Mr. Obama wants a budget fight

Posted on September 24, 2013 by


and Republicans are seemingly going to give him what he wants.  Both the budget and the debt limit are coming up and Mr. Obama says there is no negotiation.  No longer will there be any discussion on the debt limit (indeed, he does not believe we should have one), since we have to “pay our bills.”  This new found understanding of congressional responsibility to increase the debt limit galls Republicans, who accordingly note Mr. Obama’s refusal to vote for a debt limit increase when Mr. Bush was president.

Nevertheless, Mr. Obama has had several bad weeks of press on many dimensions (most notably Syria), and there is growing realization on the left that the sequestration is really hitting cherished spending, and last winter’s tax increase is all they are going to get.  So, Mr. Obama’s political calculus is that with history and the press on his side, a government shutdown could be just what the doctor ordered to improve his poll numbers.  After all, Mr. Clinton faced down Republicans on the budget and that paved the way for a huge political upswing.  Most Republican establishment types seem to agree that Mr. Obama is challenging the Republicans to charge into the firing squad, see here and here for examples.  I find the conventional wisdom compelling, and yet when almost everyone believes something, it seldom seems to work out that way.  Nevertheless, this should be political theater for the next month or so.

What I do want to address is a claim that you will see–guaranteed.  Mr. Obama and others will assert that the full faith and credit of the U.S. is on the line, that if we do not increase the debt limit, we will default, and that America has never defaulted, and Congress needs to pay their bills, and to stop trying to shut down the government.  Let’s examine each of these:

  1. Failure to increase the debt limit does not need to lead to default.  The ongoing tax receipts are more than enough to pay the interest on our national debt.  As long as Mr. Obama is committed to not defaulting, he will have more than enough resources to pay our “must pay” bills (interest on our debt).  However, this would necessitate painful spending cuts, which is precisely why Mr. Obama wants to focus on the potential default.
  2. America has defaulted at least twice in history, not that we want to do it again.  But as a matter of history, we defaulted on the gold standard in 1933 and again in 1971; we had committed to paying back our debts to other countries in gold and we defaulted.  No ifs, ands, or buts here–we have been deadbeats before (under both a Democrat and a Republican).  In both cases because we wanted to spend more than we wanted to tax.
  3. Mr. Obama talks about paying bills in a totally different sense than most Americans think of bills.  We think of bills as debts we owe, for goods and services we have already received.  Mr. Obama, however, conceives of bills as obligations to pay for things he wants to buy and are in the budget.  While we certainly think there is benefit to budgetary stability, every organization on earth knows the budget is just a plan–it is always up for change if revenues or priorities change.  This is simply the Republican’s effort to refocus the question of priorities.  Mr. Obama is certainly within his prerogative to disagree with them and argue for his priorities, but to say the Republicans wanting to change the fiscal priorities of this country (when they do control the agency of government responsible for initiating all fiscal items) is the same as “not paying your bills” seems patently false.
  4. If the government does shut down, it is because both parties were unwilling to compromise.  Mr. Obama seems to think, and Republicans certainly fear, that Republicans will be blamed.  That is likely the case.  Nevertheless, Bereans should understand that just as any other conflict in life, there is a shared blame.  No one party in conflict is 100% right and the other 100% wrong; at least this is my observation in life.

Stay tuned, and stay informed.