Will Speaker Boehner Trumpet Boehner Economist Holtz-Eakin's Condemnation Of Debt Ceiling Deniers?
On Monday, House Majority Leader Eric Cantor (R-VA) made some news by acknowledging that Congress must raise the debt limit soon because "Secretary Geithner feels that August 2 is his deadline." That such a lukewarm statement from Cantor grabbed headlines is a testament to the deep dysfunction of our political system when it comes to the debt ceiling — a dysfunction that's led Moody's and Standard & Poor's to warn Congress that our credit rating is at risk of a downgrade unless legislators raise the debt limit very soon.
If Cantor and the broader GOP leadership are looking for a way to convince their unruly hard-right caucus that we do have to raise the debt ceiling without putting it in their own words, one of their favorite economists just gave them a freebie. At a panel on debt reduction yesterday, former Congressional Budget Office director Douglas Holtz-Eakin had some words for lawmakers like Rep. Michele Bachmann (R-MN) who have argued repeatedly and loudly that Congress shouldn't raise the debt limit at all, period, and everything will be just fine.
HOLTZ-EAKIN: I think it's important to emphasize just how misguided is this notion that if you don't raise the debt limit, somehow it'll all be okay. And this is I think at the heart of this crowd that believes that there's gonna be no real pain. And the problem is that, number one, we have about $2.3 trillion in revenue coming in, and there's only about $300 billion in debt service, so it might be politically risky but you could pay the debt service to the Chinese and still have $2 trillion left. But there's $2.1 trillion in mandatory spending right now, so you can almost pay that bill— it's a hundred-billion-dollar haircut for farm programs, and Social Security, Medicare, Medicaid, but those things happen. At that point you have zero — zero — for national defense, infrastructure, education, you know, nothing in the discretionary spending budget. [...] And what's worst about it from an absolutely political strategy is, the spending isn't gone. All it says is that the Treasury gets to prioritize which bills it pays, it's still the law of the land that we have to spend that money. And so the moment it comes in, it still goes out. And so they haven't accomplished their goal. If you wanna cut spending, change the law, and so I have no sympathy for any of this line of reasoning.
The source here is significant. Speaker John Boehner (R-OH) cites Holtz-Eakin regularly on his website when the economist's statements support GOP messaging (and Holtz-Eakin is one of the '150 economists' Boehner relies on for credibility).
Some GOP leaders, including Boehner, have acknowledged in the past that the debt ceiling must be raised, even as they demand huge spending cuts in exchange for "aye" votes. But several vocal members of their caucus are raising a persistent chorus: no debt ceiling hike, even if it means a temporary default. That's fantasy talk, and the leadership fears the market reaction to a failure to raise the limit so much that they reportedly worked overtime convincing Wall Street that a doomed-to-fail vote on the matter last week should not be taken seriously.
Still, as Cantor's half-hearted endorsement of the Treasury timeline illustrates, Republican leaders aren't going to spend their own political capital convincing debt ceiling skeptics (or Bachmann, the ringleader) that the debt ceiling increase is a must-pass issue. If they can't bring themselves to rein in the doubters directly, they should at least trumpet Holtz-Eakin's stern words on the debt like they do his statements on other issues.