Wednesday, July 20, 2011

The Deadline Gambit

Vice President Joe Biden's debt ceiling talks stopped when the opposition party representatives, House Majority Leader Eric Cantor (R-VA) and Senate Minority Whip Jon Kyl (R-AZ), walked out in a dispute over the idea of raising taxes. Cantor left first. Somehow he told his colleagues what he was going to do but did not tell the Speaker of the House, if we are to believe that. Kyl couldn’t do much else but recite the GOP “job killing” mantra and participate in the display. It is much easier to strike a pose than to negotiate a deal, anyway.

Before his walkout on Thursday morning, Cantor told The Wall Street Journal, “As it stands, the Democrats continue to insist that any deal must include tax increases.” Cantor said in a statement, “Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue.” The tax increase idea means the elimination of Bush era tax breaks to which the Republicans are married. It does not mean tax increases for individual US taxpayers, but that is just GOP semantics.

During the Biden debt ceiling talks, Democrats argued that Republicans should at least join them in eliminating corporate tax breaks for chief executives with private jets. Republicans also rejected consideration of eliminating even temporary tax breaks, such as those for NASCAR tracks and Puerto Rican rum. As a result, a new Washington Post-Pew Research Center poll found that more people say they would blame Republicans in Congress than President Obama if the debt-ceiling talks broke down.

Politicians deal in factoids, not facts. They live and breathe strategic ambiguities so that blocs of voters like the tea party can panic and over react. For example, “It's time to force our elected officials to stop spending cold turkey, and we can start by making sure they do not raise the debt ceiling,” announces Representative Michele Bachmann’s website. Never mind the fact it cannot be done.

Even one of her more staunch supporters William Kristol, editor of the conservative Weekly Standard, says such an idea is not only silly but irresponsible. “I've seen no plausible plan that would enable us to go "cold turkey" (to use her term) fast enough or dramatically enough that we could reduce the deficit to zero in a few months--which is what would be required if Congress were not to authorize an increase in the debt ceiling.”

Here is a quick review of some of the facts being ignored. For one thing, the government officially hit the federal debt limit on Monday, May 16. That forced the Treasury Department to make moves to avoid a default, like reducing government investments in two federal employee pension funds. For another thing, it is the Treasury Department that set an August 2 deadline to raise the country’s $14.3 trillion debt limit before the country risks defaulting on its debt obligations. For yet another thing still, although they don't admit it, every time Congress votes for a spending hike or a tax cut, lawmakers are agreeing to raise the debt ceiling whether they say so or not.

"Congress has already passed and the president has already signed legislation that increases spending or decreases revenues. Those decisions have already been made," said Susan Irving, director for Federal Budget issues at the Government Accountability Office. So arguing over the debt ceiling is like arguing over whether to pay the bills the country has already incurred. This is the United States. Its obligations will be paid. That is why they are called obligations.

The US Treasury Department says, “Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. In the coming weeks, Congress must act to increase the debt limit. Congressional leaders in both parties have recognized that this is necessary.”

Just for the record, “Between 1980 and 1990, the debt more than tripled,” the Treasury reports. “The debt shrank briefly after the end of the Cold War, but by the end of FY2008, the gross national debt had reached $10.3 trillion, about 10 times its 1980 level.”

Remember the Ryan Budget passed by the Republican House majority? The Congressional Budget Office and House Budget Committee estimates that “the spending included in the House Republican Budget Resolution would necessitate a nearly $2 trillion increase in the debt limit by the end of FY2012. Moreover, it would require trillions of dollars in additional debt limit increases beyond that amount for the next several decades.” But these are only government estimates, not facts.

As to the Cantor walkout the morning after his boss met with the president, it would be underestimating the Speaker to believe he did not know what his Number 1 was going to do. It would be more characteristic of Boehner to believe that he said, “Eric, you can go, now.” It’s a chess move where you sacrifice a Rook to a Queen.

"In the Bush years the Republicans said that tax cuts will produce jobs. They didn't. They produced a deficit," House Minority Leader Nancy Pelosi (D-CA) said. "Leader Cantor can't handle the truth when it comes to these tax subsidies for big oil, for corporations sending jobs overseas, for giving tax breaks to the wealthiest people in our country while they're asking seniors to pay more for less, as they abolish Medicare," Pelosi said.

Congress and the Treasury seem to have a problem with the concept of a deadline. Showmanship seems to be paramount for the GOP. But it is the absence of any sense of urgency that gives the deadline gambit away. The Biden talks may be “in abeyance” after the Republicans pulled out, but Boehner's office says he's leaving town for an 11-day House recess, swaggering all the way to the golf course.

Article first published as The Deadline Gambit on Blogcritics.

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