Published July 25, 2011
With the collapse of the Boehner-Obama talks, it looks as if something closer to “regular order” in the legislative branch will probably be needed to produce the final deal to raise the debt limit. The House is moving toward taking up a plan drafted by the speaker and his lieutenants, and Senate majority leader Harry Reid is drafting a competing version for his chamber.
This is a good development. Because it’s been clear for some time now that President Obama has been the real roadblock.
The president and his advisers wanted to take what looked on its surface like a potential problem for them—the need to raise the debt limit—and turn it into an opportunity. They have had three primary objectives in this fight. First, the president has wanted to force congressional Republicans to agree to a large tax hike. Such a hike would partially mask the government’s spending problem for a time (though not permanently), and thus ease the pressure for spending cuts. It would also badly divide the conservative coalition going into an election year. In other words, it would be a real “twofer” for the president and his party and would certainly be trumpeted as such by the mainstream press.
Second, the president has wanted to further advance the Obamacare vision for health care. That has meant no meaningful move toward repeal and replace, and in fact further changes in Medicare and Medicaid that are in the spirit of Obamacare’s central-planning philosophy.
The president’s third objective has been to reposition himself politically. His first two years in office were dominated by the so-called “stimulus” proposal and Obamacare—efforts that cemented the electorate’s perception of him as a big-spending, big-government liberal. Heading into 2012, the president and his advisers desperately want to change his image, especially among independent voters, and they were hoping that a “$4 trillion” deficit-cutting plan would do the trick.
Unfortunately for the president, as the details of his talks with Speaker Boehner have spilled out into the press, it hasn’t helped him shed his well-earned reputation as a big spender. The dominant story line that has emerged is that the president has insisted on a $1.2 trillion tax hike to get a deal, and Republicans have said no, especially given the president’s insistence that a serious rewrite of the health-care entitlements, including Obamacare, is “off the table.” By holding firm, Republicans have—so far—denied the president the ability to shift political blame onto them for the tax hikes he wants to impose on working Americans. Consequently, as matters stand today, the debt-limit talks have only further exposed the president as a big-government liberal.
So Republicans have acquitted themselves remarkably well to date. The question is, what should they do now?
First, House Republicans must realize that, at this stage, they have to pass a credible plan through their chamber. Having rejected the Obama “grand bargain,” they need to show the country they are willing to pass a debt-limit increase on reasonable terms to avoid the real, if sometimes exaggerated, risks associated with a debt-limit crisis. The two-step process that Speaker Boehner outlined to his colleagues today looks like it should do the trick in that regard. It would impose discretionary spending caps for a decade, thus producing real restraint on domestic appropriations. The savings—about $1.2 trillion over ten years—would be accompanied by a substantial and immediate increase in the debt limit.
In addition, the Boehner plan would empower a special bipartisan joint committee of House and Senate members to draft further budget-cutting reforms, including entitlement changes. The target would be an additional $1.8 trillion in deficit reduction over ten years. The recommendations of this committee would go to an up-or-down vote in both the House and the Senate, probably sometime in early 2012.
Senator Reid and his Democratic colleagues are objecting to the Boehner plan on the grounds that it would force another debt-limit showdown in 2012, almost certainly with the same disputes about taxes and entitlements. Fair enough. House and Senate Republicans should be open to a reasonable counter-offer from Senator Reid, especially if it is an offer that could actually pass in the Senate.
The details of course matter immensely here. The legislation to raise the debt limit needs to include real spending restraint, not gimmicks or smoke and mirrors. But if the cuts in a Reid counter-offer are real, and if they are of a size to comfortably allow an even larger bump up in the debt limit, Republicans should be open to moving in that direction if doing so would produce a final deal with Senate Democrats.
Because, from a strategic point of view, even a resolution of the kind Reid is pursuing—one giving the president a debt-limit hike into 2013—would give Republicans all they need from this fight, if the spending cuts are indeed real and not focused on defense. There would be no “grand bargain” for the president, and no “Gang of Six” plan. There would be sizeable, even historic spending cuts, with no accompanying tax increase. There would be no tacit approval of Obamacare. And there would be no political fallout from the unpredictable economic turmoil that could accompany a hiatus in federal borrowing.
It’s true that such a deal would also mean giving up on entitlement reform before 2013. But, given what’s happened over the past two months, it’s obvious that genuine entitlement reform isn’t going to happen with this president in the Oval Office.
Republicans have successfully dodged several bullets to this point. It’s now time for them to see that they are in a good position to close a deal on their terms&mdashand then move on.
James C. Capretta is a fellow at the Ethics and Public Policy Center. He was an associate director at the Office of Management and Budget from 2001 to 2004.