Monday, July 25, 2011
By Jed Babbin on 7.25.11 @ 6:09AM
After yet another week of political theater, only one thing is clear. Barack Obama would rather have America default on its financial obligations than forgo the massive tax hikes he demands.
On Friday, there were only eleven days between America and the date on which it will begin to default, August 2.
The debt ceiling talks between President Obama and House Speaker John Boehner (R-OH) blew up on Friday when Boehner -- frustrated with Obama's games -- announced he would quit the talks and work out a deal with congressional leaders, rendering Obama irrelevant. Obama deserves to be pushed out of the picture, but Boehner's strategy relied on Senate Majority Leader Harry Reid (D-NV) and House Minority Leader Nancy Pelosi (D-CA) to be fiscally responsible and politically sensible. Unsurprisingly, as of Sunday evening, Reid and Pelosi -- having met with Obama -- were off drafting their own bill, leaving Boehner and Senate Minority Leader Mitch McConnell empty-handed.
Meanwhile, two more days were lost.
If the stakes weren't so high for our economy, the past three months of debt ceiling crisis talks could be written off as just another White House-engineered psychodrama. All-Drama Obama wants to continue raising voters' anxiety regardless of the effects on our economy simply to pressure Boehner and McConnell to give in to his demands.
Obama has only two goals: one is to increase the debt ceiling to a sufficient level that the issue won't pop up again to damage him in the 2012 campaign, and the second is to increase taxes without making significant cuts in federal spending. He apparently regards the very real debt ceiling crisis as nothing more than a political tool.
But Obama's goals appeared to have been effectively blocked on Friday when Boehner walked out of the White House talks. Obama -- at the point of an agreement -- suddenly imposed a new demand for "revenue enhancements" -- i.e., tax hikes -- far in excess of those Boehner was prepared to accept. Boehner behaved admirably by walking out, and in what he said were his reasons for doing so.
At 3:55 pm on Friday, Boehner told the press that Congress was going to develop its own plan because the White House talks had failed. He said:
The discussions we've had with the White House have broken down for two reasons. First, they insisted on raising taxes. We had an agreement on a revenue number. A revenue number that we thought we could reach based on a flatter tax code with lower rates and a broader base that would produce more economic growth, more employees and more taxpayers, and a tax system that was more efficient in collecting the taxes that were due the federal government. And let me just say that the White House moved the goalpost. There was an agreement, some additional revenues, until yesterday when the president demanded $400 billion more which was going to be nothing more than a tax increase on the American people.
About three and a half hours later, an obviously rattled Obama went in front of the cameras to blame Boehner for the talks' failure and reiterate his demand for tax hikes. Diving into in class warfare rhetoric, Obama said:
Now, if you do not have any revenues, as the most recent Republican plan that's been put forward both in the House and the Senate proposed, if you have no revenues at all, what that means is more of a burden on seniors, more drastic cuts to education, more drastic cuts to research, a bigger burden on services that are going to middle-class families all across the country. And it essentially asks nothing of corporate jet owners, it asks nothing of oil and gas companies, it asks nothing from folks like me who've done extremely well and can afford to do a little bit more.
And then the drama:
We have now run out of time. I told Speaker Boehner, I've told Democratic Leader Nancy Pelosi, I've told Harry Reid, and I've told Mitch McConnell I want them here at 11:00 a.m. tomorrow. We have run out of time. And they are going to have to explain to me how it is that we are going to avoid default. And they can come up with any plans that they want and bring them up here and we will work on them. The only bottom line that I have is that we have to extend this debt ceiling through the next election, into 2013.
This act of the drama was played against a backdrop of the series of Obama-declared deadlines that he uses to create tension. But Obama is no Hitchcock: his ticking clocks and burning fuses have become a bore. Just last night, after Treasury Secretary Geithner had predicted dire consequences for U.S. credit if a deal weren't made before the Monday opening trades on Asian stock markets, Japan's, Hong Kong's and Shanghai's exchanges all were down by about 0.7% shortly after trading opened. Not significant moves, and probably as attributable to Amy Winehouse 's demise as to the overheated mess in Washington.
The Obama-directed psychodrama played poorly on the Sunday talk shows. Geithner was the leading fear monger, insisting solemnly that we're headed for a Republican-created disaster that could have been avoided if Obama's April plan had been accepted. There was no Obama plan in April or at any time since, but that didn't stop Geithner. White House Chief of Staff Bill Daley played second banana to Geithner, saying on Meet the Press that the debt ceiling has to be raised once, not in stages, to carry through 2012. Daley repeated Obama's Friday bluff, saying that Obama would veto a short-term debt ceiling hike.
All-Drama Obama not only isn't budging on tax hikes, he's spinning a narrative that is entirely false.
For Obama and his media cohort, the only allowable question is how to make tradeoffs between tax hikes and debt ceiling increases. But that's not the federal spending equation millions of Americans voted to impose on Congress last November. The formula they voted for -- and which Republicans have so far respected -- is an equation that requires massive federal spending cuts to be balanced against small debt ceiling increases.
Obama's newest "bottom line" is another bluff, and Republicans must call him on it. It was only a few days ago that Obama indicated that he would sign a short-term debt extension if it was the premise for a long-term deal. He'll obviously go for a short-term deal if the House Republicans pass a good bill quickly and leave it on Harry Reid's doorstep.
Which Republicans may not do. House Majority Leader Eric Cantor (R-VA) reportedly wants a vote on a "balanced budget" constitutional amendment this week. That will be time wasted, just like the time last week was wasted on "Cut, Cap and Balance." But there are no more days to waste, and precious few left to use productively.
It's now only eight days before the government will either be authorized to borrow more or begin defaulting on its obligations. And it will be less than that before the rating agencies downgrade America's debt.
This week, Republicans can -- no, must -- draft and pass a relatively simple bill to raise the debt ceiling by -- as Charles Krauthammer suggested -- about $500 billion to carry through the rest of calendar 2011, coupled to at least that much in spending cuts and without any tax hikes. They can do it, and jam it through the House in quick time. It will give the Dems one final chance to stave off default.
It would be an enormous mistake for Boehner to waste more time trying to get a bipartisan deal or to allow the House to spend days debating and trying to pass a balanced budget amendment (which will probably not even pass the House because constitutional amendments require a 2/3 majority. To reach that, Republicans would have to gather about 48 Democratic votes, which simply won't happen).
A balanced budget amendment will only consume time that must be spent disposing of the debt ceiling problem in decisive fashion. If House Republicans are serious about avoiding a default -- and they bloody well have to be -- it's time to write and pass a simple bill. They were elected to accomplish things, not spend time on emotionally satisfying bills that don't solve the immediate crisis we face.
Posted by Brett at 11:54 AM