Budget Battle Drama

What goes on largely below the radar is critical.

There are reports that an April 8th government shutdown may be inevitable due to an impasse in negotiations over spending cuts between Democrats and Republicans.  On February 19th, the House passed a bill with $60 billion in spending cuts, but there has been no action in the Senate on that bill, or any alternative offered by Democrats.  As a result, the government has been kept open via the passage of continuing budget resolutions (CRs), a process which is running out of steam.  How we will move forward is unclear, but more than just overt partisan politics is in play: "sub-dramas" within the overall battle will ultimately determine whether or not America will point itself towards fiscal sustainability, or inevitable bankruptcy.

First, some perspective.  Ten years ago, former president Bill Clinton's last budget was submitted and approved for fiscal year 2001.  That budget was $1.9 trillion dollars.  The budget submitted by Barack Obama for fiscal year 2011 was $3.7 trillion, meaning in just over ten years, spending by the federal government has virtually doubled. Democrats consider $61 billion in spending cuts -- $39 billion lower than the Tea Party faction of the Republican party promised to implement during the 2010 election campaign -- dead on arrival.  They have countered with the $10 billion dollars of cuts which have already been implemented via the two CRs approved to prevent a government shutdown so far, along with an additional $20 billion proposed by the White House, for a total of $30 billion.

Thus, the political impasse between the two parties, the one which threatens to shut down the government on April 8th if no agreement is reached, is over a $31 billion difference in cuts between the two parties.  Putting it as charitably as possible, such negotiations are virtually meaningless, because they are utterly removed from reality.

Here's reality: the projected deficit for this year is $1.6 trillion, and the federal government will be borrowing over 40 cents for every dollar it spends.  Furthermore, the deficit for the month of February alone was $223 billion, which is almost four times the "unreasonable" cuts Republicans are proposing and almost eight times what Democrats have proposed for the entire year.

Need more perspective?   Imagine a miracle happened, and every House and Senate member in Congress suddenly became a Rand Paul (R-KY) devotee.  He's the senator who proposed making $500 billion worth of spending cuts in one year. For that, he has been ridiculed, vilified and sent packing to the outer boroughs of political discourse.  Yet, if Mr. Paul's cuts were enacted, America would still be $1.1 trillion dollars in the red.  Still more perspective? That's $3,333 of additional debt piled onto every man woman and child in the nation.

So what's the budget battle really all about? Enter sub-drama number one, aka the battle for the heart and soul of the Republican party.  This battle was reflected in the current three-week CR designed to prevent a previous government shutdown which 54 House Republicans rejected in order to express their disgust with their party's refusal to play fiscal hardball.  This left House Speaker John Boehner in the unenviable position of needing several Democratic votes in support of the CR to prevent the shutdown.  As luck would have it, he got them:  85 Democrats supported the measure.

Chuck Schumer (D-NY) and other Democrats believe that painting the Tea Party as "extremist" is the key to exploiting Republican disunity heading into both the budget battle and, by extension, the 2012 election season.  In fact, Mr. Schumer was caught outlining this strategy to fellow Democrat Senators Barbara Boxer (D-CA), Benjamin Cardin (D-MD), Thomas Carper (D-Del.) and Richard Blumenthal (D-CT.) in what he thought was a private conference call on Tuesday.  Unfortunately for Mr. Schumer, reporters were also listening in.  This is what they heard:  “I always use the word extreme, that is what the caucus instructed me to do the other week. Extreme cuts and all these riders and Boehner is in a box. But if he supports the tea party there will inevitably be a shutdown. What we are trying to do here..."  at which point Schumer realized they were listening.

Damning?  Only if one naively believes politicians don't collectively strategize.  Yet there is a level of cynicism here that is daunting.  It would appear that Mr. Schumer's primary concern is putting House Speaker John Boehner "in a box," rather than coming up with a responsible budget, something House Majority Leader Eric Cantor (R-VA) was quick to point out.  “We have seen what the motive is behind Mr. Schumer,” Cantor (R-VA) said. “He says every spending cut is unreasonable.”

Which brings us to sub-drama number two, and the reason there are continuing resolutions being voted on instead of an overall budget.  Again, a little background first.  The 111th Congress, led by Nancy Pelosi and Harry Reid, started the CR ball rolling last year when they refused to pass a federal budget before the 2010 midterm election.  This was the first time that occurred since 1974, when the current rules for the budget process were enacted.  The reason was obvious: heading into what already looked like a bloodbath for Democrats, Ms. Pelosi, et al, did not want another trillion dollar-plus deficit such a budget would have contained being used as a club in the 2010 election campaign.

