Political brinkmanship over raising the ceiling on the amount of money the federal government can borrow threatens to endanger the country?s economic recovery, putting its credit rating and that of all Americans at risk. Dueling televised speeches last night by President Obama and House Speaker John Boehner provided no path to resolving the deadlock over cutting the nation’s deficit and raising the debt ceiling. Instead, they escalated the divergent tracks Democrats and Republicans have taken on this crisis.
Boehner was even more adamant in his stance, no doubt delighting the right-wing Tea Party section of his caucus that has been driving the policies of the Republican Party in Washington, D.C. President Obama called for sanity to prevail and rejected Boehner’s attempts to put the country at risk of default if Democrats won’t allow Republicans to get their way.??
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Boehner?s two-step plan would cut upfront some $1.2 trillion in discretionary spending over the next decade and further cut $1.8 trillion next year through a super-committee of Congress. Those cuts would affect programs such as Social Security and Medicare that benefit the elderly, children, the poor and mostly minorities.
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The plan would also affect discretionary spending on after-school and school lunch programs, housing for the poor and lower middle class, and federal financial assistance to states and municipalities. This last would swell the already burgeoning ranks of Black unemployment because most African-Americans, and women in general, are employed in the public sector.
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It appears, then, that the Republicans are looking to do serious damage to the Democrats’ voting base in a political warfare disguised as credible economic policy. Moreover, they want a second Congressional vote next year on the second part of their plan, right before the Presidential election. And even that vote won?t be guaranteed.
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That way, Republicans can have another opportunity to grandstand, rattle the financial markets, poison economic sentiment and make the president look weak as he heads into debate with whomever they nominate as their presidential candidate. It?s a cynical ploy. The question is, will Democrats allow them to go through with it, with so much at stake.
For now, it appears that the Democrats are standing firm. Majority Leader Harry Reid has come up with a plan to reduce the deficit by $2.7 trillion over ten years and raise the debt ceiling until after next year?s elections, meeting the very same conditions that Republicans had initially laid down. Reid’s plan, which quickly received the president?s endorsement, would cut $1.2 trillion over the next ten years and get some savings from recurring programs, such as agriculture subsidies.
The proposal also counts about $1 trillion in savings from winding down the war in Iraq and Afghanistan. Unlike Boehner?s plan, it would raise the debt ceiling right away and once, and doesn?t condition this on the work of a super-committee of Congress. Moreover, Social Security and Medicare would be spared from cuts.
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It’s still unclear if either of the two plans will pass both chambers of Congress. The Republicans are so intransigent they probably won?t vote for Reid’s plan. Even Boehner’s plan has come under withering attacks from his Tea Party caucus. At the same time, Republicans don’t have enough votes in the Senate to pass Boehner’s plan.
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As the clock ticks towards the Aug. 2 deadline for lifting the debt ceiling, an impasse will present President Obama with a tough decision to make. He?s made it clear that he won?t sign a short-term plan that will allow Republicans another opportunity to hold the economy at ransom next year, making it likely that he could be forced to look to the 14th Amendment to get out of the mess.
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The 14th Amendment clearly states, ?the validity of the public debt?shall not be questioned.? A number of law professors have suggested that this gives Obama an option to unilaterally raise the debt ceiling. Former President Bill Clinton, a former law professor himself, backed up that argument last week, saying that he would invoke the 14th Amendment to raise the debt ceiling ?without any hesitation and force the courts to stop me? in order to avoid default.?
The White House has been coy about this issue, but it?s instructive that lawyers at the Treasury Department were exploring the option a few weeks ago. President Obama said yesterday that the idea was ?tempting,? although he has been advised by his lawyers not to take that route.
Invoking the 14th Amendment to raise the debt ceiling is unchartered territory. Not only has it never been tested in court, but Larry Tribe, the famed Harvard law professor who was Obama?s mentor in Law School, also recently warned against using it, saying that raising the bet ceiling is the job of Congress, not the executive.
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In an interview after President Obama?s speech last night, New York Democratic Senator Chuck Schumer told Piers Morgan on CNN that the 14th Amendment was an option that should be made available to the president under certain circumstance, but should not be used for now. Some political analysts argue that Clinton?s support for the 14th Amendment may make it impossible for Obama to void its use if he finds himself staring at a default next week, because he knows the consequences of a default would be dire for everyone, himself included.
