Wednesday, July 13, 2011

Debt-Limit Harakiri

The Wall Street Journal thinks that Mitch McConnell's plan may be the best that the Republicans can do right now:
This is the political context in which to understand Mr. McConnell's proposal yesterday to force Mr. Obama to take ownership of any debt-limit increase. If the President still insists on a tax increase, then Republicans will walk away from the talks.

Mr. McConnell would then let the President propose three debt-limit increases adding up to $2.5 trillion over the coming months. Senate Republicans (with Majority Leader Harry Reid's cooperation) would use a convoluted procedure to vote for three resolutions of disapproval on the bills. Mr. Obama could veto the resolutions and 34 Democrats could vote to sustain. The President would get his debt-limit increase, but without Republicans serving as his political wingmen.

The hotter precincts of the blogosphere were calling this a sellout yesterday, though they might want to think before they shout. The debt ceiling is going to be increased one way or another, and the only question has been what if anything Republicans could get in return. If Mr. Obama insists on a tax increase, and Republicans won't vote for one, then what's the alternative to Mr. McConnell's maneuver?
I haven't decided yet. I'd rather not see the debt ceiling go up at all. If we have not yet reached the point-of-no-return, we seem to be getting perilously close to it. Allowed the government to keep increasing the debt is deeply, fundamentally bad. On the other hand, default is unacceptable. (When and how that default would occur is not clear to me. While people are talking about August second, there are several sources indicating that there is, or is expected to be, sufficient funding in the treasury to deal with all required payments at least through the end of the month.)

The problem, of course, is that the party on the other side of the negotiating table is fundamentally unserious, and not at all interested in addressing the real source of the problem - the spending which has gone on over the past 10 years, the spending which has escalated over the past four years, and, most importantly, the spending to which the government is already committed for the coming years.

Let me acknowledge, here and now, that tax revenues are going to have to go up to dig us out of this situation. Whether that's through the closing of loopholes, the raising of rates, either nominally (by raising rates) or effectively (by shifting brackets) or miraculous growth, the public debt is going to require more revenue to close than the government is currently getting. But the big problem isn't revenue - it's spending. Until serious attempts are made to get the spending half of the equation improved, I strongly oppose any attempts to raise revenue. The inevitable result of negotiations like the current ones are agreements on tax hikes now and spending cuts in the future, and the spending cuts never actually happen. That's how we got to today, and that's what we cannot afford to do going forward.

And the President and the rest of the Democrats and their sycophantic supporters in the mainstream press haven't the slightest interest in cutting spending (except for maybe the military). That's the source of the problem. As the WSJ editors said,
We've never thought the debt ceiling was the best leverage for a showdown over the entitlement state, and now it looks like Mr. Obama is trying to use it as a way to blame the GOP for the lousy economy.
And if they can't find a way to improve the fiscal situation, McConnell's plan at least lets the Republicans place the blame where it belongs.

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