Debt Ceiling Thoughts
Posted in Politics by William Voegeli
- They say that those who successfully fake authenticity can get
away with anything. The corresponding danger is that when you try but
fail to fake it you can't get anyone to believe you, even if you are
being sincere. Barack Obama, graduate of Columbia and Harvard Law,
sometimes - as in yesterday's news conference - drops his g's and refers
repeatedly to what "folks" want and believe. The falsity of this
rhetorical persona renders everything he tries to convey less
plausible.
- The product President Obama was trying to sell yesterday was as dubious as the salesman. As Clive Crook pointed out,
Obama's passivity often extends to speaking as though someone else has
been president since January 2009: "Asked at the press conference to
make one specific proposal on
entitlement reform, he dodged yet again, merely laying out criteria for
what he might be willing to accept if somebody else happened to come up
with a plan."
- This leading-from-behind approach to the
national debt not only clouds the future but distorts the past. In the
press conference Obama yet again blamed
the federal deficits on everyone but himself: "It turns out that our
problem is we cut taxes without paying for them
over the last decade; we ended up instituting new programs like a
prescription drug program for seniors that was not paid for; we fought
two wars, we didn't pay for them; we had a bad recession that required a
Recovery Act and stimulus spending and helping states -- and all that
accumulated and there's interest on top of that." You would never know
that the Obama administration proposed a 2012 budget that told the
American people that a national debt rising to nearly 100% of GDP over
the coming decade was the best we could hope for and, really, nothing to
worry about. Or that Obama treated the Bowles-Simpson Commission report
as an interesting analysis that had no bearing on his administration's
fiscal policy.
- Other things don't add up. Even The New Republic, willing for four years to give Obama the benefit of every doubt, found
his assertion that "some modest modifications" in Social Security and
Medicare "can save you trillions of dollars" mystifying. The entitlement
changes laid out so far by the budget negotiators reduce outlays by no
more than $350 billion over the coming decade. The "trillions" claim
could make sense only if Obama were prepared to raise the Medicare
eligibility age from 65 to 67, as envisioned in the proposal put forward
by Senators Lieberman and Coburn. If Obama is receptive to such an idea
he is, again, waiting for someone else to do the heavy lifting.
- "We
have a chance to stabilize America's finances for a decade, for 15
years, or 20 years, if we're willing to seize the moment," Obama said,
but this "unique opportunity to do something big" would require "some
shared sacrifice and a balanced approach" - a mix of spending cuts and
tax increases. Strangely, when Obama speaks of the tax changes he has in
mind, the revenue they would generate for the government always sounds
incidental. The real purpose is to give people facing a reduction in
their government benefits tangible reasons to believe we're all in this
together, that they are not being singled out for sacrifices. Thus, says
Obama, the balanced approach would "require revenues" because "even as
we're asking
the person who needs a student loan or the senior citizen or people --
veterans who are trying to get by on a disability check -- even as we're
trying to make sure that all those programs are affordable, we're also
saying to folks like myself that can afford it that we are able and
willing to do a little bit more; that millionaires and billionaires can
afford to do a little bit more; that we can close corporate loopholes so
that oil companies aren't getting unnecessary tax breaks or that
corporate jet owners aren't getting unnecessary tax breaks."
- Cutting
$4 trillion from the projected national debt sounds surprisingly easy
in Obama's telling: a modest modification of a social insurance program
here, and asking a few gazillionaires to do a little bit more there, and
before you know it we're running surpluses as far as the eye can see.
When you look at the numbers, though, you keep coming back to the fact
that the Obama commitment that has put the country on the wrong path was
his determination to significantly and permanently expand federal
domestic programs while keeping his campaign promise to limit any and
all tax increases to families making more than $250,000 per year. As
Derek Thompson points out,
this pledge renders it very difficult to increase federal revenues by
more than $1 trillion over the coming decade. That upper boundary, in
turn, means that the progressive hope - a 50-50 split between revenue
increases and spending cuts - could accommodate no more than $2 trillion
in deficit reduction over ten years, not the $4 trillion that would be
the lowest amount compatible with Obama's professed desire to "do
something big."
