Commentary Magazine


No Deal Yet? Blame Obama’s Credibility Gap

This morning House Republicans are meeting to discuss ideas floated by Rep. Paul Ryan to avert a showdown over the debt ceiling. Ryan, who outlined his proposal in yesterday’s Wall Street Journal is, as we have come to expect of him, the leading voice of reason in the GOP caucus, and the White House ought to seize on this opportunity to avert what it keeps telling us is a fiscal catastrophe that will happen on Oct. 17 if the Republicans don’t surrender. But since we already know that President Obama is far more interested in pushing confrontation with the Republicans because he believes it to be in his political interests, there’s little chance of that happening.

While more conservatives are coming to grips with the fact that they are not going to be able to defund ObamaCare, it’s also unclear whether enough House Republicans will get behind Ryan’s scheme that trades off a short-term extension of the debt ceiling along with reform of Medicare and a start on comprehensive tax reform. These are core conservative ideas that are focused on the underlying problems behind the deficit—entitlements and tax unfairness—that are opposed by Democrats who seek to preserve an indefensible status quo.

But if Ryan is having trouble rallying his party behind his proposal it is in no small measure due to the fact that a lot of Republicans just aren’t buying the hype about next week’s debt ceiling deadline. Nor is there any massive public groundswell of fear pushing them to give in as the president says they must. That is causing some in the liberal mainstream media to recycle their “debt denier” slur first trotted out last winter during the fiscal cliff showdown. But, as Politico noted in a feature published today, the reason why Republicans aren’t running scared is what the site aptly terms “Obama’s Chicken Little challenge.” After repeatedly falsely prophesying doom and destruction about the sequester and the government shutdown, the nation, let alone the GOP, just isn’t buying his debt ceiling warnings.

To acknowledge the president’s credibility gap on fiscal issues is not to ignore the dire possibilities of a default on the national debt. Were that ever to happen, it really would be an economic catastrophe and no one, not even the most ardent advocates of going to the brink with the White House, is saying anything different. However, as Senator Pat Toomey calmly explained on MSNBC’s Morning Joe program yesterday, that isn’t what will happen if there is no deal by next Wednesday:

First of all, there is zero chance that the U.S. government is going to default on its debt. It’s unfortunate that people have conflated this idea of not raising the debt ceiling immediately on October 17 with somehow defaulting on our debt. We bring in tax revenue about 12 times as much money as it takes to pay our interest on our debt. There is no way that any Treasury secretary or administration would willfully choose to have the catastrophic results that would occur if we actually defaulted on our debt when it’s not necessary. So this is pretty well understood in financial circles. You see Treasury prices have barely moved through this entire episode. But I’ve got legislation that would simply codify and formalize the obligation to make sure that under no circumstances we would default on our debt. Interestingly, the White House doesn’t want that legislation. They’ve threatened to veto it precisely because they want to be able to hold the specter of a catastrophe in front of Republicans to cow us and intimidate us into giving the president what he wants, which is a whole lot of additional borrowing authority with no reforms whatsoever, and I think that’s irresponsible.

Toomey’s reality check debunks the administration’s latest “the sky is falling” routine. But even if we accept the notion that a failure to reach a deal on the debt would be problematic, there’s little chance that even those who agree that the government shutdown is more the GOP’s fault than the president’s are going to believe the Democrats’ warnings of imminent danger. After all, we were told the same thing about the sequester cuts only to discover that the republic could survive if government departments were forced to make across-the-board cuts. Nor have the predictions of disaster about the government shutdown that began last week proved true.

That is not to say that the sequester or the shutdown are positive developments. There is long-term damage being done by cuts, especially those to national defense. But the American public saw right through the stunts staged by the administration to illustrate the pain of the shutdown, like closing open-air national monuments. When the president says the country is in danger no one, not even most of his supporters, believe him anymore. They understand every word coming out of his mouth about the standoff with his Republican foes is political in nature and designed to force them to unconditionally surrender on their fiscal demands. Some may support that position, but few believe the doom and gloom predictions that underlie his “no negotiations” stand.

It is to be hoped that as the artificial debt deadline approaches, more Republicans will get behind Paul Ryan’s ideas and that enough Democrats will be willing to talk to avert more damage being done to the economy. But if we do go over the brink, the primary responsibility will belong to the Chicken Little in the Oval Office.

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