With the Fiscal Cliff thankfully now behind us, last week, Treasury Secretary Tim Geithner raised our next crisis: Federal borrowing has reached the $16.394 trillion debt ceiling. But don't worry, this is a debate President Obama says he will have nothing more to do with.
President Obama apparently remembers how negotiations to raise the debt ceiling in 2011 went. The negotiated Sequester legislation to reduce the debt by $1.2 trillion over a decade was the ransom the GOP accepted to raise the debt ceiling in 2011. Of course, Congress just decided to put off the sequesters' cuts as part of the Fiscal Cliff negotiation resolution.
Echoing President Obama's refusal to negotiate on the debt limit, Senator Chuck Schumer (D-N.Y.) warned Republicans on Friday, that Democrats have no intention of giving in to any demands in exchange for lifting the nation's borrowing limit to pay its bills. Meanwhile, Treasury, which runs the government's debt-issuance operation, is busy creating about $200 billion of headroom by employing what it calls "extraordinary measures." That should cover about two months' worth of borrowing. When the two months expire, Treasury will no longer be able to pay the country's bills — that is, it won't be able to borrow more money to pay for spending already authorized by Congress.
Republicans are promising a repeat of the summer 2011 fight that nearly led to a default (and ultimately created the fiscal cliff). Senate Republicans have promised to hold the debt limit hostage for spending cuts, and House Speaker John Boehner's (R-Ohio) office has indicated similar intentions. "If they want to get the debt limit raised, they are going to have to engage and accept that reality," Brendan Buck, a spokesperson for Boehner, said of spending cuts.
Republicans are banking on the proposition tax increases are now off the table due to the fiscal cliff negotiations just completed. They are even proposing shutting down the government by not raising the debt limit might not be such a bad thing.
"We Republicans need to be willing to tolerate a temporary partial government shutdown —which is what that could mean," said Sen. Pat Toomey (R-Penn.) on MSNBC Wednesday. In a Friday Houston Chronicle op-ed, Senator John Cornyn (R-Texas), a member of GOP leadership, used the same language. "It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country," he wrote.
The GOP game plan appears to be attempting to convince the public a government shutdown would represent consequences that are fairly modest. They again are gambling Democrats so deeply fear a government shutdown they will make spending cuts to ensure the debt ceiling is raised.
The Obama administration does have an outside-the-box option — the legally dubious idea of circumventing the debt limit statute by citing the 14th amendment. But Democratic leaders are concerned enough about the GOP's ability to prohibit raising the debt limit, that they're asking the president to reconsider. "I would do it in a second, but I'm not the President of the United States," House Minority Leader Nancy Pelosi told reporters at her weekly press briefing on Friday.
So what does any of the posturing mean to you and I, well about what it did back in 2011. The GOP will not shut down the government. Democrats will once again promise spending cuts to appease conservatives. The cost to you and I will be another couple trillion in debt adding tens of billions in interest to our annual deficit.
There is a reason President Obama will not be drawn into any further debate on raising the national debt ceiling by another two trillion. He knows the history of Congress, the more things change, the more they stay the same. It is only debt after all, right?