After compelling the President to axe almost $80 billion from his desired spending levels for the fiscal year, House Republicans are once again faced with the prospect of negotiating with a recalcitrant President on the next spending battle: the approaching debt ceiling. In keeping with his inflated rhetoric on the threat of a government shutdown, President Obama is feigning exigency once again, claiming a “clean” debt limit vote is necessary to prevent government default and certain economic catastrophe.
The request to increase the debt limit without confronting the actual causes of debt belies the wisdom of having a debt ceiling – limiting the government’s borrowing authority is supposed to inspire prudence, not offer opportunity to flout it. What’s more, a “clean” debt limit vote would be somewhat anachronistic; the limit has been raised ten times in as many years with significant reforms attached, such as passage of the Congressional Review Act in 1996 and the Gramm-Rudman-Hollings budget reforms in 1985.
With the headroom on the $14.3 trillion debt ceiling closing in, Republicans have offered several proposals that would address the government’s overspending problem that drives the mounting debt. A balanced budget amendment to the constitution is one suggestion, as are serious statutory spending caps. However, the enormity of the government’s overspending problem requires additional and serious reform, addressing the seemingly insoluble spiral of entitlement spending and rectifying the government’s bias to abuse, rather than save, taxpayer dollars. The current political environment does not lend itself to reform that fully rectifies these problems.
However, as witnessed in the funding debate, a Congress that is unwilling to cut $100 billion at one time is comfortable with cutting that amount in pieces every few weeks. This is a lesson learned from the political success of the Left: the President’s “stimulus” binge, health care takeover and financial overhaul were not simply a product of Democrat majorities – they are an artifact of years of gradual government creep, in which policymakers on both sides of the aisle were complicit in bloated spending and increasing government overreach. Addressing the statist assault will have to be done in the same way – gradually. A short term debt limit that serves as a real and constant reminder of the government’s overspending problem provides the opportunity to do this.
Rather than granting the president massive spending authority for the rest of his term in exchange for one piece of desired reform, Congress should authorize short term extensions of borrowing authority. Conservative members entered the 112th Congress with a number of good ideas that represent several smart bargaining chips in exchange for short extensions of borrowing authority. Using these proposals to chip away at the government burden while denying the President carte blanche on spending is a win-win for fiscal conservatives and taxpayers. This keeps the Big Spender in Chief on a short leash to garner prudence the White House is unwilling to commit to on its own.
It is important to note, however, that the debt limit fight is unique from the FY 11 debate in a significant way: The President cannot share the blame with Congressional Democrats. Despite the rhetoric employed by the administration, reaching the debt limit is not equivocal to default – not even close. The government currently takes in ten times the amount needed in revenue to service the debt, and it is wholly within Treasury’s authority to prioritize payments to investors to avoid economic uncertainty. Thus, the blood of a government default is fully on the hands of the President.
This presents effectively more motivation for the President to come to the table on negotiating the debt limit. The FY11 funding battle demonstrated that despite Candidate Obama’s platitudes on “reaching across the aisle,” President Obama’s congeniality is in short supply unless he is politically motivated to play nice with the other side. It is clear that absent a born-again coming to bipartisanism, the approaching debt ceiling represents a unique opportunity to keep the channels between the two parties open in a divided government that is only going to become more intractable ahead of the next presidential election.
Likely unsatisfied with his takeovers of the health care and financial industries in the first part of his term, the President no doubt has an ambitious agenda for the next year that will need to be tamed and difficult to stop if he has no reason to keep talking to Republicans in Congress. For all of their negotiating prowess in the CR debate, Republicans still only control one half of one third of the government – lacking weight, momentum is the best strategy to aid taxpayers in the year ahead. Making the debt limit debate exist in the short term restructures the debt ceiling as an actual deterrent rather than a theoretical one. The President’s inflated parlance on the looming threat of fiscal catastrophe can’t win in that debate – fiscal conservatives, and taxpayers, can.