A British parliamentary committee hearing into the transgressions of media baron Rupert Murdoch offered a surprising Benny-Hill pie-in-the-face moment on Tuesday. But the day’s Academy Award for legislative farce still went to the U.S. House of Representatives.
By a margin of 234 to 190, House Republicans rammed through a bill labeled “Cut, Cap and Balance,” the purpose of which is to Starve, Gut and Neuter the federal government. Among its provisions would be allowing the states to vote on a balanced budget amendment to the U.S. Constitution.
It would be nice to think this was just theater, that no member of Congress is so ignorant of fundamental economics that he would not know that central governments must be able fight recession with countercyclical spending. But with this bunch, no one can be sure.
Even Norman Ornstein, long-time resident scholar at the conservative American Enterprise Institute, called the legislation “disastrous,” “dangerous” and “frightening” in an analysis published in The Washington Post.
Yet even as Republican House members danced to the tune of their radical Tea Party caucus, the possibility of a U.S. financial default drew ever closer to an Aug. 2 deadline. Avoiding that calamity requires Congress to increase the current limit on the national debt. Failing that, the best economic minds say the world’s economy would become chaotic and suck the United States into a recession deeper than the one that started in 2007 and supposedly ended in mid-2009.
Even worse, a default also would rob the United States of an advantage that has helped make it and keep it the largest and most successful economy on Earth: the absolutely solid, bedrock dependability of its debt.
U.S. Treasury bonds are the world standard for safety and security, an essentially risk-free investment for investors ranging from sovereign nations to zillionaires. This has given the United States ready access to funds for research, development and education, for responding to crises of all sorts at home and abroad and for meeting the basic human needs of its people at extremely low cost. A default would shatter America’s unique advantage in world financial markets.
Unlike the anti-government ideological zealots in Washington, the American people have recognized the danger of this situation, and they want it taken care of. Three new public opinion surveys confirm their concern:
― More than 80 percent of Americans fear that the U.S. economy would suffer serious damage if the nation defaults on its debts, according to a recent Washington Post/ABC News poll.
― A new NBC News/Wall Street Journal survey found that 55 percent of respondents expect significant harm to the U.S. economy if the debt ceiling is not raised.
― And a CBS News poll released Wednesday suggests that in embracing the rhetoric of its extreme wing, the Republican leadership in Congress may be losing touch with the party’s mainstream. Fifty-one percent of the Republicans surveyed said they disapprove of how Republicans in Congress were dealing with the debt negotiations.
These and other indications of public discontent and impatience may have prompted a flurry of activity and some hopeful signs of progress on the Senate side of the Capitol. On Tuesday, Oklahoma Republican Sen. Tom Coburn, a respected conservative, rejoined a small working group of Democratic and Republican senators that had been slogging for months through ideas for broad, long-term spending and tax changes. He had left the group in May.
With Mr. Coburn’s return, the senators indicated they have agreed to ideas that would produce savings of nearly $4 trillion ― both spending reductions and revenue increases ― spread out over the next 10 years. These would address, at least in part, short-term problems and longer-term challenges to ongoing government services. They would keep the promises made to older Americans of financial security and medical care. President Barack Obama said he was encouraged by the new development.
Yet it seems unlikely that the difficult and time-consuming job of hammering out details can get done before the Aug. 2 deadline. The fall-back plan to avoid default is a convoluted one first broached by Senate Minority Leader Mitch McConnell of Kentucky. Relying on an arcane combination of resolutions, votes and vetoes, the scheme would allow Republicans to vote for a bill that would indirectly increase the national debt, but also allow them to vote against bills that directly increase the debt.
Not what you’d call profiles in courage, but at least it would avoid disaster.
