President Obama has an interesting negotiating strategy when it comes to the “debt ceiling” — the point in time when the federal government has borrowed every cent Congress allows it to borrow. In a press conference yesterday, he declared he simply won’t negotiate with Republicans on the issue.
Congress authorized spending; in fact, he said, it ordered him to spend this money (by means of legislation that could only become law if he affixed his signature to it). Therefore, Congress simply must allow the Treasury Department to go out and get more. No preconditions.
In other words, in a tone of high dudgeon, the president has asserted that the exemplary moral behavior for the United States (with its $16 trillion debt and $1 trillion-plus in annual interest payments on that debt) is . . . to borrow more money.
He won’t let the country be “held hostage,” nor will he pay Republicans a “ransom.” They are putting “a gun to the head” of the American people.
What Obama is saying is simple: The United States has become Too Big To Fail.
By daring the GOP to risk default in February with his refusal to negotiate over spending cuts, the president is, in effect, holding the United States hostage against itself.
He won’t allow America to be a “deadbeat nation.” The problem is that borrowing money to pay back more borrowed money that will oblige you in the future to borrow even more money doesn’t sound kosher. Because it isn’t.
The thing is, Obama is right that it would be a calamity for the government to default on its debt by not meeting its obligations. Such a thing has never happened and can’t be allowed to happen.
The United States established itself as a trustworthy new nation in its first two decades after the Revolutionary War by paying its debts, even when many in the country believed it had no obligation to do so. Alexander Hamilton, the founder of this newspaper, insisted on it.
But if the president is right on the blunt facts, he is wrong when it comes to the moral implication of raising the debt ceiling.
At this point, raising the debt ceiling should be a matter of national shame. We all know that the money that will be used to pay off the current debt will be borrowed too. We are borrowing from Peter to pay Paul (or, more confoundingly, borrowing from China to pay China).
In other words, having maxed out the Amex, he wants to take a cash advance on the Visa. When that’s used up, we turn to MasterCard and then Discover. And then we start taking the White House candlesticks to the pawnbroker.
The president has three solutions for this problem.
First — magic! — it already happened. He is claiming to have reduced the deficit by $1.2 trillion already. How? Mostly because the wars in Iraq and Afghanistan are ending. Yes, by counting money that would never have been spent anyway as having been “saved,” he has proven himself a responsible steward of the nation’s dollars.
Second, he wants to raise taxes on the rich. More. He just got a $600 billion tax hike, but he wants a balanced approach — by which he now means he wants an approach that features more tax hikes in exchange for . . . more tax hikes.
Third, and this is something we can all agree on, he wants to see significant economic growth. A rapidly growing economy is the one force that can pump money into government coffers fast enough to provide enough cash to prevent the need to raise the debt ceiling so quickly.
And how are things looking on that front? Well, they were looking good . . . until horrible trade-deficit figures for December came out and everybody began saying that economic growth in the fourth quarter of 2012 was probably considerably weaker than expected.
No one expects growth so explosive that it will help forestall more debt-limit crises over the next couple of years. So why is the president saying he won’t negotiate with Republicans who want to see significant budget cuts before they agree to raising the ceiling again?
Because he doesn’t want to. That’s pretty much his position. He won the election — and he doesn’t want to. And telling him he should . . . well, that just gets him angry.
It’s going to be a long four years.