How Capitol Hill sniping could set off a national debt ceiling bomb
Even as both parties cite the need for progress on the budget, the partisan sniping is becoming unusually personal. Could markets get the jitters if the rancor lasts up to the debt ceiling deadline?
J. Scott Applewhite/AP
Congress’s turn this week to unusually pointed and personal attacks could signal trouble as lawmakers work to close a deal on raising the debt ceiling, now set at $14.3 trillion.
Instead of rallying the Congress, President Obama’s call on Wednesday for a more “balanced approach” to the nation’s deficit crisis – meaning the deficit should be closed with both spending cuts and increased tax revenues – set off more intense rounds of sniping on Capitol Hill.
Conventional campaign wisdom rewards “going negative.” To not return opposition fire in kind – and then some – is viewed as weakness. But lawmakers face another concern as they grapple with a debt crisis set to take hold Aug. 2 – that their toxic rhetoric could have the unintended consequence of convincing US creditors that Washington can’t or won’t solve its debt crisis.
“You’re dealing with a tactical nuclear weapon here. You don’t want to be playing with the timing device right down to the last second,” says David Walker, former US comptroller general and a founding member of No Labels, a bipartisan advocacy group.
If the harsh partisan sniping and gridlock over the debt crisis continues, “you could see a market reaction a week before Aug. 2, if it looks like things aren’t coming together,” he says.
Senate Democrats spent their last day in session this week blasting Republicans for sacrificing the most vulnerable Americans to protect tax breaks for owners of yachts, corporate jets, and race horses, and corporations that ship jobs overseas.
Sen. Charles Schumer (D) of New York, who is charged with policy and messaging for the Senate Democratic caucus, charged on Thursday that Republicans’ “slash and burn approach” to deficit reduction had deliberately undermined the nation’s economic recovery.
“We need to start asking ourselves an uncomfortable question: Are Republicans slowing down the recovery on purpose for political gain in 2012?” he said, in a speech before the Economic Policy Institute in Washington.
It’s a theme some other Democrats have voiced previously, but mainly speaking off the record. The high visibility and timing of these remarks at a critical point in the debt talks give them special prominence.
“The result is that Republicans aren’t just opposing the president anymore. They are opposing the economic recovery itself – and all that means for America’s working and middle class families,” Senator Schumer added.
If Republicans refuse to consider tax increases as part of a compromise package, “they are threatening all of us, the whole country, with economic catastrophe, in order to protect the sky-high income of millionaire hedge fund managers and offshore tax avoiders,” said Sen. Carl Levin (D) of Michigan, speaking from the floor on Thursday and referring to two of the loopholes that Republicans have rejected as part of a deficit deal.
Republicans rushed to the floor on Thursday to protest what they called class warfare by the White House and Senate Democrats. “I’m disappointed because America does not have a tradition of class warfare,” said Sen. Marco Rubio (R) of Florida. “It’s class warfare and the kind of language you’d expect from the leader of a third world country, not the president of the United States.”
Sen. Jim DeMint (R) of South Carolina dubbed President Obama the “addict in chief” on spending. “He’s played dozens of rounds of golf and had many, many fundraisers around the country, but he has been AWOL on this issue.”
“And his condescending speech yesterday that told Congress to solve the problem ignored the fact that he was elected president to lead, and yet he’s not even following when it comes to this issue,” he added.
Senate Republican leader Mitch McConnell, also speaking from the floor, invited the president to come to the Capitol to “hear directly from Senate Republicans why what he’s proposing will not pass … and finally start talking about what’s actually possible.”
Responding to the invitation, White House Press Secretary Jay Carney told reporters: “What the senator invited the president to do was to hear Senate Republicans restate their maximalist position. We know what that position is…. That’s not a conversation worth having.”
“We also need to talk about what’s possible,” McConnell spokesman Don Stewart replied. “Carney missed that part of the speech.”
What distinguishes the partisan conflict in the current Congress from that in its predecessors is the high ideological divide, says Walker of No Labels, who spent nearly a decade as head of the Government Accountability Office, raising the profile on what he called the nation’s unsustainable fiscal course.
“I believe that we’ve always had partisanship, and we clearly continue to have partisanship, but we have in this country more of an ideological divide than we’ve had historically,” he says.
“We have more members of the Republican Party who are very conservative, and more elected officials in the Democratic Party who are very liberal. Whereas 60 to 70 percent of Americans are in what I call the ‘sensible center,’ that 60 or 70 percent is not adequately represented in Washington,” he adds.
“You have a significant percentage of Republicans who will not even consider increases in revenues and Democrats who will not consider cuts in the social insurance contract,” he adds. “Given where we are headed, you’ve got to do both.”
“The last 10 years have clearly been the most fiscally irresponsible in the history of the US and both parties are to blame for that. Our current situation threatens America’s standing in the world and the future standing of living of Americans at home.”