As the hours count down on the nation's debt clock, congressional negotiators reached an agreement they hope will avert a government default. Will rank-and-file Republicans go along? Should they?
Media reports and Democratic Party spinners frame the Capitol Hill showdown as a case of GOP/tea party "extremism." But many reputable economists say it is Washington's ravenous spending machine that is wrecking the economy and pushing the country closer to depression.
Articles in the Sunday newspapers speculated that private-sector jobs, public-works projects and credit markets would melt down if Congress does not raise the $14.3 trillion debt ceiling by Tuesday.
Under rising political and fiscal pressure to do a deal, Democratic leaders accepted a modified version of the plan first proposed by House Speaker John Boehner.
The proposal would raise the debt limit in two steps by about $2.4 trillion and cut federal spending by slightly more. But unlike the earlier plan summarily rejected by the Democratic Senate, the new version would not mandate a subsequent vote on a balanced-budget amendment to the Constitution.
In another apparent win for President Obama, the deal reportedly extends the debt ceiling past the 2012 elections. The White House, in turn, backed off its insistence on automatic tax increases if debt-ceiling increases were not approved.
The administration and Senate Majority Leader Harry Reid, D-Nev., hailed the "bipartisan compromise" Sunday evening and Obama called on all parties to get on board.
"I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days," the president said.
"It will allow us to avoid default.It will allow us to pay our bills. It will allow us to start reducing our deficit in a responsible way.And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it's currently growing."
Republicans were less enthusiastic. The Washington Post reported some were angry that defense appropriations would be hit disproportionately hard by future budget reductions.
Of greater concern, conservatives said the envisioned cuts don't go nearly deep enough.
The Boehner-Reid plan, at best, will result in a further increase in the national debt of $7 trillion. It cuts only $6 billion for next year out of a budget that will spend literally over 600 times that, so its no wonder it has been widely criticized by fiscal conservatives," said Peter Ferrara, senior fellow for Entitlement and Budget Policy at the Heartland Institute.
These budget debates make no sense because of baseline budgeting, which builds in trillions in automatic increases in the budget, and then calls any reduction in that runaway increase a draconian cut in spending."
Boehner's original plan barely squeaked through the GOP-controlled House last week as conservative Republicans balked. Whether a watered-down version will fly is unknown.
A DEAL THAT COMPROMISES THE PEOPLE?
George LeMieux, a Florida GOP candidate for U.S. Senate, told Sunshine State News, This deal is no time for celebration; it offers no significant debt reduction for our children and grandchildren, and no fundamental reforms that will solve Washingtons spending addiction.
"As a U.S. senator, I supported a balanced budget amendment, and authored legislation that would have balanced our budget in two years.During this critical crisis, Senator Bill Nelson is again absent and ineffectual and needs to be replaced," LeMieux said.
Rep. Steve Southerland, R-Tallahassee, was one of the GOP congressmen who voted against Boehner's initial plan.
After watching President Obama run up $3.7 trillion in new debt over his 30 months in office, I refuse to hand him a blank check to spend even more of our hard-earned money," the congressman said Saturday after also voting against a Democratic counterproposal.
Southerland spokesman Matt McCullough declined to offer a statement on the congressman's position Sunday night, saying, "With so much left to be determined, we'd rather not comment today."
Tea Party groups in Florida remain skeptical of a proposal they say cuts spending too little, and may be loaded with hidden accounting gimmicks. Ultimately, conservative critics figure the new GOP plan doesn't differ significantly enough from the version presented by Reid.
"To take what is currently on the table will give little to no relief to the American people, and a 'compromise' will simply mean that the conservatives take another step toward this leftist administration," said Danita Kilkullen, head of Tea Party Fort Lauderdale.
"To allow the debt ceiling to be raised is to truly compromise the people," she said.
Gov. Rick Scott said deals that continue to raise the debt ceiling are bad for business and the economy.
"Of course there are negative effects to just about any decision," said Scott spokesman Brian Burgess. "The governor's view is that we have to consider the negative effects of 'business as usual,' too.
