Debt Crisis Déjà Vu
“The question is: Are we staying on this course to keep running up the debt, debt on top of debt, increasingly financed by foreigners, or are we going to change course?” he asked.
But Republican Sen. Chuck Grassley says there is no alternative, with lawmakers facing “a choice between breaking the law by exceeding the statutory debt limit or, on the other hand, breaking faith with the public by defaulting on our debt.”
That was the state of play in 2006, when George W. Bush wanted to lift the debt ceiling from $8.2 trillion to $9 trillion and the Democrats were ripping his handling of the economy. In fact, every Senate Democrat—including Barack Obama and Joe Biden—voted against boosting the debt ceiling, while all but two Senate Republicans voted in favor. It was Bush’s fourth debt-ceiling hike in five years, for a total of $3 trillion.
Eric Cantor and John Boehner voted then to raise the ceiling, and on other occasions during the Bush administration; now they’re leading the opposition. Obama, who warned Tuesday in a CBS interview that he can’t guarantee Social Security checks will go out after the August 2 deadline, has said his 2006 vote was a mistake.
“That’s the beauty of being in the minority, you don’t have to be responsible,” says John Feehery, who served as a spokesman for Dennis Hastert when the Illinois Republican was House speaker. The Democrats “just voted against it and made us do all the heavy lifting … Hypocrisy is one of the coins of the realm.”
Ari Fleischer, the former Bush White House spokesman, recalls working for Hill Republicans who routinely opposed debt-ceiling hikes during the Clinton years. “The problem this time is split government—it still has to get done somehow,” Fleischer says. “Which is why I view so much of this as ‘wake me at the last minute.’”
Democratic strategist Jenny Backus calls it a “Washington parlor game … It’s a lot easier to oppose raising the debt ceiling when you’re the party out of power because you don’t have the perceived responsibility. I don’t think I’d say it’s hypocrisy. I’d say it’s political reality. There are very few ways to make a statement about whether the economy’s on the wrong track.”
Today, of course, it’s the Obama administration pushing to raise the debt ceiling, and the Republicans strongly resisting a deal—except on their terms. “This debt-limit increase is his problem,” Boehner said Tuesday.
There is one critical difference, of course: When the Democrats voted against Bush’s requests, it was what Backus calls “a ‘gimme’ vote”; they knew the GOP-controlled Congress had the margins to pass the measures. This time, if the two parties can’t resolve (or at least paper over) their differences within three weeks, the federal government will actually default on its obligations. Senate Minority Leader Mitch McConnell threw a curveball Tuesday by suggesting that Congress grant Obama the authority to raise the debt ceiling on his own, provided that he propose spending cuts.
Republicans argue that the U.S. debt, at $14.3 trillion, is far worse than in 2004 or 2006. Democrats say that’s in part because Bush prosecuted two wars without paying for them and left his successor a financial crisis that required massive bailouts.
Back then, the rhetoric was reversed. In the fall of 2004, when the government hit the debt limit, Treasury Secretary John Snow had to delay contributing to a federal-employee pension system to avoid running out of cash. Democrats noted that Bush had run up more debt in 17 months than the country had accumulated from George Washington to Ronald Reagan.
The Republicans postponed the vote until after the election to avoid giving campaign ammunition. But there was little sense of crisis because GOP leaders made clear they would raise the ceiling during the lame-duck session, which they did.
“To pay our bills,” said John Kerry, who had just lost his presidential bid, “America now goes cup in hand to nations like China, Korea, Taiwan, and Caribbean banking centers. Those issues didn't go away on Nov. 3, no matter what the results.”
They still haven’t gone away; the major players have just switched positions. “Part of it is just naked politics,” Feehery says.