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Monday, January 03, 2011

Will Debt Ceiling Showdown Lead To Shutdown?

Big question in Washington as the GOP stands ready to take control of the House of Representatives and have additional votes in the Senate even though Democrats still control the Senate, is whether a showdown over the massive debt ceiling will turn into a government shutdown.

Without getting too deep into technicalities, the debt ceiling is the amount of money America is allowed to borrow. For a more detailing of the debt ceiling, Wikipedia has a decent enough explanation of the differences between debt held by the public and intragovernmental holdings.

We have seen White House officials, Democrats and Republicans discussing this lately during interviews with news shows as the continuing resolution on spending expires in March after Democrats tried and failed to get a $1.1 trillion measure pushed through in the lame duck session of Congress before the holidays.

The Obama administration's argument made by Council of Economic Advisers (CEA) Chairman Austan Goolsbee on ABC over the weekend is that there will be a serious economic situation if Congress fails to raise the debt ceiling to allow America to borrow more money than the $14.3 trillion limit it stands at now.

Some Republicans argue the debt ceiling should not be raised without setting up a long term plan to cut spending and deal with the long term debt that continually increases with every vote to raise the ceiling.

Other Republicans, such as Senator Jim DeMint (R-S.C.), argue the debt ceiling should not be raised at all and instead the spending bill should cut items which would keep the ceiling at it's current level.

DeMint, a de-facto leader of Senate conservatives and many Tea Party senators, called for an all-out battle early this year, when Congress will face a tough vote to legally authorize the government to take on more debt.

"I think we should resist that. We need to have a showdown, at this point, that we're not going to increase our debt ceiling anymore. We are going to cut things necessary to stay within the current levels, which is over $14 trillion," DeMint told the conservative magazine Human Events in an interview released Monday. "So this needs to be a big showdown."

The challenge for the GOP will be where to cut spending, what programs to choke funds from and how much it all adds up to.

John Boehner explains what he and Republicans believe the message was from midterms, by reiterating his stance:

"The American people want a smaller, more accountable government. And starting Wednesday, the House of Representatives will be the American people's outpost in Washington, D.C.," Boehner said. "We are going to fight for their priorities: cutting spending, repealing the job-killing health care law and helping get our economy moving again."

In order to show the voters who handed them the largest gain of seats in the House of Representatives in over 70 years that they understood their so-called mandate from November's midterms, small changes are already being announced.

For example Boehner plans to cut congressional office spending by 5 percent across the board. Not enough to make a dent in the debt, but a message to "set the tone" as Wapo puts it, for how Republicans plan on governing.

According to the same Wapo article, page #2, the battle lines are already being drawn:

The issue resonated on the campaign trail last fall, and newly-elected Republicans were torn on it Sunday. Rep.-elect Allen West (R-Fla.) said he could support raising the debt limit if there were also spending caps and changes to entitlement programs like Social Security. But Rep.-elect Mike Kelly (R-Pa.) said raising the debt ceiling at all would be "absolutely irresponsible."

House Democrats, meanwhile, are girding for early skirmishes with the new GOP majority. Pelosi, who is becoming minority leader and will also give a speech Wednesday outlining her party's agenda, plans to meet with her diminished caucus Tuesday night to plot strategy against the Republicans' health-care repeal effort, which aides said could begin as early as this week.

Democrats also plan to challenge some of the new Republican House rules, including one that effectively replaces the Democrats' "pay-as-you-go" rule with a requirement that any increase in mandatory spending be matched not by tax increases but only by a spending cut of equal or greater value elsewhere in the budget.

On it's face, in this particular issue, Republicans have the advantage of public support, as polls from different organizations, throughout 2010, clearly show the majority of Americans preferring a smaller government with less services over a larger government with more services.

So, with Republicans poised to take control of one house of Congress, the budget and spending is in the crosshairs and messaging will be key to how the showdown plays itself out.

With the Senate still controlled by Democrats, with a smaller majority after midterms, and Obama holding the veto pen, Republicans will need to stay clear and concise on their messaging to the American people, transparent in their attempts to cut spending and create a smaller government so when the bills are passed the public is clear on where those bills die, whether it is the Senate or by presidential veto.

If the public supports the spending cuts Republicans propose and pass through the House of Representatives and Democrats whether in the Senate or Obama, kills popular cuts by refusing to pass them through the Senate or Obama uses his veto pen, then Democrats will be once again pitting themselves right up against not just the GOP but the majority of American voters.

Considering Barack Obama is up for reelection in 2012 and 23 Democratic seats in the Senate are in play in 2012, Democrats must be very careful about refusing to listen to the American public.

Democrats ignored public opinion from 2008 until midterms and voters punished them severely on November 2, 2010, handing Republicans control fo the House and giving them a net gain of six more seats in the Senate (Only one third of Senate seats were in play).

The most important thing Republicans can do right now is to uphold their promises, fight hard for what American voters want and make the process as transparent to the public as possible because if the debt ceiling and spending showdown leads to a government shutdown, American voters will blame the party that is going up against them, regardless of who controls what in Washington.