Democrats spent the 2012 presidential campaign successfully blaming George W. Bush for the country’s sluggish economy. But a week after President Obama’s second inaugural, they are still not taking responsibility for the country’s fiscal health. The White House responded to yesterday’s disturbing news that GDP declined for the first time since 2009 in predictable fashion: they blamed the bad numbers on Republicans. White House spokesman Jay Carney said the dip was the fault of “Congressional Republicans” who have tried to restrain the government’s out-of-control spending. Even though the president got his way in the fiscal cliff negotiations with the GOP, Carney said the threat of sequestration, which would mandate across-the-board spending cuts, is the real culprit for the downturn and that the “brinksmanship” by the House Republicans was victimizing the nation’s economy.
This was thin gruel even from a practiced spin master like Carney. The idea of sequestration, which will have a particularly devastating effect on defense, originated in the White House and not the GOP caucus before it was put into the 2011 deal on the debt ceiling. But while we must give Carney credit for his usual chutzpah, the idea that Republican efforts to face up to chronic fiscal problems via entitlement reforms is to blame is a particularly depressing example of the ideological dead end into which the administration has driven the economy. As John Steele Gordon wrote yesterday, there is no way of knowing yet whether yesterday’s GDP numbers are the harbinger of an Obama recession or merely a statistical anomaly, but the steadfast refusal of the White House to face up to the long-term threats is what could be driving the economy into the ditch.
Senator Chuck Schumer earned some chuckles among Democrats when he said today that the decision by House Republicans to suspend any limits on the national debt for three months was evidence that “The president stared down the Republicans. They blinked.” The GOP chose to remove, at least for a time, any threat of a government shutdown because they knew they were locked in an unequal struggle with the White House and the Democratic majority in the Senate. By backing down on the debt ceiling deadline, the House leadership decided they’d be better off avoiding a confrontation that would lead to them being blamed for damaging the economy while probably not getting the spending cuts and entitlement reform that they rightly know the country needs. But there is at least one Republican in the Senate who thinks Schumer is right and who hopes to gain from making clear his disagreement.
Senator Rand Paul made it clear earlier this week that he disapproves of Speaker Boehner’s embrace of Fabian tactics. Instead of trying another Alamo-like last stand such as the GOP’s ill-fated fiscal cliff tactics, Boehner is hoping the GOP will be better off retreating now and living to fight another day. But Paul isn’t the only Republican unhappy about the decision. The 33 Republicans who defected during the House vote on the debt legislation made it obvious that a substantial portion of the party is unwilling to accept anything but a policy of all-out war all the time against the president’s refusal to deal with the debt crisis. Boehner has his hands full in a fractious caucus, but the impulse to rebel against a more cautious approach to their political problem is not limited to the House. Paul’s statement makes it clear that he is auditioning for the role of the party’s insurgent leader.
Two-and-a-half weeks ago I wrote a post urging Republicans to back away from a confrontation with President Obama over raising the debt ceiling and warning them against engaging in high-profile confrontations and brinksmanship except on the most favorable terrain.
I was therefore quite relieved when Republicans announced that this week they will propose extending the federal debt limit by three months while also requiring that both the House and the Senate pass a budget for the next fiscal year. If either chamber failed to adopt a budget by April 15, that chamber’s members would then have their congressional pay withheld.
As the Wall Street Journal put it,
The top news out of the House Republican retreat in Williamsburg, Virginia is that the party is considering a short-term extension of the debt limit in order to give the party more time to try and convince their Democratic antagonists to start cutting spending. The proposal, which according to the New York Times, is being floated by Rep. Paul Ryan, could wind up connecting the debt ceiling issue with the deadline for the implementation of sequestration that would mandate devastating across-the-board spending cuts. That would theoretically give the GOP some room to maneuver in order to avoid a confrontation with President Obama that few think they would win. But it is hard to avoid the impression that the main object of a delay would be to deal with the Republicans’ biggest problems: a lack of unity.
Like a sports team in disarray, the GOP needs a time out where they can catch their breath and somehow get on the same page with each other. As the votes over House Speaker John Boehner’s Plan B and then the final fiscal cliff deal revealed, the party is badly split between those who don’t want to give an inch on spending and taxes, those who think that compromise with the president is inevitable and those who believe the best the party can do is to speak out for its principles and oppose tactics that will blow up the economy and help demonize the party. But the problem for the Republican leadership is that even if they can buy themselves some more time to get their fractious caucus in line, the likelihood that a confident and aggressive President Obama will either accept a short-term extension or deal honestly with them on the issues.
