Boehner really isn’t asking for that much to raise debt ceiling
On its face, House Speaker John Boehner’s demand for perhaps more than $2 trillion in spending cuts may look like a dangerous escalation in the political battle over raising the federal debt ceiling by a similar amount. But the reductions would be over 10 years, they’d be in line with several budget proposals, and they would represent only a modest down payment on austerity.
A group of Wall Street executives and other business leaders listening to Boehner on Monday evening in Manhattan seemed unenthusiastic. They would almost certainly prefer to disentangle the issue of expanding the federal borrowing authority — and thus avoid even the whiff of possible default — from how best to deal with America’s long-term deficit and debt problems. After all, both parties have agreed on a budget that requires more borrowing next year. That is the White House position, too. “To hold one hostage to the other remains extremely unwise,” spokesman Jay Carney told reporters today on Air Force One as Obama flew to Texas.
But, thankfully, politics keeps pushing the two issues together. The powerful Tea Party wing of the GOP wants party leaders to get something substantial in return for enabling more Treasury borrowing. That might include some or all of congressional approval of a balanced budget requirement, a legislative cap on future federal spending, and deep budget cuts. Boehner’s speech certainly gave the impression he’s on the same page. “The cuts should be greater than the accompanying increase in debt authority the president is given,” he said.
Treasury Secretary Timothy Geithner may want as much as $2 trillion in new borrowing capacity through 2012. It’s not a small number, but matching that with cuts over 10 years is manageable. President Barack Obama’s debt commission called for $2.2 trillion over a decade, while his own recent budget proposal contemplates reductions almost as large. And if defense cuts are in the mix, as Boehner implied, it all could be done without touching Medicare and Social Security outlays.
Of course Democrats want to see increases in tax revenue as well as spending cuts. The elements of the Republicans’ three-part package, meanwhile, would force greater fiscal discipline on this and future administrations. Failure to do a deal could lead to a series of repetitive fights over temporary, even monthly, debt limit increases up until the 2012 elections. That won’t suit Wall Streeters, so they should hope Boehner’s equation can accommodate a compromise.