"Clearly, raising the debt ceiling over and over is fraught with negative consequences. That's what got us in the trouble we're in now."
Burgess said Scott "supports the efforts of those in Congress who refuse to accept the status quo, and he believes the time is now to put the country back on the right course, reduce spending and pass a balanced budget amendment."
DEBATING GOVERNMENT'S ROLE AND DEFICIT SPENDING
The prolonged stare-down over the debt ceiling highlights two dramatically different schools of thought about the government's role in the economy.
Obama and many Democrats fully embrace Keynesian-style policies that promote public-sector spending as a primary tool for kick-starting a stalled economy. That was the impetus for the administration's $1 trillion in stimulus spending.
But more than a year later, national unemployment rates are higher and GDP rates are lower. Keynesians like New York Times columnist Paul Krugman respond that the government simply hasn't spent enough -- so they push for tax increases and higher deficit spending to stoke even more public outlays.
Hard-line Democrats who share Krugman's crypto-socialist philosophy could also vote to scuttle any compromise on the debt ceiling. Bent on class warfare, liberal activists flocked to the social media site Twitter on Sunday to rally their cause. Posting with #economicterrorists, one tweet read simply: "tea party = Taliban."
Sen. Marco Rubio, R-Fla., excoriated the tax-and-spend mantra in a Senate speech Saturday.
Rubio declared that the current fiscal crisis "is not a complicated one to understand."
The United States spends about $300 billion a month. It has $180 billion a month that comes to the federal government through taxes and other sources of revenue. That means in order to meet its bills at the end of every month, it needs to borrow $120 billion," Rubio said.
For much of the history of this country, there have been increases in the debt limit. But what has happened over the last few years is that it's no longer a routine vote because the people who give us our credit rating are saying too much of the money that you spend every month is borrowed.
"This is not something that was made up in some conservative think tank. But the reality that we cannot continue to borrow 40 percent of every penny that the government spends has brought us to this point," the freshman senator stated.
Democrats appear conflicted on the issue. Liberals, like Obama, maintain that tax hikes on "millionaires and billionaires," along with ever-rising debt levels during hard economic times, are the best tactics to "save" the nation's shrinking middle class.
Others aren't so sure. For example, Florida's Nelson has voted against increasing the national debt ceiling almost as many times as he has voted for it.
Rep. Debbie Wasserman-Schultz, D-Fort Lauderdale, gave her party's opponents more ammunition in June when she bragged that Democrats "owned" the economy.
With the economy flat or failing, Democratic leaders, including Obama, are taking increasing heat for failing to come up with realistic fiscal solutions, let alone a balanced budget.
'TEA PARTY EXTREMISTS' OR COMMON-SENSE CONSERVATIVES?
You would think these issues would have been worked on in January, February, March -- but this [Senate] chamber has done nothing," Rubio said.
Mocking the president's spending plan -- which was unanimously rejected by the Senate -- Rubio said the budget "didn't lead with the debt limit; in fact, it increased the debt. That's how absurd the budget was."
The public appears to sense trouble with the left, and Obama in particular. The president's poll numbers have tumbled during the debt debate, and his job-approval rating among independents is under 40 percent.
Rubio said tea partiers and other conservatives have been unfairly pilloried in the press.
"If we had $1 billion for every time I heard the words 'tea party extremist,' we could solve this debt problem," he concluded.
Henry Kelley, head of the Fort Walton Beach Tea Party, said things have gotten to the point where he doesn't trust the "comments or scenarios from the president, the Senate president, Senate minority leader, the speaker of the House, the House minority leader, credit agencies, Wall Street, IMF or talking heads.
"The Democrats have proven they refuse to govern responsibly. We elected Republicans to govern responsibly and this is their chance to prove it.
"If this deal isnt as advertised, the Republicans will lose badly," Kelley predicted.
Nevertheless, Kelley sees a potential silver lining.
"Despite all the rhetoric to the contrary, the tea party and American people are the real winners.For this first time in my 45 years, the nation is having a serious debate over the role of government.This will now be the defining issue in 2012," he said.
--
Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 559-4719.
