Only One Party Can Solve Debt Problem, and It Too Is Running out of Time

June 2, 2011

Do you think it’s conceivable that yet another round of dismal economic news might cause President Obama to finally dig deeply enough in his id to find some hidden humility and consider reversing course? Let’s be serious.

Why should he do that when it’s much easier — and more profitable politically — to just demonize Republicans?

But will there ever be a time when the inescapable reality of our impending financial panic will compel him and other Democrats to act like grown-ups and help solve this problem before it “solves” itself and destroys countless people and institutions in its wake?

How long can they remain in public denial? Maybe the gravity of the crisis works against those who are attempting, in good faith, to solve it. Things surely couldn’t be as bad as the prophets are warning. After all, we’ve been subjected to endless doom-filled conspiracy theories and Armageddon has yet to occur.

We actually have award-winning economists out there downplaying the situation and even suggesting that the problem is that Obama hasn’t spent enough. Others grudgingly admit there’s a problem but deny it’s urgent.

Indeed, for all the ominous predictions out there, there is an equal countervailing climate of skepticism, dismissiveness and, on the part of the Democrats, willful obstruction.

But the Republicans, at least lately, are finally beginning to dig their heels in, refusing to raise the debt ceiling without the Democrats’ agreement to major spending cuts — now. And it looks as if the Republicans might just be serious this time.

Not surprisingly, the administration’s response is not to compete with them in a frugality contest, as common sense would counsel. Rather, it is to focus its energy on convincing the public of the allegedly catastrophic consequences that would ensue if we were not to raise the budget ceiling — never mind those that will bury us if we don’t address the crisis.

U.S. Treasury Secretary Timothy Geithner is to meet with freshman GOP congressmen to discuss these issues. Based on one freshman’s pre-meeting statement — “After the meeting, I believe Secretary Geithner will see how serious we are … about getting our debt and deficit under control” — it would appear that Geithner is entering the lion’s den.

Why would he? Well, he has nowhere else to go. He realizes — even if some of our feckless colleagues on the right do not — that Congress holds the cards. The freshmen have the leverage, and they are the ones demanding remedial action.

Sure, he might just be narcissistic enough to think he can use his powers to persuade them to act against the nation’s long-term best interests.

But what else can he say? Despite the best efforts of the intelligentsia to convince us otherwise, this budget isn’t rocket science and Geithner is no savior. We’ve been talking about these issues for months, and nothing changes. The White House and congressional Democrats simply sit the game out. They offer nothing. If they resist reform when under this type of a deadline, they will never address it when the heat subsides.

They tell us all we need to know about their priorities with their announcement that White House counsel Bob Bauer is resigning to work on Obama’s re-election campaign.

Besides, they have no tricks in their brown bag other than the hair of the dog that is biting us. They are viscerally wedded to growing government; their devotion to spending permits no major modifications. They can only offer higher taxes, which, their ideology fails to inform them, would not appreciably increase revenues, much less help us retire the debt.

Republicans must realize that if any meaningful action is to occur, they will have to force it; Democrats will not participate voluntarily. The Democrats’ political fortunes are tied to stonewalling real budgetary reform; whatever they agree to must allow them to preserve their message that they will continue to enable the dependency cycle.

But among serious people, this debate is over. The question isn’t whether we’re headed for financial doom; it isn’t even whether we’re headed there soon. The only question is just how soon and whether we can stop it.

Republicans must not succumb to the manufactured illusion that their political fortunes are tied to doing the wrong thing — that they will be committing political suicide if they simply honor their 2010 mandate to put the nation’s fiscal house in order. Pure lies. Absent a serendipitous and powerful economic rebound, the Democrats face bleak prospects for victory in 2012.

No one expects Democrats to solve the problem, but many — albeit a decreasing number — believe the GOP will. But if this budget ceiling battle isn’t their last chance, their last chance is rapidly approaching. They’ll not have another leverage point like this for a long time. If they don’t exploit it, they may find themselves out in 2012, as well.