The administration and its media allies are ramping up the pressure on Republicans determined not to vote for another hike in the debt ceiling without a meaningful agreement from the White House about entitlement reform and cutting spending. The president is refusing even to talk to the GOP about any deal in order to gain their assent for expanding the government’s ability to keep running up the debt and trying to paint them as insensitive misers who want sick children to suffer. In response, some conservatives have argued that the apocalyptic talk about the impact of a failure to reach an agreement about the debt ceiling is absurd hyperbole since what would follow would not be a default in any real sense. But now some of his allies in the media are going one step further by branding those who have said such an eventuality can be managed without the government failing to meet its obligations as “debt deniers.”
The term denier is a loaded one in contemporary political discourse. In common usage these days, deniers aren’t merely people who say something that others believe is not true. They are troglodyte reactionary haters who don’t accept the scientific community orthodoxy about global warming or, even worse, claim the Holocaust never happened or that 9/11 was an U.S. government or Israeli plot. Yet “Default Deniers” is the headline Politico placed on an article devoted to examining the views of people Like Pennsylvania Senator Pat Toomey or Utah Representative Jason Chaffetz. Conservatives were allowed to defend their thesis about the consequences of not raising the debt limit in the article even though the thrust of the piece was aimed at portraying Toomey, Chaffetz and those who agree with them as extremists determined to ruin the country for the sake of their ideology. But the use of this sort of language about their views is about an effort to avoid discussion about the merits of the arguments on this issue and to cast aspersions about the motives of those who oppose the president’s desire for a blank check to keep spending.
At his press conference yesterday:
The president demanded that the Republicans surrender their most powerful bargaining chip—the debt ceiling—first and then “I’m happy to have a conversation about deficit reduction.” Translation: Give me everything I want first and then we’ll talk.
He threatened that “If congressional Republicans refuse to pay America’s bills on time, Social Security checks, and veterans benefits will be delayed.” Translation: I’ll choose not to pay the bills that will cause maximum political blow-back and the mainstream media will see to it that the Republicans bear all the blame.
President Obama used the last press conference of his first term today to continue attacking Republicans for even thinking about using the debt ceiling as leverage to force him to accept spending cuts. Over and over again, the president said he wouldn’t discuss whether the debt ceiling would be raised since it was simply a matter of Congress having to pay the country’s bills. Assuming the tone of a parent trying to instruct an unruly child in proper conduct, he likened it to going out to dinner and then deciding not to pay the bill, and declared it to be an unprecedented act of irresponsibility. But at least one member of the White House press corps wasn’t willing to let him get away with this line.
CBS News’s Major Garrett had the chutzpah to ask how the president’s denunciations of Republican threats not to raise the debt ceiling squared with his own votes while a U.S. senator. Senator Barack Obama voted several times not to raise the debt ceiling as part of a Democratic protest against the profligate spending of the George W. Bush administration. Yet when he was called out for this apparent contradiction, the president refused to be deterred. He simply ignored the point of the question, making it apparent that he was not going to let the facts interfere with his talking points. But the discrepancy between his record and the high-handed manner with which the president has continually sought to tar Republicans as extremists goes straight to the heart of the debate on the issue.
There is a new idea racing through the chattering classes for how President Obama could avoid the debt ceiling. It’s simple: He instructs the Treasury to mint a $1 trillion coin made of platinum that is then sent to the Federal Reserve. The Fed, in turn, credits the Treasury with $1 trillion and the Treasury, its coffers replenished, then goes on its merry way writing checks.
Is it legal? Well, yes, in the narrowest sense. Section (k) of 31 USC § 5112 says that:
The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
Of course, there is one small problem: Platinum is currently selling for about $1,590 a troy ounce. So a $1 trillion coin would weigh 26,221 “troy tons,” which might present a bit of a transportation problem getting from the mint to the Federal Reserve. There is also the problem that nowhere near that much platinum has ever been mined since the metal first came to the attention of chemists in the 1740s. Last year a grand total of 211 tons was mined worldwide, almost all of it from South Africa, Russia, and Canada.
Democrats had good reason to celebrate President Obama’s victory in the fiscal cliff. The House Republican caucus wasn’t just routed; it was nearly torn apart, leading some observers as well as many of the president’s supporters to suppose that this was just the first of a series of triumphs in which their liberal agenda will be imposed on the nation as the GOP fades into insignificance. Perhaps they actually think the president can get away with making the deficit or the debt ceiling go away by merely minting a trillion-dollar platinum coin. But like other triumphalist predictions from both parties in the last decade, such expectations are bound to lead to severe disappointment. Republicans remain in control of the House and any idea that the president can impose further tax increases on the nation while failing to address the need for entitlement reform that is necessary to solve our long-term fiscal crisis is pure fantasy. That’s why so many on the left are pushing hard right now to persuade Republicans to give up the one clear piece of leverage they have over the budget process: the need to raise the debt ceiling within the next two months.
