Senior Advisor for Federal Fiscal Policy
Tea party stalwarts and some Republican presidential candidates notwithstanding, experts generally agree that Congress’ failure to raise the federal debt limit by early August to avert a default would seriously hurt the economy and the nation. But Republican lawmakers’ refusal to vote for an increase unless it’s accompanied by a major deficit reduction package has kept Congress from acting. That, however, is not what you might think after listening to some recent commentary about the debt limit negotiations.
After House Speaker John Boehner decided to oppose President Obama’s effort to secure a $4 trillion package because it would involve a tax increase, some pundits suggested the President and Congress can simply enact the purported $2 trillion in spending cuts to which all sides agreed as part of the bipartisan talks that Vice President Biden had led. They seem to suggest that the President and congressional Democrats will bear the blame for a default if they do not agree to enact the spending cuts.
There’s just one problem: there was no agreement on $2 trillion in spending cuts in the talks that included high-ranking House and Senate members of both parties.
I wasn’t there, of course, but the House Budget Committee’s ranking member, Chris Van Hollen (D-MD), was. And here’s what he told Candy Crowley on CNN’s “State of the Union”:
In fact, the Vice President has said that we identified about a trillion in savings. We’re nowhere close to $2.4 trillion. . . . And let me say this, even that trillion was contingent on an overall agreement which meant that the Republicans had to agree to some revenue component.
The Biden talks had to start somewhere, and participants decided to start on the spending side. Democratic negotiators discussed the spending cuts they could support as part of a balanced package of spending cuts and revenue increases. After discussing spending, the group would move to revenues. But, after participants made some progress on the spending side — which, Van Hollen said, consisted of about $1 trillion in possible cuts — Republicans broke off the talks, saying they would not consider any tax increases.
Suggesting Democrats should be blamed if Congress does not raise the debt limit because they were willing to talk about spending cuts while letting Republicans off the hook for refusing to talk about tax increases would turn reality upside down, marking a clear case of “no good deed going unpunished.”