Debt Limit Endgame

John Boehner

Unfortunately, the White House isn’t even pushing for the real breakthrough the economy and this debate need. The Republicans, as ever, are playing partisan brinkmanship with no apparent thought to the cost of a protracted standoff.

So what would be a real breakthrough? It would be an agreement to delink the need to raise the debt limit by Aug. 2 from the hard, longer-term work needed to tame the budget deficit.

The limit must be raised so the government can borrow what it needs to meet its obligations; failure to do so would imperil the nation’s creditworthiness, causing potentially profound disruptions in already volatile global financial markets. As for Republican demands for steep near-term cuts, that is precisely what the economy, which has been weakening all year, doesn’t need.

Instead of explaining the need for new spending now and deficit reduction as the economy recovers — and developing a plan for both — the White House is negotiating what is essentially a big spending-cut package.

Within those parameters, there is no breakthrough to be had. There is only damage control.

That means getting a deal that does not worsen the economy and that does not lock in such deep spending cuts that Republicans feel no pressure to accept tax increases in a future budget deal.

So what is the minimum the White House must insist on? A deal will probably include caps on discretionary spending, with agreed-upon targets for debt and deficit levels in years to come. Any spending cuts must be phased in gradually, so they don’t hit the economy just as federal stimulus is ending and as states are cutting back to balance their own budgets. Even a phased-in package has to exempt the most vulnerable Americans, like poor women and children who depend on federal aid for food and shelter. That will require careful tailoring of any discretionary spending cap to protect poverty programs. It will also require avoiding a cap that would imperil safety-net entitlements, like food stamps.

The White House must also demand real concessions from the Republican leadership. At the least, that would include extending federal unemployment benefits beyond their expiration at year-end. In addition, the deal must have an enforcement mechanism that keeps both sides honest. If agreed-upon debt and deficit targets are not met, both spending cuts and tax increases must kick in.

Republicans, clinging to their no-new-taxes-ever ideology, would prefer a trigger that causes only spending cuts. But last week, 33 Senate Republicans signaled that they might be open to new tax revenues when they voted to end a $6 billion annual ethanol subsidy. That’s not much in a $3.5 trillion budget, but it suggests that at least some members of the party have figured out that there is no way to tackle the deficit without more revenue.

Finally, because Americans need their lawmakers to focus on bigger problems, like job creation, a deal should extend the debt limit for at least two more years, beyond the next election. Maybe by then, a serious budget summit — without posturing and brinkmanship — will take the place of a golf summit.

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