Michael Medved

Senator Mitch McConnell’s original suggestion for solving the nation’s debt ceiling dilemma outraged many of his fellow conservatives and would, if enacted in its initial form, have probably produced deep disgust in the public at large.

After the angry immediate response from the GOP base, the Senate minority leader began re-tooling the scheme to make it far more viable and substantive, with the important addition of at least $1.4 trillion in budget cuts (over the next ten years) and a potentially promising mechanism for getting clear-cut, up-or-down votes for even more significant savings in the future. Most small government advocates remain skeptical, but even doubters can acknowledge that McConnell’s proposal does perform an important public service by exposing the growing Republican consensus that President Obama feels no real desire to make a deal and prefers a dramatic, dangerous confrontation that could well work to his political advantage.

What makes the McConnell plan unacceptable to the Republican base is the appearance of capitulation to Barack Obama. The Minority Leader of the U.S. Senate offers the president unilateral authority to raise the debt ceiling by $2.4 trillion dollars with commitments to budget cuts that currently amount to far less. After months of angry debate and sweeping victories in last November’s elections, the GOP leadership needs to reward its loyal supporters with plausible claims of victory in the ongoing battle of the budget. As Senator Lindsey Graham declares with surprising vehemence, the McConnell option looks like a political solution, not an economic solution. Rather than moving toward a substantive solution of the budget mess, it allows that mess to continue and fester as long as the GOP can blame the president for the sad state of affairs.

In this sense, McConnell’s proposal (even with some of its recent tweaks) seems to place showmanship over substance, politics over policy. If Republicans voted for it, they would seem to announce: “We’ll give Obama the debt increases he wants, and we don’t care how it busts the budget; our main concern is that we’re able to pin the blame squarely on the president and go on record as voting against it.” The two-thirds requirement for denying a debt increase in the McConnell plan means that every House Republican and all 47 GOP Senators (plus some endangered Democrats) could cast a vote against an unpopular hike in the debt ceiling, without stopping the process or creating risks of default. The proposed ploy may be motivated by a sincere concern for the health of the economy, but it looks cynical and tricky, and amounts to an obvious violation of Republican promises to stand unshakably on principle.

Why would a savvy Washington operator like Mitch McConnell ever make such a demoralizing suggestion in the midst of a dramatic national debate over spending and debt? Congressional insiders suggest that the McConnell option amounts to a desperate effort to offer an escape hatch, or at least a life line, for nervous Republicans increasingly convinced that the president wants to push them into a climactic battle that could do real harm to the economy, while shattering GOP chances for 2012.

This dire conclusion results from the recent avalanche of bad news on the stalled recovery and clear signs that the Obama administration now expects no significant turnaround before the election less than 16 months from today. On Sunday, July 10, Treasury Secretary Tim Geithner appeared on “Meet the Press” and delivered a shockingly grim prognosis on the economy. Asked by David Gregory, “When do you think recovery is actually going to start feeling like recovery?” the administration’s top financial official declared, “Oh, I think it’s going to take a long time still. This is a very tough economy. And I think for a lot of people it’s going to feel very hard, harder than they’ve experienced in their lifetime now, for some time to come.”

In other words the Democrats have shelved all plans for a “Morning-in-America”/“Happy Days Are Here Again” Obama re-election campaign. With the president’s key economic advisor Austan Goolsbee saying that the best case scenario for unemployment by the end of next year involves a potential rate of 8.2%-- a full percentage point worse than the prevailing rate at the inauguration—the White House seems suddenly more concerned with blaming someone else for the hard times rather than bringing about a meaningful turnaround.

While lacking all confidence that they can fix the economy, Obama and company feel certain that they can affix guilt on Congressional Republicans and “Tea Party” activists for their alleged intransigence. Democrats look to recent history for proof that they will come out on top in any confrontation pushed to the absolute limit; they know Republicans will ultimately surrender if the predictions of catastrophe even begin to come true, and that this surrender will utterly discredit their position.

