You Have 10 Days to Move Your Debt Limit, or Your Electoral Prospects Will Be Crushed Into a Cube

The Liberal Ironist has a suspicion that the next 10 days will determine both the electoral prospects and much of the legacy of the Obama Presidency.  Between now and then the President and Congress must reach a deal to raise the current Federal debt limit of $14.3 trillion–technically exceeded in early May–or else the Federal Government will suddenly find itself unable to pay 56% of its budget authorization and even risk defaulting on interest payments on its current debt.

So the next 10 days are a critical test of President Obama’s political acuity–and of the viability of his Presidency.  He absolutely must get the tone right as he tries to push Congressional Republicans towards a deficit-reduction deal, and he might already be in so much trouble that he has to secure a viable deal whether he frames the right message or not.  These involve different theories of the political context and the media power of the Presidency: What is at question is whether the President, who is inevitably more-visible and more-resourced than any opposition Congressional leader, can use the bully pulpit to remind the public of the Federal programs he means to protect and why the Republicans must not be allowed to hold the Federal Government hostage, or whether, as recent polling suggests, the public is really so concerned with the Federal debt that they will embrace Republicans’ decision not to raise the debt limit.  Finding such popular commitment to the principle of austerity implausible, the Liberal Ironist thinks the President should get on the soap box right now and push something very like a take-it-or-leave-it deficit reduction package to go with a debt limit increase.

It’s a telling sign of the rightward tilt Republican Party’s base that House Speaker John Boehner, having previously encouraged the President to think big (meaning a deal for a $4 trillion reduction in projected Federal deficits over 10 years), backed off of such an ambitious deal on Saturday, again citing the House Republican Caucus’s rigid rejection of any deficit-reduction plan that involves tax increases (even in the form of closing tax loopholes going to oil companies posting near-record profits or benefiting corporate jet-users).  Boehner proposed, as an alternative, a return to the “Biden Group’s” plan for $2.4 trillion in debt reduction over 10 years.  Vice President Joseph Biden began leading those talks with Republican and Democratic Congressional leaders in the spring after passage of the final F.Y. 2011 Federal Budget in April; they stalemated in June as House Majority Leader Eric Cantor walked out of the talks in protest of Democrats’ insistence that every $3 in spending cuts be matched with $1 of tax increases.  This would have led to a projected Federal Government revenue increase of $600 billion over the next 10 years.  (Incidentally, or perhaps not incidentally, canceling George W. Bush’s 2001 income tax cuts for Americans making over $200,000 a year would add about $700 billion in fresh revenues over the next 10 years.)

It doesn’t help President Obama’s re-election prospects that a long-term deficit reduction plan on the scale of the President’s Deficit Commission plan now appears to be an unreachable goal before 2013.  While it’s true that Congressional Republicans have been dogmatic and stubborn in negotiations on deficit reduction, refusing to consider tax increases in the hundreds of billions of dollars over the next decade while the Democratic leaders have been offering spending cuts in the trillions over that time frame, President Obama deserves almost an equal share of the blame, strangely for the opposite reason.  The President had the time and the political cover he needed to propose a deficit reduction plan of his own, and he didn’t take that opportunity.

Consider the scope of this failure: President Obama convened the bipartisan National Commission on Fiscal Responsibility and Reform by executive order in early 2010 (following Senate Republicans’ bizarre filibuster of Congressional authorization of such a commission).  The Deficit Commission came out with a report, called “The Moment of Truth,” on December 1st.  This report would have had to secured the yea votes of 14 out of 18 Commission members for legislation to be automatically drafted in Congress; only 11 of 18 members endorsed the report.  The President still could have embraced the plan himself and called on Congress to draft legislation based on its recommendations.  If he felt that the Commission’s proposals imposed program cuts that were too harsh and made recommendations that would leave us with a tax structure that is too regressive (as he did), he should have made a Liberal version of House Budget Committee Chairman Paul Ryan’s (R-WI) maneuver and synthesized much of the Deficit Commission’s report into a long-term plan for restructuring the Federal Government that reflected his ideology; instead he let Ryan advance his own long-term budget plan first, ensuring that any plan the President proposed afterwards would in fact simply be “the President’s response to the Paul Ryan Plan.”

There has been a growing trend this year of the President’s seeming inability to stay on-message.  Since the President’s Middle East speech in which he called for a 2-state solution to the Israel-Palestine conflict negotiated from the 1967 borders, the President has failed to stake serious space for himself on any major issue, including the deficit-reduction negotiations.  (The President’s call for tax increases on the rich to accompany any spending cuts and his refusal to sign a short-term debt increase doesn’t count, since it simply represents claimed parameters for negotiations he has only entered belatedly.)  By around July 21, the President has to secure a deal on the debt limit increase or else there is a real possibility that the House Republican Caucus will overwhelmingly vote “Nay” on a debt limit increase even if the Speaker calls for it.  If it comes to that, the President will have the unappetizing choice of boldly claiming that the 14th Amendment precludes statutory limits on Federal borrowing–which would inevitably be interpreted as a Presidential power grab–or stand abjectly in the face of an economically-disfiguring collapse of government resources.  In any case, as I’ve already said, the President will at a minimum have to sound all the right notes in protest leading up to this historic collapse of political will, and at a maximum must secure a deal to keep the Federal Government operating through the end of his 1st term if he wants to keep his job.  The Federal Government has never been brought down by failure to borrow money, and it has never defaulted on its debt; there is only a risk of either because of the ideological conformism of Congressional Republicans.  In either the mildly-optimistic or the grim pictures of his prospects, the premise that the President is above the fray simply must be dropped.  He doesn’t have to resort to simple partisan trench warfare, but he must learn to dictate terms.


