Who will be left standing? August 2 - debt ceiling doomsday - is upon us and something has got to give.
President Obama has said that if we don't raise the debt ceiling the consequences will be catastrophic. On the other end, we have Tea Party members of Congress who have said that if we don't raise the debt ceiling, we won't see any of the problems that Obama claims and we will be able to meet our obligations. Tea Party members of Congress treat this like it is the morning after the Y2K bug. So which will it be? Or will we see some middle ground?
In the wake of 9/11 the Bush Administration warned Americans of "the threat of a mushroom cloud coming from Iraq." This needlessly created an atmosphere of fear.
The new atmosphere of fear surrounds not raising the debt ceiling versus having too much debt.
So, in all fairness, we have to ask the same question of President Obama. Are his claims of catastrophic consequences if we don't raise the debt ceiling just a ruse to move things along? We should ask the same question of Tea Party congressional members. Are they minimizing the importance of raising the debt ceiling and overstating the seriousness of federal debt?
As a percent of GDP, the current level of federal debt isn't anything to be proud of but it isn't anything the U.S. economy can't handle. The debt ceiling has been raised 102 times since it became law in 1917. The debt ceiling has been raised under Presidents Reagan, 17 times; George H.W. Bush, eight times; Clinton, four times; George W. Bush, seven times; and Obama, three times to date. No other developed nation (except Denmark) even has a debt ceiling. And the credit rating agency Moody's suggests that we get rid of the debt ceiling to prevent self-inflicted fiascos like this again in the future.
It seems that the thing that is different about raising the debt ceiling this time is the convictions of the Tea Party. The Tea Party makes some important points about federal spending and the debt and I respect many of their concerns, but I have a problem with three specific points.
First, they believe that taxes are too high and they will not vote to raise any taxes whatsoever. Tax rates may be high as a matter of a target; however, tax rates are in fact at a post-World War II low and are low by international standards. At the same time, they complain that approximately 47 percent of Americans "don't pay taxes." This is not true; 47 percent aren't paying federal income taxes because of loopholes. However, that 47 percent are subject to state income taxes, sales taxes, property taxes and a host of other taxes. It wouldn't be too ideologically consistent to suggest collecting from this 47 percent, and revenues collected from this 47 percent would be miniscule, anyway. Meanwhile, the Center for Budget and Policy Priorities, using Congressional Budget Office figures, found that the Bush tax cuts were the single largest driver of the federal deficit.
Second, it sounds catchy to say that the U.S. should have a Balanced Budget Amendment since most states do (this was struck down by the Senate), and that the federal government should have the same spending practices as a family household. But if we had either, we would not have been able to win WWII, or outspend the Soviets in the 1980s, which contributed to the fall of the USSR. The federal government needs to be flexible in emergencies and to be a spender of last resort when needed such as in a recession or war. The principles of macroeconomics are very different that of microeconomics, a point glossed over by many.
Lastly and most importantly, the idea that compromise is the same as selling out is absurd. Non-compromisers should work for Greenpeace, Amnesty International or the NRA. In Washington, to get things done compromise is necessary. Compromise is as American as the formation of the Constitution. Besides, who among us is so categorically sure of their convictions that they would outright dismiss concerns important to others? Such righteousness is unprofessional and scary. Besides, neither President Obama nor Speaker Boehner wants to raise the debt ceiling; they feel they must. Raising the debt ceiling isn't a compromise, the terms are.
The Tea Party perspective is important. But when taken together, these points made the debt stalemate worse than it should have been. When politicians on either side of the aisle maintain extreme positions to push policy, and they both do it, America suffers from partisan ideology and gridlock.
PAUL HEROUX of Attleboro is a contributing columnist. He can be reached at PaulHeroux.MPA@gmail.com.