Consider the example of the Emergency Economic Stabilization Act of 2008 – the Bush bank bailout, and the first stage of the TARP program. When the House of Representatives first considered the administration proposal, Republicans voted overwhelmingly against it (133 to 65) and despite support from the majority Democrats, the measure failed. The next day, stock markets collapsed – the Dow lost 777 points, its biggest one-day drop in history. Three days later, the House voted again and with 24 badly-spooked Republicans switching their votes, the measure passed.

If the heavily-hyped August 2nd debt ceiling deadline approaches without Congressional action, and if Moody’s and S&P follow through on their repeatedly trumpeted threats to downgrade the triple-A rating of the federal government, would the markets repeat their catastrophic reaction of September, 2008? Some Wall Street observers expect an even more devastating meltdown. If that happened, how long before Republicans abandoned their hard-line position and raised the debt ceiling with few (or no) conditions attached? Some cynics suggest the time-line to capitulation would extend only for hours, not for days.

Sooner or later, with government offices closing, federal workers furloughed and media proclaiming the end of civilization as we know it (even if the Treasury did manage to send out all Social Security, Medicare, and defense-related checks), the GOP would cave and give the president new borrowing authority. If dozens of major government offices (not to mention National Parks at the height of the summer vacation season) began to shut down and furlough their workers the media hysteria would reach frenzied levels. Unfortunately, Obama could orchestrate these closures for their own advantage, deliberately provoking maximum public outrage and fear.

No one argues that a partial government shutdown, with attendant turmoil in world markets and consumer confidence, could last more than a week or two before the Congress (always attuned to its members’ political survival) abjectly surrendered. Assuming that Democrats in the House remained loyal to their president (which counts as extremely likely) only 26 of the 240 Republicans would need to shift their votes to give the president the “clean” no-strings-attached debt limit increase he’s always wanted.

At that point, Obama would claim victory (just as Bill Clinton did when Senate Republicans eventually raised the White Flag after the big budget shutdown of ’95) and blame all economic damage on his vanquished, discredited adversaries. In this desperate situation, some panicked Republicans might well settle for less meaningful progress on spending than McConnell and his allies have recently built into their proposal. Moreover, when unemployment fails to fall during campaign season of 2012, and the public remains sour of the economy, Obama will cite the chaos surrounding the debt ceiling debacle and blame fanatical House Republicans (and George W. Bush, of course) for any and all bad news.

This is the grim scenario Mitch McConnell’s sneaky strategy means to avoid, based on impeccable logic that says that since there’s no obvious way to beat Obama on this issue, it’s better to capitulate now than later, and to walk away with some gains rather than none. Some smart conservatives believe he’s right. Last week, John Podhoretz of “Commentary” declared: “In the end, the much-reviled McConnell option or something very close to it—some series of temporary debt-ceiling increases that take us past Election 2012—will almost certainly be what happens.”

To avoid this outcome, the House of Representatives must act within a few days to pass their own version of a debt ceiling increase – featuring major and immediate budget cuts, no tax hikes, and some form of spending caps or balanced budget amendment. The leadership has already promised a vote on the “CCB” reforms – cut, cap and balance. They can move this program through the House (by maintaining Republican unity), send meaningful legislation to the Senate, then let the Senators pass their own more timid version of more borrowing authorization. The two houses could ultimately negotiate with each other (leaving out the meddlesome and scolding interference of the White House) to put something on the president’s desk before August 2nd. If Obama follows through on his veto threats, then it will be harder for him to blame anyone else for catastrophic consequences.

Even in the likely event that the McDonnell mechanism with its Rube Goldberg details ends up going nowhere, the thinking it reflects still helps illuminate the current state of play and may yet contribute to a reasonable and responsible resolution. For all its faults, the scheme offers one salient virtue that tough but unfocused rhetoric seems to lack: an exit strategy, in case the GOP and the country ultimately need to walk away from an economically and politically devastating government breakdown.

Michael Medved

Michael Medved's daily syndicated radio talk show reaches one of the largest national audiences every weekday between 3 and 6 PM, Eastern Time. Michael Medved is the author of eleven books, including the bestsellers What Really Happened to the Class of '65?, Hollywood vs. America, Right Turns, The Ten Big Lies About America and 5 Big Lies About American Business
 
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