Yet when the election yielded a Republican majority in the House only, it was virtually inevitable that the two principal reasons for Republican success -- promises to defund ObamaCare and get spending under control -- would be killed in the Democrat-controlled Senate, or vetoed by the White House, if either somehow got that far.  Thus, Republican leadership embraced a series of CRs, each containing some cuts, as a means of chipping away at the spending. It is precisely this timidity which annoys those Republicans who voted against nickel-and-diming the way towards fiscal sanity.

Which brings us to the third sub-drama: whether or not to raise America's debt ceiling.  Earlier this year, Treasury Secretary Timothy Geithner warned that a failure to raise the borrowing limit in the coming months could lead to "catastrophic economic consequences."  Despite Geithner's warning, a Reuters/Ipsos poll taken in January revealed that 71 percent of Americans opposed raising the ceiling, which currently stands at $14.3 trillion. One of those opposed Americans is newly-elected Senator Marco Rubio (R-FL) who explains why in a Wednesday editorial for the Wall Street Journal which can be read here. Rubio characterizes raising the debt ceiling as a "leadership failure of epic proportions," and, like many of his conservative Republican colleagues, has indicated he will only change his mind if "it is the last one we ever authorize and is accompanied by a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced-budget amendment, and reforms to save Social Security, Medicare and Medicaid."

Which brings us to the fourth sub-drama: a lack of leadership.  Mr. Rubio was not the only one who characterized raising the debt ceiling as a failure of such.  Back in 2006, Senator Barack Obama said precisely the same thing when he voted against raising the debt ceiling then -- to $8.965 trillion.  Yet it is Democrats and Mr. Obama, in control of Congress and the White House for four and two years respectively, who have added almost five trillion dollars to the national debt.  And it is Mr. Obama himself who proposed a $3.7 trillion budget in which, like so many other issues, including Libya and domestic energy production to name two, he demonstrates a surreal capacity for hypocrisy, absent the slightest acknowledgment or hesitation.

With respect to the budget, this is both distressing and understandable.  Despite what Americans may believe, restoring fiscal sanity is impossible without major reforms of Social Security, Medicare and Medicaid.  It is this reality which is the basis for the disconnect between Americans who want spending brought under control, and their steadfast refusal to accept that the three entitlements which account for nearly 60% of federal spending are the biggest culprits.  Genuine leadership would require telling Americans some really unpleasant truths --- in the run up to the 2012 election, no less.

One can debate whether or not Mr. Obama is up to the task, but it is an irrelevant debate.  In this particular case, a lack of leadership, or clarity if you will, accrues to the president's advantage.  It is worth remembering that Barack Obama's 2008 campaign was built around the epitome of amorphousness known as "hope and change," even as a somnambulant media refused to press him for specifics.  It is likely that at least 40 percent of the electorate will once again be swayed by another siren song devoid of details, especially unpleasant details.  Mr. Obama, along with other member of the Democrat party, are undoubtedly hoping genuine reformers like Marco Rubio and other Republicans will be the bearers of unpleasant tidings (as Rubio has already indicated above), thereby pushing enough Americans who don't like bad news into the Democrat camp in 2012. Add a little of the boilerplate Democrat demagoguery regarding any spending cuts to the mix --- as in killing grandma or tossing children into the street -- and one has the basis for a highly cynical, but possibly effective election campaign.

If polls are accurate, such a strategy is already working.  Many of the same voters who handed Republicans a decisive victory in November now give president Obama a one point edge with respect to being "best equipped" to reduce the budget.  As for a government shutdown, former DNC head Howard Dean thinks Democrats should be "quietly rooting for it," believing Republicans would get blamed as they did for the two which occurred in 1995 and 1996--both of which helped Bill Clinton get re-elected despite the shellacking his party took in the 1994 election.

Can history repeat itself?  Certainly, with one exception:  When Bill Clinton was re-elected in 1996, the national debt was $5.2 trillion.  A Democratically-controlled Congress added almost that much to the national debt in four years, over three trillion of which occurred on Barack Obama's watch.

That is the ultimate sub-drama which will be an integral part of the 2012 election campaign.  It is one which Americans cannot--literally--afford to ignore.

Arnold Ahlert is a contributing columnist to the conservative website, JewishWorldReview.com.