Now that the grown-ups in Washington got that whole government shutdown thing settled (sorta), folks are finally focusing on what has been freaking me out for the last month: the looming debt ceiling crisis. And as The Post’s Saturday editorial on the frightening brinksmanship over a potential shutdown asked, “You think this one is hard?”
No. I don’t. What we just witnessed is nothing compared to what we might (and are all but certain to) see. An epic fight that goes right down to the wire with the full faith and credit of the United States hanging in the balance.
“If what we just saw with resolving the [Continuing Resolution] showdown is the model for how Congress is going to handle the debt ceiling increase, we are in big, big trouble,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “I guess the good news is that the dress rehearsal is always supposed to go badly. But nothing makes me think we have left opposing-camps-enmeshed-in-high-stakes-negotiations-that-go-until-the-11th-hour mode. This will not work for increasing the debt ceiling; the stakes are too high and global credit markets are watching too closely.”
Ryan McConaghy, director of the economic program at Third Way, concurred. “Unfortunately, it seems like a good deal of the GOP caucus can’t take yes for an answer,” he said referring to the deal that averted a government shutdown. Saying that House Speaker John Boehner (R-Ohio) is declaring the deal a major victory, “it seems that more broadly on the right this deal is seen as a sufficient, if not satisfactory, resolution of the undercard on the way to the debt ceiling main event. Or you have Tea Partyers like Michelle Bachmann flat out rejecting it as capitulation and explicitly focusing on the debt ceiling as a place to make up for a perceived loss.”
In a tweet on Saturday, former labor secretary Robert Reich wrote, “The right held the U.S. govt hostage, and O paid most of the ransom — inviting more hostage-taking. Next is raising debt ceiling.” Jim Horney, vice president of federal fiscal policy at the Center on Budget and Policy Priorities, is also worried about “hostage-taking.”
“The House Republicans’ willingness to play brinksmanship and to repeatedly move the goalposts — with them finally threatening to shut down the government if they did not get cuts greater than what they had thought was reasonable and proposed on Feb. 3, and with [Senate Minority Leader Mitch] McConnell consistently making sure there are not 60 votes in the Senate for anything that House Republican leaders don’t support — heightens fears that House leaders could make radical and dangerous demands on the debt limit bill and take us to the edge — or over the edge,” he said. “That’s of great concern because the damage from defaulting is so much greater than the damage from a government shutdown of a limited duration.”
Treasury Secretary Timothy F. Geithner spelled out the hell that would be unleashed on the American people and the American economy if the debt ceiling were not raised in a Jan. 6 letter to Senate Majority Leader Harry Reid (D-Nev.). It goes far beyond closing national parks and holding up your income tax refund. In an April 4 letter, Geithner informed Reid the debt ceiling would be hit “no later than May 16.”
In that same letter, he outlined numerous options at Treasury’s disposal to put off the day of reckoning. According to Geithner, said options “would be exhausted after approximately eight weeks, meaning no headroom to borrow within the limit would be available after about July 8, 2011.”
Geithner also reiterated a key point made in his earlier missive.
Increasing the limit does not increase the obligations we have as a Nation; it simply permits the Treasury to fund those obligations that Congress has already established.
“We need to pivot into understanding that putting in place a credible plan to deal with our deficits and debt is the single most important national priority,” MacGuineas said. “Along with that, the two parties need to put aside the opportunity to clobber each other and be willing to compromise on this. . . . It has to be handled by the two parties as something of a shared objective....”
But that’s going to be a problem. “The word compromise is a filthy, evil word” to the freshmen members of the House Republican majority, Rep. Charles Rangel (D-N.Y.) told me during a phone conversation on Friday. Pointing out that many of them have never held elective office and campaigned on cutting federal spending, he said they haven’t learned the language of Congress, the cornerstone of which is compromise. Rangel said the Tea Party members “must learn [that] when you promise [on the campaign trail] it means you’ll do the best you can.”
Because of the promises they made in the 2010 midterm elections, Rangel said the Republicans are in a serious bind. “The question is,” he said, “how do you explain that you gave the government the authority to borrow more money? How do you explain it?”
Good question. Boehner has between May 16 and July 8 to come up with an answer.