Obama’s Costly Victory on Debt Ceiling
To end the government shutdown and raise the debt ceiling without accepting any meaningful GOP conditions, President Obama resorted to falsehoods, wounded American democracy, and damaged U.S. global leadership.
The president accused the House GOP majority of refusing to pay bills Congress has already racked up, not doing its job, and defying the outcome of the 2012 election.
In reality, the $17 trillion outstanding national debt funded past spending, and raising the debt ceiling is all about the government spending more than it taxes going forward. The Constitution requires that revenue bills originate in the House, not the president’s desk. If Obama wants to spend more than the country can afford, it requires him to negotiate with the House—that’s where the framers put the money.
The House was given this power because it is closest to the pulse of the people, who, in 2012, elected a majority of representatives promising to cut spending and reduce deficits.
Obama’s victory in the 2012 presidential election turned on many issues, including immigration, foreign policies toward China and in the Middle East, and the environment. It is disingenuous to say his election affirmed voter support for the Affordable Care Act.
Poll after poll -- at the time the ACA was passed, during the election, and now -- revealed the majority of Americans don’t like the law and want it substantially revised or repealed.
The ethnic breakdown of the 2012 election results indicate Obama’s victory was much more the result of Governor Romney’s inability to appeal to Latino and Asian voters.
Each month the government collects $250 billion in taxes, and if the Congress had decided not to raise the debt ceiling, Secretary Lew still would have had adequate resources to pay the $23 billion in interest to the public.
Each month, the government spends about $315 billion. If the House judges the resulting accumulation of $65 billion in new debt to be too burdensome -- as the public has repeatedly expressed by electing conservatives to the House -- the president has a constitutional duty to negotiate with the House rather than demand “clean bills” and spend as he pleases. The House would be derelict to simply roll over to presidential demands for powers the Constitution does not provide.
To pressure House Republicans, Treasury Secretary Lew purposefully cultivated fear in financial markets by falsely stating the U.S. must default if Congress failed to raise the debt ceiling. That would only happen if he failed to establish appropriate priorities for the $250 billion in taxes collected each month.
His doomsday rhetoric made the U.S. government appear inept and irresponsible, has eroded the primary standing of U.S. securities in global markets, and will weaken U.S. economic leadership in global forums for many years to come.
Senate negotiators hammered out a bill acceptable to the president that reopened the government and raised the debt ceiling, and House Democrats and moderate Republicans voted for it.
The president’s victory was accomplished through deception and demagoguery, by violating the will of voters expressed in the 2012 congressional elections and the Constitution, and damaging U.S. global standing. Those are mighty high prices to pay for a president’s refusal to negotiate changes to a health care law voters clearly want changed and reducing budget deficits voters want slashed.
Peter Morici, an economist and professor at the University of Maryland Robert H. Smith School of Business, is a widely published columnist. Follow him on Twitter.