With the federal government less than six weeks away from hitting its legal limit of $16.4 trillion of debt, the fiscal-policy gap between President Barack Obama and his Republican opponents in Congress seems unbridgeable.
The GOP rejects additional revenue increases on top of the $600 billion Congress accepted to avoid the “fiscal cliff.” And Republicans insist they will not raise the debt ceiling without spending cuts to match. The president refuses even to consider any trade of debt reduction for a debt-ceiling increase.
The approaching debt ceiling is not the only inflection point facing the government and, possibly, the economy. On March 1, some $109 billion in automatic spending cuts kick in, the first installment of a “sequester,” that is worth about $1 trillion over the next decade. On March 27, the most recent extension of federal spending authority will lapse, forcing a partial shutdown of government operations.
Though fraught with potential pain for the economy, neither the sequester nor a partial government shutdown poses quite the same risk, for the country or the GOP, that the debt ceiling does. Hence, the party retains some leverage. While Obama may refuse to negotiate over the debt ceiling, it’s not so clear that he and his fellow Democrats can avoid negotiating with the Republicans entirely.
Fortunately, Obama left the door open to that possibility in his otherwise combative news conference Monday. Alluding to his close-but-no-cigar debt-reduction talks with House Speaker John Boehner, R-Ohio, after the November election, he suggested there could still be a modified version of that near-deal, worth about $1.5 trillion over 10 years, including revenue raised by tax reform and “some additional cuts, including . . . reducing our health-care spending.”
That would be unsatisfactory, relative to the country’s debt problem. But relative to the country’s current political and fiscal impasse, such an outcome would rate as a very happy ending indeed.
The Washington Post (Jan. 16)