vote?
Within the first few months of 2011, Congress will be required to take another unpalatable vote to raise the debt ceiling. Already, some incoming Republicans are talking about waging an effort to block the vote. That would be politically, and financially, stupid.
As of today, the National Debt stands at $13,788,455,142,118.05, meaning that at some point within the first month or two of 2011, the 112th Congress will be required to hold a vote to raise the ceiling on the debt, which currently stands at $ 14.3 trillion. Already there are some fiscal conservatives and newly elected Tea Party-linked Congressmen and Senators who are talking about making an effort to defeat an effort to raise the debt ceiling, which is causing more mature Republicans like incoming Speaker John Boehner to become more than a little bit concerned:
Raising the debt ceiling is shaping up as a difficult early vote for the new House GOP majority. Many of the new Republican lawmakers harshly criticized their Democratic opponents during the campaign for voting to raise the limit in the past, citing it as an example of the Democrats’ recklessness with federal tax dollars.
But on Thursday, Minority Leader John Boehner (R., Ohio) said he’s been talking to the newly elected GOP lawmakers about the need to raise the federal debt ceiling when it comes up early next year.
“I’ve made it pretty clear to them that as we get into next year, it’s pretty clear that Congress is going to have to deal with this,” Mr. Boehner, who is slated to become House speaker in January, told reporters.
“We’re going to have to deal with it as adults,” he said, in what apparently are his most explicit comments to date. “Whether we like it or not, the federal government has obligations and we have obligations on our part.”
If an increase in the current debt limit of $14.3 trillion does not pass, it would suggest the country may not meet its obligations and would shake the financial system. It could rock the bond market, rattle the dollar and scare away foreign buyers of U.S. debt.
Former Senator Alan Simpson, who co-chairs the Debt Commission, thinks that a standoff over raising the debt limit could provide an opening to force politicians to think seriously about cutting the deficit:
The co-chairman of President Barack Obama’s federal deficit commission is predicting a political “bloodbath” next spring, when the new Republican-dominated Congress must make tough fiscal decisions ahead of a vote on raising the federal debt limit this spring.
Retired Sen. Alan Simpson (R-Wyo.), made the remark Friday, in light of strong bipartisan objections to the bold deficit-cutting proposals he and commission co-chairman Erskine Bowles laid out 10 days ago. Speaking at a breakfast sponsored by the Christian Science Monitor, Simpson said he and Bowles were adjusting the plan to try and win support from the other 16 commission members, most of who are sitting politicians – and are deeply divided by political ideology on the proposals, which include hard-to-swallow tax hikes along with painful spending cuts.
No one is really sure what would happen, however, if the debt limit wasn’t raised; some believe it could well cause a panic in financial markets, while others say a federal shutdown is possible, though budget experts say that the government probably has the emergency power to continue operating at least temporarily.
“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.
Simpson said he hoped that Congress would be forced to accept some of the major ideas laid out in the commission’s preliminary report, several of which Republicans favor. The tough-talking former senator implied that, at least this spring, a series of tax increases also recommended in the report were probably not likely to happen.
I’d like to think that Simpson might be right here, but I think the more likely outcome is that the GOP, newly radicalized by the influx of Tea Party supported freshmen will push the House of Representatives into forcing another government shutdown, which seems to be the most likely outcome of a failure to raise the debt ceiling. In fact, there are already those on the right who are saying that is exactly what they should do.
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.
Midterm voters “were voting to stop the Obama spendathon, and that’s what people were sent to Washington to do,” Norquist said in an interview for POLITICO’s “Taxing America” video series.
“That’s what all the freshmen are going to do. That’s what the fight’s going to be about,” he said of the party’s majority-makers, who are spoiling for a showdown with President Barack Obama. The president “will be less popular if — in the service of overspending and wasting people’s money — he closes the government down, as opposed to now, when he’s just wasting people’s money.”
The problem with Norquist’s advice is two-fold.
First, it rests on the premise that spending and debt were in the forefront of voters’ minds when they cast ballots in November 2nd. As I argued earlier this week, though, there’s simply no evidence to support that assertion, and the exit polls make clear that it was the economy that voters were concerned with when they cast their ballots, all other issues were a distant, distant second. Additionally, more recent polling shows us that the public is divided over whether spending should go up or down, and not very impressed with the deficit cutting plan put forward by Senator Simpson and Erskine Bowles.
Second, it assumes that the public would back the Republicans in the event of a government shutdown. As anyone who was around Washington in 1995 could tell you, there’s absolutely no guarantee that would happen. Even Senator-Elect Rand Paul recognizes that a shutdown would be politically risky:
[S]ome GOP members of Congress, as well as some of the activist conservatives elected on Nov. 2, continue to discuss a shutdown as a viable option. But Sen.-elect Paul is not among them.
In an exclusive interview Monday on Capitol Hill, the Kentucky ophthalmologist told Newsmax: “I think shutting down the government is a mistake. Nobody really wants that. That’s sort of government by chaos.”
Paul is right, of course, and doubly right to the extent we’re talking about a shutdown brought about by a failure to raise the debt ceiling. In that case, the fact that the government would not have the legal ability to borrow means that, in theory, everything would have to be shut down, even the so-called “essential” services that would normally be exempt during a shutdown caused by failure to pass a budget. Politically, that would mean that the White House could plausibly claim, for example, that Republicans were putting American troops in danger by not providing funding. Combine that with the panic in the financial markets that would likely take place, and there’s simply no way that the GOP would come out of a shutdown undamaged.
Raising the debt ceiling is a crappy vote for any legislator to take. It demonstrates as plain as day the fiscal irresponsibility of the Federal Government, and the act of voting to push the debt limit even further into the fiscal stratosphere is one that looks bad on any representative’s resume. However, it’s also not a vote to be playing games with, as Boehner correctly points out. Unless Republicans intend to use the debt ceiling vote as a catalyst to force a national debate on making the kinds of spending cuts and tax changes that will be needed to seriously deal with the debt (and I would love it if they did), they need to just swallow their pride and cast the vote.