Thursday, January 6, 2011

The first fight of 2011

The federal debt clock in April 2008.  It is now over $14 trillion. (Jesper Rautell Balle)

Georgia’s congressional delegation became more Republican this year, partly on the promise to repeal and replace Obamacare.  Now, as the new congressional term begins, one of the first actions taken will likely be a vote in the House of Representatives for repeal.  This vote, however, will not mark the first real fight of 2011. 

The vote for repeal is likely to pass the Republican-held House, but its chances are far less certain in the Senate, which still has a Democratic majority.  Even if the bill passes the Senate, it would face an almost certain veto from President Obama.  Chances of convincing enough of the surviving Senate Democrats to vote for repeal can be found somewhere between slim and none.

Instead, the first real political fight of 2011 in which the Republicans have a chance to make a real difference and not just take a symbolic stance will likely come when the Democrats try to increase the federal debt limit.  The debt limit is the legal amount that the government is permitted to borrow.  It was most recently increased in May 2010 to a $14.3 trillion.

If the debt limit is not raised, often as part of a budget bill, the Democratic spending train will be stuck in the station.  The government will soon reach a point at which it can no longer legally borrow money.  In practical terms, this means that the government will be forced to cut spending.  Ironically, this is precisely what the Republicans were sent to Congress to do.

Failure to raise the debt limit would put the Obama Administration, and by extension the entire federal government, in a bind.  President Obama’s prescription for the economy has so far been to spend money.  So far, this has resulted in a stagnant economy with high unemployment and very slow growth.  Without being able to borrow to finance his programs, from implementing the new health care bureaucracies to stimulus spending, Republicans would be able to “starve the beast” and reverse the government growth of the last two years.

Keeping the current federal debt limit would also tie in with the Republican promise to enact “cut-go.”  The Democrats had enacted a “pay-go rule when they took Congress in 2006 that required new spending programs to be paid for, rather than financed through debt.  In reality, pay-go was waived so often as to be meaningless.  Pay-go also allowed programs to be financed through increased taxes, where cut-go will require new spending to be offset by spending cuts elsewhere.  If the Republicans hold to this promise, it will start to reverse the federal habit of deficit spending.

There are political risks to not raising the debt ceiling.  Most obvious is that the Democrats will attempt to finance new programs through raising taxes rather than through spending cuts.  Given the broad public support for the extension of the low Bush-era tax rates, this would likely be an unpopular move with most voters that would ultimately hurt the Democrats.

Newt Gingrich and Bill Clinton faced a similar situation.
More likely is that the Republicans would provoke a confrontation with President Obama, in which the Democrats would seek to deduce deficit spending by cutting popular programs such as Medicare and Social Security.  They might also threaten a government shut-down of the sort that cost Republicans support in the Clinton era.  Whether it would play out the same, given the voter anger at Democratic policies and spending, is an open question.

Republicans have the advantage in this looming battle.  A strong showing at the polls last November that sent additional Republicans, including Georgia’s new Representative Austin Scott, to Congress is fresh in Democratic minds.  This gives the Republicans a momentum that they have already used to block December’s omnibus spending bill and pass the compromise that extended the Bush-era tax cuts until 2012 and reduced the revived death tax.

Closely related to this fact is that Senate Democrats are very vulnerable in 2012.  In the next election, 23 Democratic senators will be up for re-election compared to only 10 Republicans.  Many of these Democrats will face tough re-election battles.  Given the current climate of voter anger at federal spending and the growth of government, many Democratic incumbents will not want to go on record with votes supporting more federal debt and spending, let alone tax increases.

More importantly, the house of Congress that is now controlled by the Republicans is the House of Representatives.  According to the Constitution, all spending bills must originate in the House.  This means that Republicans will have control over the federal budget.  Of course, the GOP budgets will still have to pass the Democratic Senate and survive an Obama veto.

In the final tally, an important part of the battle will be played by the Tea Party and other citizen activists.  If voters remain engaged and angry, it will place pressure on both parties to change the status quo in Washington.  In particular, it will keep the pressure on Republicans who campaigned and won on promises to reduce wasteful deficit spending and stop the rampant intrusion of government power into private life.

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