House Speaker John Boehner is looking for a second chance.
In a talk at the Peter G. Petersen Foundation on Tuesday, Boehner said he intends to use the next debate over increasing the federal debt ceiling as yet another chance to get the spending cuts [1] his caucus desires:
House Speaker John Boehner said Tuesday that any increase in the government’s borrowing limit must be accompanied by spending cuts and other budget savings of greater value, and he rejected tax increases as part of any deal to reduce the federal deficit.
Speaking at the Peter G. Peterson Fiscal Summit in Washington, D.C., Treasury Secretary Timothy Geithner said Congress needed to act smartly this time around on raising the debt ceiling.
Those positions signaled to the White House that congressional Republicans are prepared for fiscal brinkmanship at the end of the year, when Bush-era tax cuts are scheduled to expire, large automatic spending cuts are set to begin and the government reaches its $16.394 trillion borrowing limit.
“It is a line in the sand because Washington has kicked the can down the road, kicked the can down the road, kicked the can down the road, and the American people think we’re crazy…”
“Crazy” is being generous.
But we recall what happened last summer when the debt ceiling increase became one of those great DC spectacles, where a shutdown and possible government default loomed large over the scene. While I’ve nothing against government shutdowns (they do wonders for mall traffic in and around DC), the last round of debt ceiling brinksmanship ended in farce. It lead to the creation of the supercommittee, which was supposed to come up with an array of savings or, if it failed, a budget-wide sequester. The committee failed, the sequester became real and the political class has been scrambling ever since looking for ways to avoid the nasty cuts to this, that and the other program (nevermind that even these hysteria-inducing cuts would hardly dent overall federal spending).
Why should we expect a different outcome the second time around?
The presidential election. Or so some folks hope.
Except the debates will all likely occur during the lame duck session of Congress. Potentially, and hopefully, a great number of the current seat warmers will be spending their last days in power. With their elevation to private status imminent, it might be possible for them to cast aside their partisan chains and do what’s right for the nation’s long-term fiscal health.
Plus, if some estimates are to be believed, the federal government will reach its debt ceiling right after the election. Minds focused, party ties loosened, Congress and a presumably lame duck president will stop abusing cans on our roadways and reach a deal that makes everything better.
Or it all devolves into Greece-like chaos and at the last possible moment will result in a series of band-aids and promises wrapped around a short-term debt ceiling increase.
Rinse, repeat.
With all due respect to the Speaker, the only thing that will bring the two sides together is stern external discipline. Not from voters, but from the market. When the debt market decides our government’s paper isn’t worth its ink, and interest rates begin their relentless rise despite the Fed’s efforts, the political class — and us — will have no choice but to do what we’ve always known would have to be done one day, but kinda hoped wouldn’t: make the cuts, or raise the taxes, or both, that hurt.
That day is coming much sooner than anyone cares to admit.