Commentary Magazine


Topic: debt ceiling

GOP Can Start Reining in the Debt

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.

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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.

As Morris writes:

The Republicans should offer to pass a bill now setting a debt limit that rises each quarter pegged to one-third of the revenue growth of the preceding quarter. Thus, two-thirds of all revenue growth — natural or due to tax hikes — would go to deficit reduction.

Republicans are unwilling to pull the trigger on default by refusing to raise the debt limit. But a bill to allow gradual increases in the debt limit, at a pace slower than revenue growth, need not trigger default. Instead, the president would be forced to prioritize his spending and borrowing so as to avoid default, pay the military and send out Social Security checks. All the rhetorical handles he has to battle an effort to kill the debt-limit increase will be gone in the face of a phased-in debt-limit hike.

Critics of the idea can certainly point out that this proposal could turn out to be as ineffectual as Boehner’s Plan B fiscal cliff plan that was dead on arrival in the House and never would have been passed in the Senate or signed by the president. We should certainly expect the president to stick to his refusal to negotiate on the debt ceiling at least initially. But Morris is right that what the GOP needs to avoid is an all-or-nothing approach to the debt that will only make Obama look like the reasonable one in the negotiation, even if his stand is no less ideological than that of his Tea Party foes.

As Pete wrote last week, conservatives need to use the upcoming months to articulate their vision for the country. But so long as they control the House they must use that body’s power of the purse to fight for the principles that the voters expect them to uphold. That requires what Morris calls a “flexible response” to a difficult fiscal and political problem. So long as Republicans are willing to raise the ceiling and avoid the shutdown that Obama believes will only strengthen his hand, they have a chance to win their point. The phased approach may not be perfect, but it is as good a scheme for thwarting Obama’s tax madness as I’ve heard in the last week.

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Liberals’ Idea of Tax Reform Shows Who Are the Real Extremists

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.

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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.

In the view of the Times, anything that creates a more progressive system in which more money is siphoned out of the private sector and into the hands of Washington is a form of reform no matter how convoluted the system might be. That’s a distraction from the country’s real problems that have everything to do with spending and little to do with not enough taxes. But it is also pure liberal cant rather than sensible economics.

But the Times is right on target in one respect. Having bulldozed Congress into the fiscal deal tax hike, the president and his followers are in no position to push for even more tax hikes. The payroll tax windfall for Uncle Sam also makes this argument difficult to sell to a skeptical public, let alone a Republican House of Representatives that is determined that it won’t be scammed in this manner again.

We can expect to hear more of this distorted argument in the coming weeks and months, but the main takeaway from this discussion ought to inform the way the upcoming debt ceiling fight is covered. Redistribution isn’t tax reform. It’s actually a way to avoid reform as well as irrelevant to the cause of preventing the country from sinking into bankruptcy. The Times editorial as well as the rhetoric coming out of the Democrats in recent days makes it apparent that instead of this confrontation being one between extremist Republicans and a sensible White House, the real ideologues in this argument are among the ranks of the president’s supporters.

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The GOP Can’t Surrender on Debt Ceiling

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.

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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.

Pete believes that since Republicans will have to give in on the debt ceiling eventually and will inevitably come out the losers in any such confrontation, they’ll do better by quickly discarding the illusion that they have any real leverage over the president. Instead, he thinks they should pick their fights carefully and use the coming months to put forward a competing vision of government that will bring us back to fiscal health. There is, he writes, no alternative but to patiently wait for the inevitable moment when the public tires of “Obamaism.” It will only be then that Republicans can implement a growth agenda based on low taxes and a far-reaching reform of entitlements and other spending that will ensure the nation’s fiscal health.

But while no one on the right should assume that they are in a strong position on the debt ceiling, it is not as weak as the one they were stuck with on the fiscal cliff. With the White House and the Senate obsessed with passing tax increases on the wealthy for ideological reasons and equally determined to avoid dealing with entitlements and spending, there was no way the GOP could stick to its own principles without allowing taxes to go up on all Americans.

Now that Obama has gotten his tax hike on the rich, the argument that the GOP is holding the nation hostage for the sake of millionaires is effectively neutered. The president arrogantly assumes that his status as a re-elected president is so secure that he can dictate not only the outcome of the negotiations but also even the nature of the debate. But as we approach the moment when the current debt ceiling will expire and a government shutdown is possible, the holdup is not a controversial Republican pledge to not raise taxes under any circumstance but a Democratic refusal to entertain substantive entitlement reform. The political advantage he gained in the past could disappear once the public understands that it is his arrogant refusal to deal that is the holdup rather than Tea Party extremism.

In the president’s favor is one of the factors that helped his re-election campaign: a liberal mainstream media that continues to paint the Republican position as radical rather than reformist. It’s entirely possible that any attempt to use the debt ceiling to force the president off his high horse on spending will be portrayed as a radical putsch that the reasonable commander-in-chief is right to oppose. If an already bruised GOP House doesn’t bow to his ultimatum, they will get another thorough working over in the press.