As Pete Wehner wrote last week, using that upcoming deadline to force the president to give in on spending cuts is a perilous enterprise. Past attempts to hold Democrats’ feet to the fire on the budget in this manner have failed miserably. Nevertheless, as I pointed out on Sunday, unilateral surrender on the debt ceiling is not an option for Speaker John Boehner. They must fight not only for the sake of the cause of fiscal sanity but to avoid a meltdown of their caucus that will strengthen the ability of Democrats to get their way on taxes and spending and lessening their own chances of a comeback in 2014. The question is how to do so without being seen as irresponsible hostage takers who don’t care about the damage a government shutdown would have on the economy. A number of ideas are floating around, but Dick Morris floated one yesterday in the Hill that is worth considering: phasing in limited debt ceiling hikes that would avoid a government shutdown but would not be enough to allow the president to avoid having to negotiate on entitlement reform and other spending issues.
President Obama made it clear he wasn’t going to be satisfied with the tax increase on upper income earners that he forced on Congress during the showdown over the fiscal cliff. Though in fact all wage earners suffered a loss this week as the payroll taxes surged, the president and his liberal supporters are determined to inflict even more pain on more people in any upcoming budget talks. However, one of the leading advocates for the president’s redistributionist position, the New York Times editorial page, is worried that in settling for a deal that raised taxes on those earning more than $400,000 a year, he has made it harder for the left to foist another job-killing tax increase on the country. So, to make this bitter pill easier for Americans to swallow, the Times claims that plans to confiscate more private income for government use is actually “reform.”
Leaving aside the fact that trying to squeeze more revenue for the government out of taxpayers won’t do much, if anything, to avert the budget crisis, the use of the word reform in this context is straight out of Orwell. Reform implies making the system fairer, which for some on the left is synonymous with soaking the rich. But a genuine reform of the system is one that will incentivize achievement, not penalizing it as well as making the labyrinthine code simpler and more understandable. But when liberals use this word it is merely code for policy driven by left-wing ideology and not pragmatism or the country’s economic health.
On Friday, my friend and colleague Peter Wehner wrote about the question of how the Republican Party can avoid a repeat of the fiscal cliff debacle in the upcoming months as a new deadline for raising the debt ceiling looms. Throughout the last few weeks, Pete has been spot-on in his analysis of what he rightly called the Republicans’ “losing hand” as President Obama and the Democrats forced them to accept a terrible fiscal cliff deal. Though some think the debt ceiling discussion will be very different from the cliff debate, Pete fears the GOP is headed down the same path and will suffer if they allow themselves to be portrayed as holding the country hostage again. To avoid that accusation as well as what he accurately describes as the futile pretense that the president will negotiate in good faith, he advises that they preemptively take the debt ceiling issue off the table sooner rather than later.
There is much to be said for this point of view, but I don’t believe Republicans can or should do as he says. If the Republican majority in the House of Representatives were to concede on the debt ceiling now they might as well just go home and let the Democrats have their way without the fig leaf of a debate. Doing so would tear the party apart and lessen rather than enhance their chances of winning in the 2014 midterms. Though Pete is right about the calamity of a rerun of the GOP fiascos of 1995 and 2011 and 2012 when they were beaten in such confrontations, there is more than one way to lose a political fight. As much as House Republicans need to worry about being marginalized as extremists who are willing to allegedly sabotage the economy to make an ideological point, they also need to worry about playing the role of the pliant opposition that is unable and unwilling to offer a stark alternative to the Democrats.
It’s certainly true that negotiations over how to avoid going over the fiscal cliff were particularly difficult ones for Republicans. President Obama had a huge negotiating advantage: If a deal wasn’t struck, taxes would go up on everyone, not just the high-income earners, and the military would be decimated by deep spending cuts. Presumably Republicans will be in a stronger position as we approach our next governing crisis: the debt ceiling deadline in early March.
There is a twin danger for the GOP, however. One is that they enter negotiations assuming the president is responsible and acting in good faith—and that a “good government” solution will be found and a grand bargain will be struck. That’s not going to happen. Mr. Obama is a dogmatist and a committed progressive. He has no interest in reining in spending or reforming entitlements. He wants to, in his words, “transform” America. And he has a burning desire to destroy the GOP.
The second danger facing Republicans is they once again engage in brinksmanship with the president—that they elevate the debt ceiling debate and (unwisely) threaten to allow the United States to default right up until the moment when they cave (which they would be forced to do).
My counsel to them would therefore be to take the threat of default off the table sooner rather than later. (One way to do this would be to pass legislation that increases the debt limit for, say, six months at a time.) Republicans should simultaneously put forward reasonable and realistic cuts to offset the increase in the debt limit, in the hope that they can secure some gains. Which leads me to my broader piece of advice.