Published on TheHill.com on July 19, 2011
The House Republicans can checkmate President Obama by passing two one-house bills in the coming week:
1) Allow a conditional increase in the debt limit of up to $200 billion for use only to avoid default. The money could be borrowed only if the Treasury secretary certifies that the funds will be used only for debt service and that there is no other source of funds available for the purpose. Take away the default argument from the president.
2) Prioritize the use of tax revenue in the event of no increase in borrowing authority so that military pay and Social Security checks would not be affected.
Obama’s entire political position on the debt limit is based on a giant bluff: that default looms and “I cannot guarantee that Social Security checks will go out” if the limit is not raised. It’s a bluff, and he knows it.
The 60 cents of every dollar that the government spends that come from tax revenue — not from debt — will continue to flow into the Treasury. These funds are more than adequate to pay for the really vital expenses. But they are not adequate to pay for the entire federal bureaucracy. Amtrak, EPA, Interior, State, Justice, Energy, Education, Medicaid, the NLRB, NASA, the FTC, HUD and a myriad of other bureaucratic alphabet-soup agencies will have to take a back seat and wait for the debt limit to be raised.
But Obama can hardly go to the ramparts demanding funds for Amtrak or the FTC, so he hides behind the so-called risk of default and a shutoff of Social Security and military pay to make his case for an increased debt limit. He trots out expert after expert to warn of “catastrophe” or “Armageddon” if the limit is not raised.
But if the additional borrowing is not authorized, Obama will himself have to make the choice as to what to fund. If he chooses to pay for Amtrak, not Social Security, that’s his decision, and he will have to live with it politically.
In an ideal world, this point would be obvious. But trying to get the liberal media to cover it is beyond the realm of possibility. The major news outlets will still predict disaster and the markets will get suitably nervous. The ratings agencies will chant their warnings and the Dow will begin to teeter.
But if the House makes it clear that there will be no default by passing a small conditional debt-limit increase earmarked exclusively for debt service, it will call Obama’s bluff, reassure the markets and totally cut his bargaining position out from under his feet.
Even the liberal media will see his predictions of disaster as unduly alarmist, and his crying wolf will be increasingly seen as spooking the markets and postponing recovery.
Obviously, the Senate will not pass the conditional debt-limit increase or the prioritization of the expenditure of tax revenues. But no matter. Once the House votes it, the ball is in the president’s court. It will then be up to him whether a failure to raise the debt limit will cause default.
Remember that President Clinton only won the government shutdown battles of 1995 and 1996 by first laying out his plan for a balanced federal budget. Once the president showed that the Republican spending cuts were not necessary to eradicate the deficit, the GOP had no leg to stand on.
The mainstream media wouldn’t cover that there was a path to balance the budget without the Republican cuts. So, in frustration, the Clinton White House began to buy TV ads to explain its view to the American people, and the president addressed the nation to lay out his plan.
For the Republicans to win the coming debt-limit fight, they must take similar prophylactic steps to ensure that they win it.