Leaders Scramble to Produce a Deal Congress Will Accept
Or will it come down to the 14th Amendment? Jul 31 2011The fiasco playing out in Washington brings Winston Churchill’s observation to mind: "The best argument against democracy is a five minute conversation with the average Congressman." Ok, he didn’t say ‘Congressman’, he said ‘voter’, but if he were on hand today to observe the American democracy stumbling along with its shoelaces tied together, he would have.
The latest development is that in a flurry of last minute talks, a fragile framework has been worked out for a $2.4 trillion rise in the debt limit balanced by $2.4 trillion in deficit reduction — $1 trillion in cuts now, mostly those worked out weeks ago with Vice President Biden, the remaining $1.4 trillion to be apportioned come Thanksgiving by a bi-partisan Congressional committee.
That second round of cuts will be tougher to come by as they would involve entitlements and defense. Revenue increases could be in the mix considered by the committee, but would not be required. If no agreement is reached by the deadline, a trigger mechanism would force the $1.4 trillion in the form of all cuts, no revenue.
President Obama would thus see the limit raised, but at the price of angering his own party. Not only has he opened the door to cuts in Social Security, Medicare and Medicaid in that second round, but he will have come away with nothing in the revenue increases he repeatedly argued for. Heading into the weekend before the August 2nd deadline when the borrowing window slams shut for the U.S., John Boehner had labored on a bill that would dole out debt limit increases every few months, so that we would be treated to reprises of this debacle every six months, and even though it crossed the one line in the sand the president hadn't smoothed over — a single debt limit increase to last the rest of his term. It passed in the House, but was pronounced “dead on arrival” by Senate Majority Leader Harry Reid, who had been working on his own bill. In response to that, Senate Minority Leader Mitch McConnell gathered 43 Republican signatures to block Reid so as to put forth his own plan. Which gets us to now.
The president and Boehner had worked out a Grand Design whereby variously $3.5 to $4.5 trillion in deficit reduction, about $1 trillion of that in revenue enhancements. Some were simply elimination of what loosely came to be referred to as “loopholes”. But none of the plans since have included a revenue component, even though most Republican voters think revenue increases should be part of the package.
A Gallup poll shows that only 20%
think there should only be spending cuts.. Even loophole elimination qualifies as tax increases that would run afoul of pledges made by every last Republican in the House and 41 senators to someone named Grover Norquist ( see related story).
As the Republicans on the proposed committee can be expected, just as now, to refuse any loophole closures, much less outright tax increases, we will see cutbacks in entitlements before getting rid of the inequities often cited by the president. As examples he has often cited multi-million paychecks of hedge fund CEO's taxed at no more than someone earning a secretary's wages (apparently some people still have secretaries), canceling subsidies to the big five oil companies, and ending the use of last-in first-out expensing of inventories by corporations. This rigid refusal to contemplate revenue of any form as a component of reducing the huge national debt lays bare what's really going on — Republicans have caught sight of the finish line of their party’s decades-long quest to shrink the federal government, to "starve the beast" so it will atrophy, epitomized by Norquist's stated goal of reducing government "to the size where I can drag it into the bathroom and drown it in the bathtub".
In reaction to the standoff, market indexes have dropped for six straight says as everyone from Wall Street to the man on the street scrambles their finances in search of safe havens from looming default.
Congressional leaders such as Senate Minority Leader McConnell now express confidence in the new plan, however, which has been worked out with the president. But while finding it unthinkable that the United States would default on its debt obligations, no one is answering the question of whether there are enough Republican votes for passage by the House. And with McConnell having sabotaged the plan developed by Majority Leader Reid, will Senate Democrats meekly do McConnell's bidding?
Fearing that it could disrupt its much preferred path of resolution by negotiation, the White House has wisely made no mention of its final option in the event that Congress fails to pass a bill. That option would be to go right on borrowing as needed to pay government debts by invoking Section 4 of the 14th Amendment, which states in no uncertain terms that
"the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
Would we then witness the spectacle of Congress voting to impeach the president for obeying the Constitution?
Maybe Churchill, watching this dysfunctional farce over the last several weeks, would instead say about us what he once said about the Balkans, that they “produce more history than they can consume”.
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