The debt-ceiling Armageddon being fought in Washington has never been chiefly about money. Because everyone except the most extreme members of the Tea Party Movement knows that the debt limit must be raised, Republicans are holding it hostage to exact acceptance of their conservative agenda. They know that the Democrats controlling the presidency and the Senate will never agree to scale back Social Security and other social programs. As of now, all but a very few Republicans are inexorably opposed to any tax increase, including the closing of loopholes that would result in higher taxes for individuals or corporations. Seizing the opportunity offered by the moment, they would force far-reaching cuts in public programs as the price of preventing the United States from defaulting on its debts.
Driving the conservative agenda is the determination to shrink the size of government by “starving the beast” — defunding it by steadily lowering taxes — a theory adopted by Republicans in the 1970s. The assumption was that the decreased revenue would compel cutbacks in spending, especially on the social network programs (Social Security, Medicare, Medicaid) enacted by Democrats. Republicans wanted to prune those programs drastically or, ideally, eliminate them entirely.
Despite the demonstrated failure of “starving the beast,” today’s Republicans are still set on the same objectives. In the debt-ceiling negotiations they have insisted on both spending and tax cuts. President Obama offered them a deal that reportedly would have cut the deficit by $4 trillion in 10 years, raised the eligibility age for Medicare and cut Social Security benefits by switching to the chained-CPI. But Republicans refused to consider it, because the package also included a tax-reform provision and would have let the Bush-era tax cuts expire in 2012. The Senate minority leader, Mitch McConnell, believed that the president’s plan would force Republicans to “either sign onto a bad deal that raises taxes or go into default and allow us to have co-ownership of a bad economy.”
Not surprisingly, throughout this white-knuckle debate, rivalries, political maneuvering and not-so-hidden agendas have been simmering barely below the surface. Obama may have been “pulling an anti-Corleone, making Republicans an offer they can’t accept,” wrote Paul Krugman. Obama’s goal in putting Medicare and Social Security on the table may have been “to paint the G.O.P. into a corner, making Republicans look like intransigent extremists.” The president has been portraying himself as the only adult in the room, and polls confirm that Americans accept that view. Gambling that the Republicans wouldn’t accept his $4 trillion deal, Obama could safely earn points for offering to sacrifice the sacred cows of the Democrats.
Now that the noose is starting to tighten as Aug. 2 is less than two weeks away, Republican leaders realize that the time for posturing and grandstanding is over. But how to renege on their pledge not to raise the debt ceiling without severe spending cuts, particularly in the social programs, and with nary a tax increase? Sen. Lindsey Graham (R-S.C.) admits they are in a tight bind. “Our problem is, we made a big deal about this for three months,” he said. “How many Republicans have been on TV saying, ‘I am not going to raise the debt limit’?” Graham asked, admitting he had been one of those. “We have no one to blame but ourselves.”
McConnell has made very clear that his “single most important political goal … is for President Obama to be a one-term president.” McConnell made no bones about his motivation in designing a fallback plan that would be electoral poison for Democrats — his proposal allows them to raise the debt ceiling, but in three installments and with no Republican votes. “I refuse to help Barack Obama get re-elected by marching Republicans into a position where we have co-ownership of a bad economy,” said McConnell. Of course, Democrats in swing or conservative districts who voted three times before the election in favor of raising the debt limit without guaranteed spending cuts would have a scant chance of being re-elected.
Eric Cantor (R-Va.) appears to be challenging the position of John Boehner (R-Ohio) as top dog in the House. Cantor speaks for the House Republicans who have vowed not to raise taxes under any condition. Boehner instead accepts that some agreement must be reached, because not raising the debt ceiling “would be a financial disaster, not only for our country but for the worldwide economy.”
There is also a discernible rift between the Republican leaders and the rank and file. Speaker Boehner had indicated he could cut a deal with the president — one that would of necessity involve some “revenue” or tax increase — but he was forced to back down because he didn’t have the votes. At least 60 members of his caucus, he said, “won’t vote to raise the debt ceiling under any circumstances.” Neither Boehner nor McConnell are in favor of increasing taxes, a component of any deal Obama and the Democrats would approve, but they understand the imperative of maintaining the “full faith and credit” of the United States.
The most committed (or intransigent, take your pick) Tea Party Republicans, however, believe the predictions of financial collapse and global calamity are overblown. Last week presidential hopeful Michele Bachmann (R-Minn.) said that default “is a misnomer that I believe that the president and the Treasury secretary have been trying to pass off on the American people, and it’s this: That if Congress fails to raise the debt ceiling by $2.5 trillion, that somehow the United States will go into default and we will lose the full faith and credit of the United States. That is simply not true.”
Supporters of the Tea Party Movement, like Bachmann, don’t fear the specter of default. They believe it could work in their favor, because if the Treasury hasn’t the money to both pay its creditors and meet its domestic obligations, it will have no choice but to reduce spending — the primary Tea Party goal.
In addition to the intricate choreography played out by the various players, the leads and the chorus, we are also witnessing what would be a farce, were the stakes not so high. Rome burns and Nero fiddles. On Tuesday the House spent the day debating and then voting on a plan that everyone knew could never vault the Senate’s Democratic phalanx. The Republican passage of “Cut, Cap and Balance” was intended to reassure their constituents. It mandates drastic cuts — more than $100 billion in 2012, a future spending cap of 18 percent of the total economy (a level not seen since the 1960s) and a constitutional amendment requiring a balanced budget, which would effectively rule out any tax increases ever. The object of the exercise was to provide political cover for the Republicans who would have to vote to increase the debt limit.
At the same time, word spread that what had been a moribund bipartisan budget plan in the Senate had roared back to life. Like Obama’s rejected plan, it would reduce deficits by $4 trillion in the next decade. It also includes steep cuts in spending and new revenues from tax-code reform. The president embraced it, and 49 senators on both sides of the aisle look on it favorably. The financial markets signaled their relief that the debt-limit crisis has a resolution in sight with a strong rally.
The single cloud on the horizon is an ominous thunderhead. Will the Tea Party members of the House sign off on a plan that violates their stated deepest convictions?
A version of this article first appeared in Women’s Voices for Change.
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