Everyone assumes the president has the leverage this time because if he does nothing the Bush tax cuts expire and he can propose fresh ones for 98 percent of the country.
But everyone’s forgetting one thing: the debt limit.
Matt Miller
A senior fellow at the Center for American Progress and the host of the new podcast “This...Is Interesting,” Miller writes a weekly column for The Post.
Amazingly, no one asked about how it would affect the coming fiscal talks at the president’s press conference Wednesday. But we’re slated to hit the debt ceiling early next year, meaning it will be a central part of the kabuki dance that begins Friday at the White House. So the only way President Obama really has leverage is if he decisively removes the debt ceiling as a source of power for the Republicans.
Recall it was reckless GOP brinksmanship with the debt limit last time (and Obama’s timidity in the face of it) that scared markets, gave us the United States’ first-ever downgrade, and left the president looking weak.
For Obama’s own sake — and for the sake of stable governance for future presidents of either party — the president can’t let the GOP hold the country hostage via the debt ceiling again.
The question is whether Obama has learned from experience and has the stomach now for what’s required. Bob Woodward’s book “The Price of Politics” had some cautionary detail on this question that hasn’t gotten the attention it deserves.
The so-called 14th Amendment option — which Bill Clinton suggested pursuing — was discussed in the Oval Office in July 2011 as the crisis peaked. The amendment reads in part that “the validity of the public debt of the United States, authorized by law . . . shall not be questioned.” Could this let Treasury issue debt beyond the statutory limit? Woodward reports that everyone in the meeting, Obama included, “agreed it would not work. There would be lawsuits. The new bonds would be immediately downgraded. It would be a mess.”
Imagine that. The lawyers had concerns.
Woodward pressed Obama about the matter in a later interview.
“I am not prepared to put the country in a position in which a miscalculation results in default,” the president told Woodward, recalling his sentiment about the 14th Amendment option at the time. “[T]he world financial markets, having already gone through trauma two years earlier, cannot afford to have uncertainty about what the world’s reserve currency and its Treasury notes are worth in this environment.”
Well, neither can world markets afford to have the debt ceiling of the world’s most important economy be a recurring source of blackmail and volatility. Now that the GOP has shown it’s willing to cross that line, it’s a matter of choosing your poison.
The White House attitude last time reminds me of Al Gore’s refusal during the Florida recount to challenge military ballots. Gore said he’d be savaged in the press for such a move and wouldn’t pursue it. I recall thinking that Clinton would have had the exact opposite reaction. “If throwing out some military ballots will help us win, then do it,” Clinton would have said. “I’ll deal with any PR fallout as president.”
This is about presidential will. And a readiness to do what the situation demands.
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