Michael Waldron: Weighing in on the debt ceilingPublished 11:59pm Wednesday, August 10, 2011
I started to think about this column on July 14, when my column for July was published in the Star. I like to write my first draft and let it sit for a while. If it still makes sense after a week or two, then I just try to smooth out its grammar before submitting it. Over the past six months, I’ve tried to write about a variety of topics that should be of interest to everybody. I’ve written about the national debt, Pakistan, Osama bin Laden, media bias and inflation and high interest rates. When this column is printed, the crisis over the debt ceiling will be either over or well developed so I’m polishing my crystal ball and taking a risk that this column will still be relevant in a month.
On July 14, politicians of both parties appear to be digging in. Neither side seems to be ready to solve the debt problem without forcing the other side to back down. Republicans want significant debt reduction with no higher tax rates. Democrats want higher tax rates. Both sides agree that loopholes should go. Both sides value adulthood in this crisis but neither side seems to know how to display it. Eric Cantor withdrew from a negotiation and later President Obama walked out of a meeting. Politics is the elephant in the room.
Thus on July 14, I’m very pessimistic that our politicians will reach a solution to the debt crisis. Democrats, particularly President Obama, are very recent converts to debt reduction. President Obama spent historic amounts of money in his first two years in office. Sadly, his spending did not affect unemployment rates, his stated goal. Last year, Democrats didn’t submit a budget when they had complete control of government. Early this year, President Obama’s budget proposed increased deficit spending, which received not a single vote in the Senate. A little later he gave a speech which acknowledged the need to rein in spending but contained no details. Now in July, the president portrays himself as the adult in the room. That’s hypocrisy of the worst form. If President Obama wants to lead, he should present details of his plan, something he has failed to do as of July 14. President Obama gets the respect due his office. There is a cost. He must lead and he can’t lead from behind.
Republicans don’t have the responsibility to lead but they must bend a little on taxes. If we all suffer a financial crisis in August, I predict now in July that nobody but a few ideologues will appreciate the political purity of Republican leaders. I agree that it makes no sense to raise taxes on job creators, but don’t force Democrats against the wall or over the cliff — whatever metaphor you like. The real issue is the size of government.
Do we want a bigger, more expensive government or do we want to return to a smaller, less expensive government? As I’ve written in the past, I believe a smaller, less expensive government is better for America. President Obama’s bigger, more expensive government has not worked. Unemployment has grown while President Obama radically increased spending. That exploded the debt, which I believe will ruin this country. Nobody but certain liberal commentators like Paul Krugman disputes that any more. The elections of 2012 will settle the question of the size of government; however, we can’t wait until November 2012. We must address that question this year.
My crystal ball has warmed up by now so here is my prediction for early August. I predict that there will be a short-term (three to six month’s worth) rise in the debt limit accompanied by debt reductions. That will allow for a more comprehensive discussion of taxes and entitlements. I’m confident that our politicians will find a way to kick the can a bit farther down the road. If they could kick that can beyond November 2012 without a political firestorm, they would. My prediction saddens me greatly because it means we must go through this again next year — an election year.
It’s now Aug. 3. Congress passed the debt reduction and the president has signed it. Now the government can borrow above the previous debt ceiling of $14.3 trillion. Hurrah! Well, maybe not. Expenses will be cut only $21 billion next year and the bulk of the budget cuts don’t happen until after the next election. After 10 years our budget debt will still increase $7 trillion so in 2021 we will owe more than $21 trillion! Our brave, elected officials should refrain from patting themselves on the back. They have not solved the debt crisis — only prolonged it.
Now let’s see how my crystal ball worked in July. The amount of the rise in the debt ceiling was a lot more than I predicted; it will, in fact, be enough until after the 2012 election. Oops. The deficit ceiling deal mandates .9 trillion in cuts with an additional $1.2 trillion cut to be decided by a super committee of six Republicans and six Democrats by Thanksgiving. The super committee will look into entitlements and taxes. If the committee fails to produce a bill, automatic cuts in domestic and military spending will produce the other $1.2 trillion in cuts. That sounds very close to what my crystal ball predicted on July 14. There was a lot of can kicking and nothing was solved Aug. 2.
Reality, however, will soon exert its influence. Stock markets will speak to the issue as will credit rating agencies. By Sept. 30, the government’s authority to spend money will expire unless Congress passes a budget or another continuing resolution. I hope our brave, elected officials rest up on their ill-deserved August recess because they will need it in September. Pray for our country.
Just to be ready, I looked up the word for a 1,000 trillion. It’s quadrillion.