3 thoughts on “You Have 10 Days to Move Your Debt Limit, or Your Electoral Prospects Will Be Crushed Into a Cube

  1. Leigh

    I think if Obama suggests his own plan, it will immediately become the focus and be picked apart by the left and right. I think it is ok to let the republicans take ownership of the plan, succeed or fail, although you are right that failure will hurt Obama more. Right now Obama is basically saying “you wanted to do this, it was not my priority, but I will go along with it. Now where is the plan that I am able to sign?”

    Another good thing for Obama is that the news is sort of dominated by this, and not Libya or some other bad story for him.

    1. liberalironist Post author

      I disagree with the reasoning that it’s prudent not to advance his own deficit-reduction plan completely. Firstly, it’s irresponsible not to have a policy on a burning issue that isn’t going to go away simply because critics will instantly appear; that just makes the President appear as though he isn’t fighting for anything. George W. Bush was very politically successful–until he took on Social Security and the tax code in spring 2005–because he STAYED ON MESSAGE. He sometimes found advocates for his policies outside his own party–a resource not necessarily available to President Obama–but he would describe the same policy goal (and sometimes a justifying principle) early and often. Unless the national political mood really sours on him, a president (as both commander-in-chief and the head of the Executive Branch) just inevitably has more of an opportunity both to sell policy and to make policy. With the President having convened a Deficit Commission which last December presented a serious but contestable plan to reduce future deficits by $4 trillion and put the Federal Government on a path to fiscal sustainability, all he gained by walking away from that framework was to allow Congressional Republicans to use the raising of the debt limit to try to extort a deal from him later; having already decided more-or-less to ignore a deficit reduction plan he could have at least worked with, he gave Paul Ryan a chance to propose a plan of his own. I don’t think that winning New York’s 26th Congressional District in a special election is enough of a prize to justify the President not taking the lead in a debate over a possible restructuring of the Federal Government.

      I definitely disagree that “it is ok to let the republicans take ownership of the plan, succeed or fail.” If there is “success” in the sense that a major deficit-reduction plan is passed, then if such an austere long-term budget blueprint actually looks good to the public, the Republicans will be able to say that it happened because they held the President’s feet to the fire (which would probably be true, their bizarre beliefs about the perfection of the market notwithstanding) and ask to be given more power in 2012. If budget cuts are painful, that could certainly drive independents away from the Republicans, but it isn’t obvious that they would rally to the President as he had endorsed the deal (whatever his motivations); Democrats, meanwhile, would almost by definition be more-sensitive to the loss of beneficial government programs than Republicans and would thus feel demoralized if not angry by the fact that the President accepted a deal without being clear about his feelings on deficit reduction during a prolonged period of economic stagnation. On the other hand, if the plan “fails” this can only be a good thing for the President if the debt limit is raised independently; he could reasonably say that, partisan balance aside, the atmosphere is simply too poisonous for both parties to work out a long-term plan to bring the Federal budget back into balance at this time. “You wanted to do this, it was not my priority, but I will go along with it,” isn’t much of a strategy for President Obama; it leaves Democrats to think that he doesn’t care to fight for the party’s principles (which I definitely don’t believe after the 111th Congress) and independents to think that he isn’t prepared to lead with a plan to control Washington’s enormous deficits (which I think is a fair criticism, and an observation you seem to agree with, too).

      That’s bad, because the public polling consistently shows people are more-concerned about an increase in government debt even more than they are about a Federal default. Such sentiments are of course completely insensitive to what is really at issue here (which is of course the sudden, insane inability of the Federal Government to pay 44% of its outlays) but they reveal how the Republicans, left to their own devices, can dominate this discussion pretty-much up to the point that they propose anything radical (which happens to be their preference this time around).

      In political terms, this is a much more-fraught issue than Libya. (Skeptics of the Libya intervention on political grounds, I think, have been repudiated by the smoothness and efficacy of this operation, even if a rebel victory has taken longer than expected.) The fact that the news is dominated by this is good for him in terms of the shape the coverage is currently taking (as I definitely agree President Obama looks better than Congressional Republicans on the terms that this debate is happening), but bad in the sense that the closer we get to failure to raise the debt limit, the closer we get to a 2nd recession–and at some point the markets will have to react accordingly–not necessarily out of an expectation that the debt limit won’t be raised (but then why should big investors be risk-acceptant?) but because at some point large investors have to get skittish about some other investors’ possible overreaction, and start taking money out of stock preemptively. Media coverage of these now-unproductive and ambivalent talks is more like a slow fuse than political cover.


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