- This failure to be clear and candid is not
simply Obama's but a liberal failure of which Obama's $250,000 promise
is a recent and clear instance. European social democrats not only want a
government big enough to guarantee the economic well-being of every
citizen, but are willing to acknowledge that the revenue base such an
enterprise requires can be provided only through broad-based taxes, such
as a value-added tax, which significantly reduce everyone's
disposable income. American liberals want the former but shrink from the
latter, thus committing themselves, stupidly or cynically, to the
proposition that America can progress toward a social democracy with a
tax system that curtails the lifestyles of the rich and famous, but no
one else's.
- Given all this, Republicans could be forgiven for echoing an old SNL parody:
"I can't believe we're losing to this guy." But they are. Obama has
"dramatically transformed the debate over the debt limit to his
advantage," according to Rich Lowry, editor of National Review,
using "the threat of post-August 2 turmoil to paint the
Republicans as reckless and unreasonable." The source of this emerging
political defeat is that "no [debt ceiling] increase can currently get
218 votes in the House. If House
Republicans were voting to cut spending by $10 trillion and raise the
debt ceiling by $10, they still might not be able to get a majority."
This intransigence, meant to cow and constrain Obama, has wound up
enhancing his leverage and flexibility. In Lowry's account, the
"paralysis in the House" means Obama can suggest he's amenable to
"phantom spending cuts that he's never
compelled to reveal but that he takes credit for proposing in
negotiations."
- The no-retreat, no-surrender Republicans on
Capitol Hill regard opposition to any and all debt ceiling and tax
increases as a matter of principle. Believing that government has
already taxed and borrowed enough, they refuse to be complicit in any
plan to tax and borrow more. Principles are necessary for
governing ably, but not sufficient. Statesmanship requires the
application of timeless principles to transient realities, which are
usually complex and difficult to perceive with clarity. In a democracy,
where public sentiment is the ultimate arbiter of all questions,
statesmanship requires an understanding of what the people will insist
on, cannot abide, and might tolerate, which must be far more subtle and
discerning than the insight such crude measures as public opinion
surveys can provide. On the fundamental question about the size, scope
and financing of American government, public sentiment is inchoate, not
clear and resolute. As Crook argues, when Democratic politicians vow to
"defend Medicare and Social
Security" and Republican ones promise to "roll back wasteful government
and [oppose] job-killing
tax increases," the public "agrees with both sides."
- In politics it's better to be right than wrong, but it's imperative to be right shrewdly,
in ways that attract allies and divide adversaries by presenting them
with difficult choices. Within the public's contradictory feelings about
the welfare state, it's possible to discern the raw material for an
enduring center-right consensus. The fact that Democrats refuse to
advocate wide-spread tax increases, and that the welfare state can't
begin to approach European dimensions until they not only produce but
sell such arguments, suggests that our distinctive don't-tread-on-me
spirit continues to make an American social democracy impossible. For
that consensus to dominate American politics, causing the welfare state
to ingest a decline proportion of a growing economy, will require the
smartest and not merely the most unyielding efforts of conservative
politicians. One idea
Republicans should consider is Kevin Williamson's: "a very narrowly
tailored bill that would permit the issuance of new debt
-- but only for the purpose of financing current debt service." Under
such a law, "The national debt no doubt will rise, but only by as much
as it costs to refinance current obligations." In the unlikely event
Obama and the Democrats want to do something about our deficits, as
opposed to doing nothing about them while getting credit for wishing to
address the problem, that plan would permit and ultimately require them
to put some cards on the table. Such a course compares favorably to the
Republicans' current negotiating path, which will lead them to "take
much of the blame [for any default] without having achieved any tactical
or strategic aim," in Lowry's assessment. "The last thing Republicans
should want," he correctly points out, "is to make President Obama
fortunate in his adversaries."
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