WASHINGTON, January 2, 2013 — The fiscal cliff was averted, barely, and no one is happy with the deal, claiming each side gave away too much. President Obama seems OK with it for now. Last night, he praised the work of Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R-Ky.), but at the same time he looked ahead to the looming fight over the debt ceiling and drew a line in the sand:
“While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed.
“Let me repeat: We can’t not pay bills that we’ve already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic— far worse than the impact of a fiscal cliff.
“People will remember, back in 2011, the last time this course of action was threatened, our entire recovery was put at risk. Consumer confidence plunged. Business investment plunged. Growth dropped. We can’t go down that path again.”
Don’t Hold Your Breath
Let’s hope so, but progressives and liberals aren’t holding their breath. Didn’t he run on never, ever caving on taxes at the $250,000 mark? Yet he just did, moving the taxable rate to $400,000 on individuals and $450,000 for households. And Obama was holding all the cards. If the Republicans wanted to plunge over the fiscal cliff and raise everyone’s taxes, then so be it. Obama didn’t have to budge. But he did. So why should we believe him this time?
According to his spokeswoman Jen Psaki this line is firm: “What the president was saying was, ‘I’m not going to play chicken with the debt limit. I’ve learned my lesson in 2011.’
“This is something that impacts businesses, it impacts markets, it impacts the view of the world of the United States economy, and again, this isn’t something we should be fooling with.”
Sounds feisty, Obama staring down the GOP. However, this President’s lines in the sand seem to have a way of being washed out to sea when the next tide moves in. As Paul Krugman, Nobel winning economist, put it: “ So why the bad taste in progressives’ mouths? It has less to do with where Obama ended up than with how he got there. He kept drawing lines in the sand, then erasing them and retreating to a new position.”
The Real Fiscal Cliff: The Debt Ceiling
Of course, we need to raise the debt ceiling because Congress has already spent the money. We have a Federal law, instituted during World War I, requiring Congress to authorize our government to borrow any money that is needed to pay for the programs that Congress has already passed in the previous year.
All the raising of that ceiling means is that we will now pay our bills, just like you do every month. Or at least most of you.
As of January 1, our debt ceiling is $16.4 trillion. So we need to get the money somewhere. Besides borrowing, which only adds interest to our financial woes, we will need spending cuts (how about in defense?), more revenue (raise taxes, change tax rates, reform the tax code), and a revitalized economy (investment in infrastructure and schools).
Ahhh, but do we have the will to do it? Doubtful.
Just listen to the Speaker of the House John Boehner (R-Ohio), who couldn’t even corral his own Republicans to support his grand bargain, much less Plan B:
“Now the focus turns to spending. The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the ‘balanced’ approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.
“Without meaningful reform of entitlements, real spending controls, and a fairer, cleaner tax code, our debt will continue to grow, and our economy will continue to stumble.
“Republicans stand for a stronger, more prosperous America, rich in opportunity and free of the debt that threatens our children’s future. On this New Year’s Day, we renew our commitment to that vision, humbled by the opportunity to serve.”
Sounds good, but read his second paragraph again.
Sen. Graham Draws His Line in the Sand
And if that is not blunt enough for you, just listen to Sen. Lindsey Graham (R-S.C.) fulminating Tuesday night: “Work with me and others never to raise the debt ceiling again unless we address why we’re in so much debt. That’s where we have leverage, that’s where we should go to next.”
The debt ceiling fight will definitely erupt again by the end of this month and just like a year and a half ago, the GOP will drive the economy, our credit rating and the stock market into the ditch…no, make that over the cliff. We may see our good faith and credit damaged, the government shut down, our credit rating once more down graded, Social Security checks not sent out, and the lights in Washington turned off or at least dimmed, metaphorically.
Looks dire. Can President Obama be the man of steel and not just steely eyes? He has drawn a sharp line in the sand. Yet is Obama really prepared to defend that line against the tsunami headed his way?
To contact Catherine Poe, see above. Her work appears in Ad Lib at the Communities @ WashingtonTimes.com. She can also be heard on Democrats for America’s Future. She is also a contributor to broadcast, print and online media.
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