House Republicans last week wisely backed off a threat to refuse to raise the federal debt ceiling, instead offering President Barack Obama a three-month extension of the government’s borrowing authority through April 15.
The GOP offer would also force a debate on taxes and spending in the spring, as the deal would withhold pay for both chambers of Congress if either fails to pass a budget.
The constitutionality of withholding Congress’ pay remains subject to debate, but regardless, the deal is clearly the most reasonable offer put forth on the issue by the House GOP, and one that Obama should consider. Unfortunately, the deal would set Washington up for another quixotic, market-rattling dance with fate three months down the road, because some lawmakers and pundits still don’t realize that the debt ceiling is not the ideal tool for extracting budget concessions.
The debt ceiling — which was raised 17 times on Ronald Reagan’s watch, four times under Bill Clinton, seven times under George W. Bush and three times since Obama took office — is not tied in any way to proposed future spending. It’s a limit on how much the government can borrow to pay existing bills, and using it as a bargaining chip does nothing to reduce federal spending. Refusing to budge on it is akin to tossing the credit-card bill into the furnace to teach one’s spouse about fiscal responsibility.
But don’t tell that to Tea Party Express Chairwoman Amy Kremer, who argued last week that it is “pure baloney to say we have to pay the bills for things Congress has already approved.
“We are drawing the line on future spending, not debt or obligations to Social Security, Medicare and the military, which can all be met without an immediate rise in the debt ceiling.”
Kremer’s claim is contradicted by the Treasury Department and the Congressional Research Service, who have said that arbitrarily deciding which payments the Treasury is obligated to make is legally dubious.
Worse yet, this reckless and misinformed stance has tangible consequences for the markets, as investors wonder whether our lawmakers understand high school level civics and government. During last summer’s debt-ceiling impasse, consumer confidence plunged and the Standard & Poor’s 500 dropped 10 percent. Similar pessimism was expressed last week in Morgan Stanley’s index of business conditions for the coming months.
“With another prolonged, high-stakes political circus expected in the coming months, fiscal policy uncertainty remains high,” the report said. “Business conditions expectations turned lower, and hiring remains subdued.”
Polls show that a balanced budget is a high priority for most Americans, and yet the House GOP’s debt-ceiling brinkmanship has proven deeply unpopular.
One can only surmise that voters are growing tired of Congress’ self-inflicted wounds to our economy.