McConnell’s Cowardly Debt Solution
Sen. Mitch McConnell’s suggested solution to the nation’s debt ceiling dilemma won’t fly with his fellow conservatives and would, if enacted, deeply disgust the public at large. But his perplexing proposal does perform an important public service: by exposing the growing consensus among Republicans that President Obama feels no real desire to make a deal and prefers a dangerous confrontation that could well work to his political advantage.
What makes the McConnell plan utterly unacceptable to Republicans is the appearance of capitulation to Barack Obama. The minority leader of the U.S. Senate offers the president unilateral authority to raise the debt ceiling as long as he specifies vague, unenforceable future spending cuts; it would take a complicated process, and two-thirds votes in both houses of Congress, to block a presidential decision to authorize more borrowing. After months of angry debate and sweeping victories in last November’s elections, the GOP leadership needs to reward its loyal supporters with plausible claims of victory in the ongoing battle of the budget. The McConnell scheme offers nothing that even vaguely resembles success, and looks like a cowardly (if cunning) way out of a high-stakes showdown.
That’s also the problem with selling this approach to the public at large: McConnell’s proposal seems to place showmanship over substance, politics over policy. If Republicans voted for it, they would seem to announce: “We’ll give Obama the debt increases he wants, and we don’t care how it busts the budget; our main concern is that we’re able to pin the blame squarely on the president and go on record as voting against it.” The two-thirds requirement for denying a debt increase means that every House Republican and all 47 GOP senators (plus some endangered Democrats) could cast a vote against an unpopular hike in the debt ceiling, without stopping the process or risking default. The proposed ploy may be motivated by a sincere concern for the health of the economy, but it looks cynical and tricky and amounts to an obvious violation of Republican promises to stand unshakably on principle.
Why would a savvy Washington operator like Mitch McConnell make such a clumsy and demoralizing suggestion in the midst of a dramatic national debate over spending and debt—a debate that Republicans appeared to be winning on the merits, according to most polls?
Congressional insiders suggest that the McConnell option amounts to a desperate effort to offer an escape hatch, or at least a lifeline, for nervous Republicans increasingly convinced that the president wants to push them into a climactic battle that could do real harm to the economy, while shattering GOP chances for 2012.
This dire conclusion stems from the recent avalanche of bad news on the stalled recovery and clear signs that the Obama administration now expects no significant turnaround before the election, less than 16 months from today. Last Sunday, Treasury Secretary Tim Geithner appeared on Meet the Press and delivered a shockingly grim prognosis on the economy. Asked by David Gregory, “When do you think recovery is actually going to start feeling like recovery?” the administration’s top financial official declared, “Oh, I think it’s going to take a long time still. This is a very tough economy. And I think for a lot of people it’s going to feel very hard, harder than they’ve experienced in their lifetime now, for some time to come.”
In other words the Democrats have shelved all plans for a “Morning-in-America”/“Happy Days Are Here Again” reelection campaign. With the president’s key economic adviser Austan Goolsbee saying that the best-case scenario for unemployment by the end of next year involves a potential rate of 8.2 percent—a full percentage point worse than the prevailing rate at the inauguration—the White House seems suddenly more concerned with blaming someone else for the hard times rather than producing a meaningful turnaround.
While lacking all confidence that they can fix the economy, Obama and company feel virtually certain that they can affix guilt on congressional Republicans and Tea Party activists for their alleged intransigence. Democrats look to recent history for proof that they will come out on top in any confrontation pushed to the absolute limit.
Consider the example of the Emergency Economic Stabilization Act of 2008—the Bush bank bailout, and the first stage of the TARP program. When the House first considered the administration proposal, Republicans voted overwhelming against it (133 to 65) and despite support from the majority Democrats, the measure failed. The next day, stock markets collapsed—the Dow lost 777 points, its biggest one-day drop in history. Three days later, the House voted again and with 24 badly spooked Republicans switching their votes, the measure passed.
If the heavily hyped Aug. 2 debt-ceiling deadline approaches without congressional action, and if Moody’s follows through on its repeatedly trumpeted threat to downgrade the triple-A rating of the federal government, would the markets repeat their catastrophic reaction of September 2008? Some Wall Street observers expect an even more devastating meltdown. If that happened, how long before Republicans abandoned their hardline position and raised the debt ceiling with few (or no) conditions attached? Some cynics suggest the timeline to capitulation would extend only for hours, not for days.
Sooner or later, with government offices closing, federal workers furloughed and media proclaiming the end of civilization as we know it (even if the Treasury did manage to send out all Social Security, Medicare, and defense-related checks), the GOP would cave and give the president new borrowing authority. No one argues that a partial government shutdown, with attendant turmoil in world markets and consumer confidence, could last more than a week or two before the Congress (always attuned to its members’ political survival) abjectly surrendered. At that point, Obama would claim victory (just as Bill Clinton did when Republicans eventually raised the white flag after the big budget shutdown of ’95) and blame all economic damage on his vanquished, discredited adversaries.
This is the grim scenario McConnell’s sneaky strategy means to avoid, based on impeccable logic that says that since there’s no way to beat Obama on this issue, it’s better to surrender now than later. Some smart conservatives believe he’s right. Reacting to news that Obama abruptly terminated Thursday’s budget talks, indicating no flexibility or willingness to move toward Republican demands, John Podhoretz of Commentary declared: “In the end, the much-reviled McConnell option or something very close to it—some series of temporary debt-ceiling increases that take us past Election 2012—will almost certainly be what happens.”
To avoid this outcome, the House of Representatives must act within a few days to pass its own version of a debt-ceiling increase—featuring major and immediate budget cuts, no tax hikes, and some form of spending caps or balanced-budget amendment. Send meaningful legislation to the Senate, which can pass its own version of more borrowing authorization, and then let the two houses negotiate with each other to put something on the president’s desk before Aug. 2. If Obama follows through on his veto threats, it will be harder for him to blame anyone else for catastrophic consequences.
Even in the likely event that the McConnell mechanism with its Rube Goldberg details ends up going nowhere, the thinking it reflects still helps illuminate the current state of play and may yet contribute to a reasonable and responsible resolution.