“Debtmaggedon” won’t materialize.
By a vote of 269-161 in the House last night and 74-26 in the Senate moments ago, the ceiling on the national limit on borrowing was essentially lifted. The deal that will be law the moment President Obama signs it today is not perfect. The process that forged it was appalling. Since March, I worried that the full faith and credit of the United States would be destroyed and a world of hurt would be unleashed on the American people. And I was especially fearful that the raucous Tea Party freshmen in the Republican majority would willingly let it happen.
In this fourth “Inside Voice” anthology, I reprise the pieces that tried to sound the alarm on the coming train wreck for the American people and then chronicled the debt-ceiling drama that engulfed the Capitol as the nation hurtled ever closer to the danger of default.
CHAPTER ONE: Sounding the Alarm
A Jan. 6 letter from Treasury Secretary Tim Geithner to Senate Majority Leader Harry Reid (D-Nev.) and a subsequent report from the the Congressional Research Service put in real terms the devastating impact a failure to raise the debt ceiling would have on the United States and its people. “There’s no alternative,” Geithner told a House appropriations subcommittee in March. But then what to do about the red-ink-stained trajectory of the national debt?
CHAPTER TWO: The government shutdown and the Tea Party
My rising worry about the impact of Tea Party members on the impending debt-ceiling fight began after reading a Dana Milbank column on their antics during budget negotiations. Their willingness to play hardball on the budget meant they would be more than willing to play chicken with the debt limit. That worry became alarm after a meeting with House Minority Leader Nancy Pelosi (D-Calif.), who expressed doubt that Speaker John Boehner (R-Ohio) could secure the votes to raise it. Indeed, the brinksmanship that averted a government shutdown at literally the last minute gave no comfort that the looming fight over the debt ceiling would be any better. “What we just witnessed is nothing compared to what we might (and are all but certain to) see,” I warned in April. “An epic fight that goes right down to the wire with the full faith and credit of the United States hanging in the balance.”
CHAPTER THREE: Brace for Impact
On May 16, the United States hit its legal debt limit. Thanks to “extraordinary measures” employed by Geithner and better-than-expected tax revenue, the day of reckoning was pushed off until Aug. 2. By June, the bond rating agencies issued the first of several warnings that the AAA status of the United States and the advantages said status accords it were at serious risk. That didn’t stop some who should know better from claiming that a short-term default wouldn’t be so bad or that the Aug. 2 deadline wasn’t real.
CHAPTER FOUR: The drama begins
President Obama talked about the consequences of default in a White House press conference on June 30. Reid canceled the Senate’s July 4 recess. By July 11, Geithner was on “Meet the Press” explaining the consequences of Congress crashing through the Aug. 2 deadline. “They have to act,” he warned.
CHAPTER FIVE: Down to the wire
The Gang of Six in the Senate, looking at ways to slash the debt, released its plan to great fanfare. The president gave it his backing. And then the negotiations over a grand bargain between Obama and Boehner blew up in spectacular fashion. The plans being discussed instead placed the United States squarely between default and downgrade. Because both would have been unprecedented actions, we were in uncharted territory. But the Bipartisan Policy Center issued a report that showed in vivid color the gut-wrenching decisions that would have to be made if an agreement between the White House and Congress was not reached.
Speaking in the Rose Garden after Senate passage of the debt bill, Obama called it “an important first step to ensure that the nation can live within our means.” Make no mistake, the next steps will be difficult. But no matter how tough or painful they will be, may we never come this close to economic oblivion again.