The Obama administration position on raising the nation’s debt limit is simple: It has to be done, and it has to be done now.
The second part of that statement is where it goes wrong. We will need to raise the debt ceiling eventually. But there’s no hard and fast deadline. In the 1990s, the Clinton administration drew up plans for how to keep operating if the nation reached its debt limit. Those plans still apply. That means there’s time to negotiate spending cuts and deficit reduction to go along with the debt-ceiling vote, which is exactly what the White House wants to avoid. But a number of Obama’s fellow Democrats, it seems, haven’t gotten the message:
A growing number of Democrats are threatening to defy the White House over the national debt, joining Republican calls for deficit cuts as a requirement for consenting to lift the country’s borrowing limit.
…The push-back has come in recent days from Sens. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, and Joe Manchin (D-W.Va.), a freshman who is running for reelection next year. Sen. Mark Pryor (D-Ark.) told constituents during the Easter recess that he would not vote to lift the debt limit without a “real and meaningful commitment to debt reduction.”
Even Sen. Amy Klobuchar (D-Minn.), generally a stalwart White House ally, is undecided on the issue and is “hopeful” that a debt-ceiling bill can be attached to a measure to cut the federal deficit, said her spokesman, Linden Zakula. Klobuchar is also up for reelection next year.
Months ago it seemed unthinkable that Congress might refuse to raise the borrowing limit. Leaders in both parties agreed that failing to do so would risk a default by the U.S. government, which could send interest rates soaring and cut off Social Security checks, as well as salaries for combat troops.
And although many lawmakers and aides say a bipartisan deal is likely, the insistence on conditions by a small but pivotal group of Democrats suggests that any agreement would almost certainly have to include substantial cuts in the deficit — not just to mollify House Republicans but to satisfy Democrats who could be politically vulnerable on spending issues.
“As catastrophic as it would be to fail to raise our debt ceiling, it’s even more irresponsible to not take this opportunity to own up to our unsustainable spending path,” Sen. Mark Udall (Colo.), another Democrat challenging the White House, said in a statement his office released this week. “If we don’t take action to reduce our deficit spending, Congress will be facing this same debt ceiling vote in the near term – still with no end to our deficits in sight.”
That’s basically right. The point here is not that the debt limit shouldn’t be raised at all. It’s that any vote to raise the debt limit should also be a vote to start making the sort of cuts and reforms that will keep Congress from having to vote to raise the debt limit again.
House Majority Leader Eric Cantor (R-VA) last week gave voice to the GOP claim that the Republicans will not support a national debt limit increase unless the bill also includes major spending cuts or budget and spending reforms. The debt limit currently stands at $14.3 trillion, and it has been raised by legislative action 74 times since 1962. This limit will be breached at some point between mid-May and July.
Republicans have suggested, among other ideas, a constitutional amendment that would call for the budget to be balanced by prohibiting spending from outstripping revenue in any year without a two-thirds vote of each chamber of Congress. Tax increases and debt limit increases would also require a two-thirds vote, and federal spending would be capped at 18 percent of GDP. Sounds pretty good to us.
Democrats like New York Sen. Charles Schumer and Vermont Rep. Peter Welch have demonized Cantor’s stance as “playing chicken” with the country’s economic recovery. Their counterarguments were predictably light on policy alternatives, however. Democrats want a so-called “clean” debt ceiling bill that would merely raise the limit without addressing the reckless spending practices that have produced the debt. The only thing such a bill would be clean of is the moral fortitude necessary to face down our fiscal problems.
Democrats in general have done their best to avoid engaging in a real debate about the government’s budget problems since the start of the new Congress in January, choosing instead to brush up on their demagoguery skills. In fact, Democrats don’t appear to even care about the debt crisis. Senate Majority Leader Harry Reid (D-NV) recently took off for a 10-day junket to China with members of his staff. Barack Obama is in full-on campaign mode, appearing on Oprah, filling his calendar with fundraisers, and using more energy to fill his 2012 coffers than in providing substantive leadership on critical fiscal issues. So, once again, America waits while its elected leaders engage in brinksmanship over our economic future.
Hope ‘n’ Change: Improper Payments
Federal agencies reported making $125 billion in improper payments in 2010, 94 percent of which came from social spending programs. The Government Accountability Office (GAO) defines improper payments as outlays that are overpayments, underpayments, or insufficiently documented payments, including, but not always, fraudulent claims. The $125 billion was spread across 70 different programs in 20 federal agencies. The bulk of the problem showed up in areas such as — surprise — Medicare ($34 billion), Medicaid ($22 billion), and unemployment insurance ($17.5 billion).
To put the $125 billion worth of improper payments in perspective, according to the Treasury Department, the entire State Department spent just over $11 billion in 2010, the Justice Department spent $16 billion, and NASA spent $17 billion. In other words, last year it cost more for the government to absorb fraud and poor accounting practices than it did to implement our foreign policy (such as it is), administer justice at a federal level, and fund our entire space program. The GAO said that the high total of improper payments was a result of the government’s spending more money. This makes the solution to this problem even more obvious — cut spending