The eyes of the Republican blogosphere are concentrated on Wisconsin these days, as the public employee unions and Democratic senators are lashing out in a desperate and futile attempt to defend the status quo of unsustainable state debt. But despite the mediagenic circus of shut-down public schools, doctors dispersing fraudulent sick notes and teachers waving misspelled signs, the battle between the unions and Republican Gov. Scott Walker is not one that demands reinforcement from either the blogosphere or the tea party.
The focus of the fiscally prudent should be on Washington, not Wisconsin. This is because the outcome in Madison is assured, whereas the one in the national capital is not. While both situations are unsustainable, Wisconsin has already reached the outer limits of its debt expansion. The federal government has not. Wisconsin’s limits are externally imposed, whereas Washington’s are not, at least, not in the near term.
This means that Gov. Walker and the Republicans cannot give in, as Republicans have usually done in the past, because the spending cuts have to come from somewhere. Since the salaries and pensions of the state-funded workers are one of the largest and most publicly offensive portions of the state budget, it is arguably the easiest and most politically viable areas for Wisconsin Republicans to target.
In Washington, on the other hand, the congressional ability to increase the statutory debt limit from $14.3 trillion means that nothing but the will of the Republican House majority stands in the way of more reckless spending on the part of the Obama administration and the Democratic Senate. Raising the debt limit will accomplish nothing of any benefit to the nation, as is obvious from the fact that it was raised to $14.3 trillion from $12.4 trillion only 13 months ago.
As has been their historical wont, the Republican leadership is widely believed to have already gone wobbly on the issue, as House Majority Leader John Boehner is reported to have taken the concept of blocking an increase in the debt limit off the table. However, a more careful review of the transcript of his interview with Chris Wallace of Fox News shows that this is not actually the case:
Wallace: Let me finish the question, Mr. Speaker. If you’re not willing to compromise, then the government could shut down. If you’re not willing to compromise – and I’m not saying it’s your fault or the president’s – but we could default on our debt.
Boehner: Well, we have to work our will in the House. We have to work with our colleagues in the Senate and put something on the president’s desk. But I’m going to suggest to you that we are going to keep our word to the American people, that we will, in fact, reduce wasteful Washington spending.
Wallace: I want to – I know you’re not threatening to default. But do you agree with administration officials and other economists that defaulting on the full faith and credit of the United States would be a financial disaster?
Boehner: That would be a financial disaster not only for our country, but for the worldwide economy. Remember, the American people on Election Day said we want to cut spending and we want to create jobs. You can’t create jobs if you default on the federal debt.
Listen, there has been a spending spree going on in Washington these last couple of years that is beyond control, and if the president is going to ask us to increase the debt limit, then he’s going to have to be willing to cut up the credit cards. We’ve got to work together by listening to the American people and reducing these obligations that we have.
Wallace: So, defaulting on the full faith and credit is unacceptable to you?
Boehner: I don’t think – I don’t think it’s a question that is even on the table.
What most of those who referenced this interview have failed to note is that refusing to raise the debt limit is not the same thing as defaulting on the federal debt, much less “the full faith and credit of the United States.” In fact, refusing to raise the debt limit significantly decreases the chances that the federal government will be forced to default on its debt. Boehner only said that it was federal default that was not on the table, he said nothing about conceding yet another expansion on the debt limit.
Think about it this way. If you have a credit card and are barely able to make the monthly interest payments on it, will raising your credit limit and charging more purchases to the card make it more likely or less likely that you will eventually be forced to default on your credit-card debt?
While the interest payments on the federal debt are an increasingly heavy burden on the federal budget, the government can still easily make them. What it cannot afford to do is to permit them to increase while simultaneously spending more on multiple military occupations, aid to foreign governments, bailing out bankrupt financial institutions and massive income transfers to the elderly, the poor and other unproductive classes.
If Republicans are at all serious about getting America out of the financial hole it has dug for itself, they absolutely must do the political equivalent of cutting up America’s credit card and commit themselves to blocking the increase of the statutory debt limit at all costs. It is not enough to use it as a bargaining chip to extract some useless promises of financial restraint from Democrats; that ploy proved to be a failure in January 2010 as it did not reduce federal spending and laid the foundation for the expansion of the annual deficit from $1.35 trillion then to an estimated $1.5 trillion now.