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The Most Terrifying Result of the Debt Ceiling Crisis

The most terrifying result of the debt ceiling crisis is not the deal itself — with its tight discretionary caps, its special joint committee that Republicans already are saying they won’t allow to raise any revenues, and its potential for arbitrary across-the-board cuts. Instead, it’s the precedent that Republican congressional leaders say the crisis has established.

Senate Minority Leader Mitch McConnell declared on the Senate floor today that this “creates an entirely new template for raising the national debt limit.”  As he explained on CNBC last night, “In the future, any president, this one or another one, when they request us to raise the debt ceiling, it will not be clean anymore.”

In his Senate floor speech, McConnell noted that Washington will have to raise the debt limit again in early 2013.  He promised that he and others will seek to use that event once again to shrink “the size and scope of government.”

Ohio’s Rob Portman, one of the most influential Republican senators on budget issues, and Paul Ryan, the powerful House Budget Committee chair, clarified what Republican leaders have in mind, indicating that the new standard should be a dollar in spending cuts for every dollar that the debt ceiling is raised.  In a blog post today, Ryan argues that the agreement, “establish[es] a clear precedent that any future debt limit increases must be matched by an even larger cut in government spending.”

If maintained over a number of years, such a dollar-for-dollar standard ultimately would decimate much of the federal government.  Consider:

  • Under House Budget Committee Chairman Paul Ryan’s budget — which cuts non-security discretionary programs one-third by 2021 (relative to last year’s funding levels adjusted for inflation), slashes Medicaid by $1.4 trillion over ten years, cuts food stamps and Pell Grants by over $100 billion each, and cuts total spending by more than $4 trillion — the debt ceiling would still have to be raised more than $6 trillion over the coming decade above the increase enacted today.
  • In other words, applying a dollar-for-dollar standard to all future debt limit increases would require trillions of dollars in additional cuts on top of the massive cuts already in the Ryan budget — and make the Ryan budget look like a piker by comparison.

Policymakers who have engaged in recent months in high-stakes hostage-taking — threatening the economy and the full faith and credit of the U.S. government — apparently now feel vindicated, affirmed, and emboldened.  The lesson they draw is to threaten default each time Washington must raise the debt ceiling unless their demands for ever deeper budget cuts (with no revenue increases) are met.

The issue extends far beyond that of basic fiscal priorities, however huge that issue is.  Requiring a dollar-for-dollar match is not only unnecessary (and excessive) from an economic or fiscal policy standpoint, but also ultimately would require dismantling much of the Great Society and even the New Deal, thereby paving the way for vast increases in poverty and deprivation.

Even more fundamental is the risk that such tactics would pose to American democracy.  The lesson being drawn is that a majority in just once House of Congress may use the threat of default to bring the government to its knees in order to pursue its radical vision for America’s future.  The will of one party in the House or Senate would effectively replace agreement among both Houses of Congress and the President, undermining democracy.

If we head down this path in the years ahead, we will become a very different nation and society — coarser, harsher toward the vulnerable and people experiencing what FDR termed the “vicissitudes of life,” unable to invest in our future, and willing to tolerate degrees of poverty and inequality that are present nowhere else in the Western world.