Back from the debt-ceiling brink
THIS CIRCUS has lasted way too long — and the high-wire act is not yet done. On Sunday evening, congressional and White House negotiators reached a two-stage deal to raise the debt ceiling and prevent the government from having to default on its obligations. At 8:40, President Obama emerged to announce that the process had been “messy” but that disaster had been averted. The first stage would involve spending cuts of just over $900 billion in return for an equivalent increase in the debt ceiling. The second would call for a super-committee of Congress to find an additional $1.2 trillion to $1.5 trillion in savings by November.
The chief sticking point involved the precise content of the enforcement mechanism to be employed if that committee fails to reach agreement. The “trigger” would involve only automatic cuts in spending, not automatic tax increases, as Democrats wanted — and, indeed, what any sensible deal would entail. But what programs would be exempted from cuts, and the mix of the cuts between domestic and security spending, was the subject of vigorous behind-the-scenes debate.
Meantime, the White House appeared to have achieved its goal of securing enough of an increase in the debt ceiling to get it past the 2012 election, separating the second bump-up of the debt limit from the reporting and adoption of the super-committee’s recommendations.
The path in the Senate seems clear, but the House could still pose a hurdle. Even before the terms were revealed, some House Republicans were expressing concern about the potential impact of automatic cuts in defense spending if the trigger is pulled — and, of course, a hard-core group of others has vowed to entertain no increase in the debt ceiling whatsoever. For its part, the progressive caucus in the House revolted against the prospect of deep cuts in entitlement spending and no clear pathway to new revenue.
What to make of all this, other than to wonder, as the president put it Friday, whether the United States has “a AAA political system to match our AAA credit rating?” On the plus side of the deal is the bottom line of relief — assuming the arrangement gets past the House — of the immediate crisis averted. When the hostage is released, everyone breathes a sigh of relief, no matter what it took to secure his safety.
In addition, securing a significant down payment on the debt is an achievement, even if the far, far better way would have been a broader approach that combined spending cuts, including trimming entitlement programs, and new tax revenue. In theory, the congressional super-committee could be a valuable approach; in practice, given both sides’ entrenched positions, it will face a formidable challenge. To avoid triggering across-the-board cuts, the committee would have to agree on a blend of cuts and revenue increases, or to another round of deep cuts. We can only hope that the breathing space of additional time will yield more compromise and flexibility than have been demonstrated in the current debate.
The difficulties of the second round make the trigger particularly important. The point of having a trigger is to keep a credible threat: one that both sides can imagine deploying but that both sides desperately want to avoid. This mechanism of a trigger is by definition ugly, with across-the-board cuts substituting for ones that have been well thought out. Are deep and arbitrary cuts in military spending really advisable in the midst of operations in Afghanistan? Areany deep and arbitrary cuts in spending sensible — especially in what may still be a faltering recovery?
This may be the only feasible solution at this late hour. It is not a solution of which anyone involved in this heart-stopping performance ought to be proud.