“I am happy to talk with him and other Republicans about anything,” President Obama said of Speaker Boehner in his press conference yesterday, “not just issues I think are important but also issues that they think are important. But I also told him that having such a conversation, talks, negotiations shouldn’t require hanging the threats of a government shutdown or economic chaos over the heads of the American people. Think about it this way, the American people do not get to demand a ransom for doing their jobs.”
Indeed, they don’t. And it is my hope that the President’s call to both fund and reopen the government would not fall on deaf ears, but it appears that nothing has changed for the Republicans.
The planned Senate test-vote Friday on granting President Obama the authority to increase the $16.7 trillion debt ceiling for a year, unless two-thirds of Congress disapproves, may offer a route toward at least a temporary solution. But we need much more than a temporary solution, and Obama knows it.
A growing chorus of Republican congressmen now insist that hitting the debt limit wouldn’t lead to default. All we have to do is “prioritize” payments, they say: the Treasury will keep paying interest on our debt and funding the most vital needs, like the military, and everything will be fine. The notion that hitting the debt ceiling wouldn’t cause a default or, even if it did, that it wouldn’t cause serious problems for the United States and the global economy, is profoundly dangerous.
Just listen to Chinese Vice Finance Minister Zhu Guangyao, for instance. He warned recently that “the clock is ticking” and that China, as the U.S.’s largest creditor, “is naturally concerned about developments in the U.S. fiscal cliff.” Zhu remembers well the downgrade of our “AAA” credit rating in 2011. American political leaders can hardly afford to forget it. No rational analyst could argue that, if we are left with $30 billion in cash to meet our almost $60 billion-a-day obligations, we’ll somehow be okay. “Catastrophe,” as the president put it, is the much more accurate description.
I have already written about the strange and unexpected lack of urgency that lawmakers are bringing to this debt-ceiling crisis, especially in light of the chaos surrounding the issue in 2011. Indeed, I am not altogether sure how House Republicans cannot see the deleterious impact that a default would have on our domestic economy, on the global economy, and on America already-diminished global standing.
We may have one final opportunity to save our fiscal hides. Out of what now seems like a never-ending struggle pitting reason and fiscal discipline against partisan infighting, we need to tie the debt ceiling and shutdown together in forging a new path toward sound policy for the long term.
Former White House Chief of Staff Erskine Bowles and former Senator Alan Simpson have a plan to push through smart reforms in mandatory spending that could replace the sequester cuts; generate $300 billion in revenue and spending savings in the first 10 years by moving to the Chained CPI (consumer price index), a more accurate gauge of inflation, which would translate to $1.2 trillion in the second 10 years; simplify the tax code and lower income-tax rates, including the reduction of the corporate tax rate to a globally competitive 26%; make $585 billion in health-care cuts in the next 10 years, which will translate into $2.8 trillion in the next ten. What’s more, the Simpson Bowles plan doesn’t hurt the truly disadvantaged: the proposal contains zero cuts to income-support programs like SSI, Food Stamps, and Unemployment Compensation. The proposal actually increases the minimum payment to the poor under SS to 125% of the federal poverty line and builds in low-income protections under health-care reform.
Simpson-Bowles 2.0 is a plan both parties should get behind. It should satisfy Republicans by achieving real cuts in the health-care cost curve and Democrats by building in low-income protections. Indeed, it meets core objectives from both sides of the aisle and focuses on our important priorities—unlike the nitpicking that is going on in Washington today.
As they have done for years now, Simpson and Bowles stand as voices of reason in a sea of partisan noise. They have shown us a way to impart fiscal discipline and sound public policy while protecting important priorities, whether they be a strong defense or real entitlement reform. Our leaders in Washington would be fools not to take note—but then, things have already degenerated to a point far beyond what sensible people would tolerate.