But what he fails to take into account is what will happen if they run up the white flag on the debt ceiling without a fight.

A surrender on those terms would lead to the sundering of the GOP that could derail what is left of Speaker John Boehner’s already shaky hold on his caucus. Without even the semblance of a fight, it won’t be just a couple of dozen Tea Partiers roaming off the reservation but a full-scale revolt. More than that, the base of the Republican Party that elected a conservative House majority will be sent a message that their votes were obtained with false promises. Any notion that an aroused conservative core of the party could be enticed to the polls in 2014 to reverse the Obama agenda will be lost.

As much as Boehner needs to avoid being fitted for the sort of Newt Gingrich clown suit that will ensure this coming debate ends as badly for the GOP as did their 1995 government shutdown, he also knows that the specter of Gingrich’s predecessor as head of the House Republicans looms over his efforts.

Bob Michel, the minority leader of the House of Representatives from 1981 to 1995, was an honorable public servant but he is also a symbol of everything that was wrong with the Republicans before the Gingrich-led Republican revolution. Many politicians and liberals in the media may lament what they consider the change from the more sedate political culture of that era to the angrier and less collegial style of politics that is practiced today. Indeed, they see a willingness of Republicans to use deadlines like the debt ceiling or the fiscal cliff to advance their cause as unthinkable breaches of courtesy that show how far out the GOP has become. But conservatives understand that when dealing with liberals it is just that go-along-to-get-along philosophy that is perhaps unfairly associated with the Michel era that led to Republicans being co-opted into backing up a corrupt and sinking system that is sending the country careening along the path to bankruptcy.

They can’t let that happen. There is a vast difference between the deferential style of a Michel-led GOP minority and what Pete thinks would be good politics and good policy now. But if Republicans don’t put up a fight and hold the president’s feet to the fire now, that will be seen by most Republicans and Democrats as a distinction without a difference.

The only way for House Republicans to be able to act as any kind of a check on the president’s plans for tax increases, more spending (though it will be called “investment”) and functional status quo on the chronic problem of entitlements in the next two years will be to stick together. That won’t be possible if Boehner caves.

There are worse things for the GOP than being branded as radicals by the president and his friends in the media. If John Boehner unilaterally surrenders on the debt ceiling, they will find that out.

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How to Prevent Another GOP Debacle

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. 

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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. 

The Republican Party tends to do quite poorly when it engages in high-profile negotiations/confrontations with Democratic presidents. It happened to Newt Gingrich in 1995 over Medicare and the government shutdown. It happened to the GOP Congress in 1998 over impeachment. And it happened to John Boehner and the GOP in the summer of 2011 and December 2012 over the debt ceiling and the fiscal cliff.

The reason for this has been, in part, because it’s impossible to govern when a party controls just one legislative chamber. The president, especially one with a sympathetic press, has enormous things working in his favor in any showdown with Congress. 

On the flip side, the two greatest electoral gains for Republicans in Congress happened in 1994 and 2010. Those elections were not preceded by dramatic, high-stakes, last-second negotiations that took place in a crisis atmosphere. Rather, they came in the aftermath of Democratic presidents and Democratically-controlled Congress’ overreaching. Republicans forcefully criticized the policies of Clinton (in 1993 and 1994) and Obama (in 2009 and 2010)–but they did not threaten to shut down the government, cause America to go into default, and encourage America to go over any fiscal cliffs.

So what does that mean for the here and now? The mindset of the GOP should be to jettison the idea that Obama is a responsible interlocutor (Speaker Boehner seems to have gotten that message in pledging that he will no longer negotiate one-on-one with Obama). Second, congressional Republicans should accept the fact that even though they have a majority in the House, their power to shape the governing agenda is still severely limited. There will be no meaningful reforms of entitlements or the tax code. Accept it; and accept that they cannot undo the damage of Obamaism so long as he remains president.

Republicans should of course check Mr. Obama’s ambitions where they can and when they occupy the political high ground (like on the implementation of ObamaCare). But trying to put America on a different course right now, given the present circumstances, is a fool’s errand. Prudence is a political virtue–and in this case, prudence argues for modesty of aims and expectations.

At the same time, Republicans in the House should pass bills with an eye toward sketching out an ambitious governing agenda—not in the hopes that it will ever become law during the Obama years, but simply to lay out a compelling alternative to Obama.

In sum, then: Republicans need to carefully pick their fights. Declare now that under no circumstances will they allow the U.S. to default on its debt–and then pass legislation to prove it. At the same time, Republicans should continue to argue for re-limiting government by offering up specific proposals. Hold hearings that highlight the failures of government. Demonstrate patience. Don’t try to remake the world. And lay out a reform agenda that Republicans would implement if Obama wasn’t president and if Republicans controlled both legislative chambers.

The public will eventually grow weary of Obama and Obamaism. The job of Republicans right now is not to get in the way of that process.

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