Boehner says spending limit must match debt increase
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House Speaker John Boehner Monday night visited the belly of the bond market, in New York City, to put down a policy marker in the debate over raising the national debt ceiling. And lo, the sky did not fall, the seas did not burn, and the financiers did not wail and gnash their teeth. Maybe they've concluded that the real threat to America's credit standing is raising the debt limit again without a plan to control spending.With a majority opposing any increase in the debt limit, the Republicans do have some leverage, But forcing the Democrats into this agreement may be more difficult than forcing them to set their hair on fire. There seems to be no limit on what Democrats are willing to spend and raise taxes to cover.
"It's true that allowing America to default would be irresponsible," Mr. Boehner told the New York Economic Club. "But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process."
The Speaker then got to the news, which was laying out what House Republicans want in return for raising the debt limit this year: "Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase. And the cuts should be greater than the accompanying increase in debt authority the President is given."
In other words, if President Obama wants a $2 trillion increase in the statutory debt limit from today's $14.294 trillion, he will have to accept $2 trillion in spending cuts. Mr. Boehner didn't spell this out, but his advisers tell us that those cuts would have to be scored as real by the Congressional Budget Office over a five-year budget window.
"We should be talking about cuts of trillions, not just billions," the House leader said. "They should be actual cuts and program reforms, not broad deficit or debt targets that punt the tough questions to the future."
The real question isn't whether the U.S. will meet its debt obligations but what the government will do to control its spending habits. Federal debt held by the public—the kind the government has to pay back—as a share of GDP has soared in the Obama years and is now near 70% and rising. No one knows when the world's creditors will lose their appetite for U.S. debt, but no nation should want to tempt fate.
Debt-limit brinksmanship won't be pretty, but this is no ordinary moment. Mr. Obama made clear with his over-the-top assault on Paul Ryan's House Republican budget that he won't make any serious spending concessions unless he has no political choice. That means the debt limit—which must be raised—is the main point of leverage that Republicans have to force Mr. Obama's cooperation.
The problem with a halfway deal where taxes are raised and spending limits are agreed to is that the Democrats will not honor their own deal. The have demonstrated bad faith on similar bargains more than once since the Reagan years. I just do not trust this group of Democrats and a tax increase will mean that Republicans will lose the next election which is exactly what Democrats have in mind.