House Speaker John Boehner (R-Ohio) delivered a speech to the Economic Club of New York yesterday that was arguably the most important of his tenure as speaker. It was also a sign that determined but responsible leadership is the order of the day. The Wall Street Journal reports:
While disagreeing with Mr. Obama about the way forward, Mr. Boehner tried to reassure the listeners that he took seriously concerns about brinksmanship in the debate over raising the limit on borrowing.
“I know there are a lot of people in this room that are probably somewhat uneasy about this debate,” he told a crowd of hundreds. “And let me tell you, I understand your concerns. It’s true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt limit without simultaneously taking dramatic steps to reduce spending and to reform the budget process.”
Bond-market investors are following the debate over the debt ceiling closely, amid concern that pushing a deal on raising the borrowing limit to the eleventh hour could prove risky. At the same time, there seems to be very little tangible evidence that investors are seriously worried that a deal won’t happen.
The liberals’ warnings that a bond crisis will occur because of Boehner’s “brinksmanship” is belied by the traders’ behavior and reaction to the speech. (“On Monday, bond-market investors pushed the yield on the 10-year Treasury note . . . lower to close at 3.142%. That’s the lowest it’s been since Dec. 6, 2010. Since yields typically rise when investors view investments as becoming increasingly risky, the decline in yields on the 10-year note suggests that lately investors are getting more—not less—comfortable owning U.S. debt.”)
Boehner’s speech devoted substantial time to taxes. He told his audience:
A tax hike would wreak havoc not only on our economy’s ability to create private-sector jobs, but also on our ability to tackle the national debt.
Balancing the budget requires spending cuts and economic growth. We won’t have economic growth if we raise taxes and fail to address the drivers of our debt.
The mere threat of tax hikes causes uncertainty for job creators — uncertainty that results in less risk-taking and fewer jobs.
If we’re serious about balancing the budget and getting our economy back to creating jobs, tax hikes should be off the table. . . . I would note that my colleagues and I are not calling for tax cuts in our budget. Rather, we’re calling for an end to the threat of tax hikes — and a fundamental reform of the tax code — to provide certainty to those in our country who create jobs. We’re calling for an end to the government spending binge that is crowding out private investment and threatening the availability of capital needed for job creation.
There is nothing radical in any of this. Boehner isn’t recommending that there be no debt ceiling increase, only that it be accompanied by real cuts. He’s not advocating tax cuts, only that we not squash the fragile recovery with the threat of new taxes. Democrats, meanwhile, insist that a debt ceiling increase is pro forma, that even the debate over accompanying cuts is somehow illegitimate. (Boehner reminds us, “There’s a reason the debt limit can’t be increased without a vote of Congress. The debt limit is set in statute specifically so that the executive and legislative branches of our government have to deal with the difficult fiscal choices we face.”)
Rather than address the drivers of our debt (entitlement spending) Democrats want to take the opportunity to soak the rich (again) and slash defense, neither of which will address the underlying problem (spending is out of control and has grown to an historically high percentage of our economy). So who are the radicals here?