Saturday, July 30, 2011

Debt Ceilings and Trojan Horses: What the Fight in Washington is Really About

The debate over raising the debt ceiling limit is a Trojan horse. It is only partially about allowing the government to pay for obligations that it has already incurred. If that were all it is about then the vote should be pro forma. But it is not. It is merely a proxy for a different set of battles that now appear to have little to do with the debt ceiling. Instead it is about power, influence, the 2012 election, and a zero-sum view of the world.

There is a sense in which the debate over the debt ceiling is about economics and government. By that, it is over the role of the government in the economy and what is the best way to provide goods and services into the future. It is a debate, at its best, about government versus markets, how public debt affects economic growth, and perhaps even a discussion over entitlements. If only that were true then the discussion would be more lofty and interesting than it is now. But instead, because the debt ceiling is a proxy for other battles that is what makes it so hard to resolve.

First, the debt ceiling is about influence. Who runs Washington, D.C.? Is it President Obama, Harry Reid and the Senate, John Boehner, or the Tea Party freshman? For each of them, they view this battle as a personal test of strength. For Obama, this is a test of presidential strength and influence. A faltering economy is already dooming his presidential re-election and he is only saved by the fact that the Republicans are running a gaggle of mediocre candidates against him. But look at Obama–he looks perfectly powerless as a bystander in the debt debate. His speech last Monday night was a drip. It was a plea to the American public to help him out. He literally conceded he has no influence over Congress in this debate, practically begging its members to come to reason. His speech came after he tried to negotiate a deal.

For Obama, part of the problem lies in the fact that as Senator he voted against raising the debt limit, but the real problem is one dogging his presidency–competence and a hands-off attitude to do the real dirty work. He refuses or is incapable of expending personal capital to get what he wants in Congress. That approach almost cost him his health care bill, and it also led to him getting a weak Dodd-Frank law and in caving in on the Bush-era tax cuts. Obama just does not know how to fight and execute. Thus, Obama needs the win on the debt limit to save his presidency. Another crash to the economy only makes him look even weaker and more ineffective.

Boehner too needs this win, but also on his terms. He is a weakened speaker of the house after this week. The bill he pushed through on Friday was simply stupid–it was no different than an earlier one but this time it had a balanced budget amendment attached to it. That amendment, even if passed, would not solve any problems. Congress would still have to make the tough economic choices it fails to do now. Another gimmick. The speaker had to pass something, especially after the Tea Party alliance, to prove he was in charge. He is not. He is trapped and it is not sure he is either the leader of his party or leader of the House. If he did what made the most sense–craft a more moderate bill that appeals to House Democrats and which looks more like the Reid bill, then he alienates the Tea Party members who might not continue to support him as either party leader or speaker. But by passing the bill he did–after making it a clash of wills–he showed how little influence he had over his caucus.

For the freshman Tea Party, their stated aim is a zero-sum battle with Obama. Passing a debt ceiling is viewed as a victory for Obama, a capitulation to the Washington status quo, and a resignation of their principles. Better the world be brought down than show weakness.

Finally, for Harry Reid, he needs to show he and the Senate Democrats are still relevant. Snubbing their nose at the Boehner bill and passing their own Senate version is about showing that they have more influence than the House.

One could go on and on, charting out the real interests and battles here that lie behind the debt ceiling debate. It would be easy to describe the rational ways out of the crisis–delink the debt ceiling from debt reduction, or develop more permanent solutions to the issue, such as repeal the redundant and no longer needed 1917 law that requires congressional approval for increases in the debt ceiling, or even serious tax reform as part of a deal to raise the debt ceiling–but all that is an appeal to a serious and adult way out of the issue that presupposes that the debate is really about the debt ceiling. But it is not. All of the parties here have personal interests and agendas to hold fast, rendering the debt ceiling debate merely a Trojan horse for what is really driving the fight.

No comments:

Post a Comment