April 11 (Bloomberg) -- The root canal Americans experienced over the averted government shutdown may seem painless compared with the operation that’s coming: debate over raising the debt ceiling followed by House Budget Committee Chairman Paul Ryan’s plan to overhaul the government.
The political fates of President Barack Obama and most of Congress depend on the outcome. While the stakes for the 2011 budget skirmish has been over a few billion dollars, the next fight -- over the debt ceiling -- is about several hundred billion. Then, Ryan’s proposed rewrite of the nation’s social contract will be about several trillion dollars.
So all the eye-gouging and hair-pulling over spending for the current fiscal year may be just a warm-up for what’s to come. Or it may move Congress to its senses. Then raising the debt ceiling can once again be a routine technical vote (as it has been for generations) and tackling entitlements and the tax code can move to the center of a spirited but rational debate.
For now, it isn’t hard apportioning blame for the month’s unpleasantness. Five years ago, when the shoe was on the other foot -- when Democrats were determined to pursue an ideological agenda and cut off funding for the war in Iraq -- they didn’t threaten to shut down the government in order to get their way.
Today’s Republicans are so determined to defund Planned Parenthood, gut the Clean Air Act and go to the mat on their other “riders” (amendments that have little budgetary impact) that the usual incentive for politicians to cut a deal on budget numbers has become clouded by ideology.
The only remedy is to fix blame squarely and publicly where it belongs. If the Tea Party is seen as responsible for hundreds of thousands of delayed paychecks, weakened local economies and tourists not getting to see the pandas at the National Zoo, then the “Shut It Down!” crowd will have less leverage next month when Congress has to raise the debt ceiling.
This may be wishful thinking on the part of Democrats. They remember the 1995-96 government shutdown as the episode that secured President Bill Clinton’s reelection when he outfoxed Republican House Speaker Newt Gingrich. But blame for that crisis could have easily gone the other way.
During the first of two shutdowns (one for five days in November of 1995 and a second for three weeks around Christmas), Clinton’s poll numbers dropped sharply. It was only after Gingrich earned “Cry Baby” headlines around the country for complaining about having to deplane from the back of Air Force One that the president emerged a winner.
As the 26-day Clinton era furloughs suggest, the political consequences of these events are greater than the economic ones. Contrary to claims by the White House, a short shutdown wouldn’t short-circuit the recovery. But according to almost every economist, banker and government official, failure to raise the $14.3 trillion debt ceiling would be disastrous.
Treasury Secretary Tim Geithner said in a letter to congressional leaders that Congress must act before May 16 or bring “severe hardships” to the U.S. economy. This is brinksmanship; in truth, the Treasury Department has the power to put off the reckoning for a few weeks if necessary. But by early summer, the political posturing will be like playing with dynamite.
“Default by the United States is unthinkable,” Geithner wrote to congressional leaders on April 4.
Freshman Senator Marco Rubio of Florida, a likely 2012 vice-presidential nominee for any Republican candidate, is thinking it. He has come out against raising the ceiling. Rubio doesn’t mention what would then be required to avoid default: cutting spending by $738 billion in six months. Not even the most fire-breathing Tea Partier has suggested how to do that.
Cutting that kind of money over a longer time frame isn’t only doable, it’s essential. That’s where the plan unveiled last week by Paul Ryan comes in. He deserves points for courage and leadership, but not for seriousness.
Ryan is still so much in thrall to the tax-cutting religion of his party that he reduces the top marginal tax rate to 25 percent, thereby undermining the deficit reduction that was supposed to be his “cause.” Unless you believe in supply-side economics, Ryan’s plan doesn’t add up.
The recommendations of the Simpson-Bowles commission -- also denounced by the Democratic left -- make a much better starting point for dramatic reductions in the deficit. Even on entitlement reform, Ryan falls far short. Politically, his plan to end the wildly popular Medicare program is a dagger pointed at the heart of the Republican Party. Substantively, his voucher plan would do little to rein in costs, while shifting more tax money from the struggling middle class to the affluent elderly.
I hear from inside the White House that after the shutdown and debt ceiling debates have ended, Obama will finally weigh in with his own long-term deficit reduction ideas, and not wait for the election. A few common sense if politically dicey remedies (e.g. raising the retirement age for non-manual laborers) are what the doctor ordered. No major surgery required.
(Jonathan Alter is a national correspondent for Newsweek and author of “The Promise: President Obama, Year One.” The opinions expressed are his own.)
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