The Next Cliff: Another Round of Debt Brinkmanship Looms

Originally devised as a solution to the last round of debt-limit negotiations, the fiscal cliff instead sets up another round of hostage taking.

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Charles Dharapak / AP

President Barack Obama walks out of the Oval Office as he departs the White House in Washington, Jan. 1, 2013.

The fiscal cliff was a lousy metaphor. It wasn’t really a cliff; the country tore past the deadline without plunging. The combination of deep spending cuts and damaging tax hikes Congress averted on New Year’s Day was the latest in a cascade of budget fights that convulsed the 112th Congress, wrenching the U.S. government into a state of near-continual crisis. Like the others, the cliff was a crisis of Congress’s own making. Originally devised as a solution to the last self-inflicted calamity — the debt-limit negotiations that threatened to detonate the U.S. economy in the summer of 2011 – the widely panned deal instead guarantees another round of brinkmanship.

The automatic cuts to military and domestic programs that the cliff deal averted, known as “sequestration,” now come due at the end of February. Around the same time, the Treasury Department will deplete the stock of accounting gimmicks it can use to stretch the $16.4 trillion debt limit, which the U.S. reached once again on New Year’s Eve. So the pact postpones the pain for a mere two months. A month after that, the U.S. will run out of money to fund the government. The last act of this Congress — among the least popular and most unproductive in history — was to punt a final time, bequeathing to its successor the kind of messy impasse that marked the past two years.

(TIME MAGAZINE: More on the Fiscal Cliff, Available to Subscribers)

Washington’s descent into dysfunction didn’t begin with the 2010 midterm elections. Gerrymandering, the filibuster, the rise of partisan media and waning comity on Capitol Hill all played a role. But the 87 House Republican freshman swept into Congress by the Tea Party wave have, as promised, reshaped the way the capital does business.

Beginning early in 2011, the new Republican majority began to weaponize routine procedural votes in a war to scale back the size of government. First they eradicated earmarks. In early spring, they nearly shut down federal operations in a fight over the budget. But it was an innovative tool of destruction that nearly brought the nation to its knees later that summer, when conservatives used a vote to increase the U.S. borrowing authority — a vote that many House Republicans cast 19 times at the behest of George W. Bush — as a way to force draconian spending cuts. By turning the debt ceiling into a nuclear button, Congressional Republicans took the economy hostage to their cost-cutting ideology, Michael Grunwald writes in the new issue of TIME. “The idea that the President can’t borrow to pay for congressionally authorized spending without new congressional legislation is a recipe for disaster,” Grunwald writes. Now the hostage taking is set to begin again.

(MORE: Four Misconceptions About Taxes and the Deficit)

All but 17 House Republican incumbents were re-elected to the 113th Congress, which begins Jan. 3. Those members are livid that the cliff accord contained some $620 billion in new tax revenue, according to the Congressional Joint Committee on Taxation, while Democrats safeguarded federal spending programs that Republicans sought to pare back. “The lack of spending cuts” was a “universal concern amongst members,” said Brendan Buck, House Speaker John Boehner’s spokesman. Eighty-five Republicans, including Boehner and Budget Chairman Paul Ryan, voted for it anyway, reasoning that even a bad deal was preferable to the alternative. Nearly two-thirds of the conference saw things differently.

In the cliff deal, Republicans were boxed in by the toxic politics of preserving tax cuts for the wealthiest Americans. They knew they held a weak hand. The upcoming fight over the debt limit is different. Even though the last round of debt-limit roulette damaged the GOP brand and downgraded the nation’s credit rating, Republicans say they have leverage. They intend to use the next round to extract a dollar of spending cuts for each dollar Obama seeks to increase the U.S. borrowing authority.

(MORE: Why the Fiscal Cliff Negotiations Are More Complicated than We Think)

A debt-ceiling sequel was a skirmish Obama sought to avoid. During the cliff negotiations, Obama tried to gain the authority to hike the nation’s borrowing limit without Congressional approval. That effort collapsed when a broader bargain fell apart. But Obama is still vowing not to be held hostage. “While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed,” he said late Tuesday night. “Let me repeat: We can’t not pay bills that we’ve already incurred. If Congress refused to give the U.S. the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic – far worse than the impact of a fiscal cliff. People remember, back in 2011, the last time this course of action was threatened, our entire recovery was put at risk. Consumer confidence plunged. Business investment plunged. Growth dropped. We can’t go down that path again.”

The economy wouldn’t be the only casualty. Another protracted budget brawl would sidetrack Congress from other tasks. Obama’s ambitious 2013 legislative agenda includes gun-control legislation and comprehensive immigration reform in addition to tax and entitlement overhauls. Washington has been incapable of meeting any of these challenges in recent years. A debt-limit fight would gum up all of them.

(MORE: Viewpoint: Why We Should Go over the Fiscal Cliff)

Heralding the cliff deal, Obama summoned the optimism to spin the budget battles that beguiled his first term as incremental progress toward the goal of deficit reduction.  “We are continuing to chip away at this problem, step by step,” he told reporters during a late-night visit to the White House briefing room. “Last year I signed into law $1.7 trillion in deficit reduction. Tonight’s agreement further reduces the deficit by raising $620 billion in revenue from the wealthiest households in America. And there will be more deficit reduction as Congress decides what to do about the automatic spending cuts that we have now delayed for two months.” Of course, Obama was forced into such measures by an obstinate opposition. Nor is it clear how he’ll avoid being drawn back into a cycle of budget crises that shows no signs of abating.

VIDEO: TIME Explains: The Fiscal Cliff

247 comments
outsider
outsider

Is there going to be anything new today? 

fitty_three
fitty_three

I would like to hear from GOPers how, exactly, has the GOP actually improved your life.

sremani
sremani

Debt is 16 Trillion

by the time Obama leaves office it would be over 21 Trillion. I do not know how these are acceptable levels of debt for any country.

shepherdwong
shepherdwong

Obama has (somewhat hinky) tools to circumvent the Republican terrorists' threats to crash the global economy by threatening the debt ceiling. He can simply tell them he'll use them if necessary; end of negotiation. If he caves on major entitlement cuts - or much at all - we'll know he's the negotiating wimp (or not-so-secret centrist) progressives have always claimed, not the savvy progressive strategists his current defenders are claiming.

Besides, the real constituents of the Republican House "of Representatives," the fat cat bankers and bond traders, will never let their lackeys take it to the brink. More Kabuki.


http://krugman.blogs.nytimes.com/2013/01/02/that-bad-ceiling-feeling/

outsider
outsider

The centrist fantasy of a Grand Bargain on the budget never had a chance. Even if some kind of bargain had supposedly been reached, key players would soon have reneged on the deal — probably the next time a Republican occupied the White House.

For the reality is that our two major political parties are engaged in a fierce struggle over the future shape of American society. Democrats want to preserve the legacy of the New Deal and the Great Society — Social Security, Medicare and Medicaid — and add to them what every other advanced country has: a more or less universal guarantee of essential health care. Republicans want to roll all of that back, making room for drastically lower taxes on the wealthy. Yes, it’s essentially a class war.

The fight over the fiscal cliff was just one battle in that war. It ended, arguably, in a tactical victory for Democrats. The question is whether it was a Pyrrhic victory that set the stage for a larger defeat.

Why do I say that it was a tactical victory? Mainly because of what didn’t happen: There were no benefit cuts.

http://www.nytimes.com/2013/01/04/opinion/kurgman-battles-of-the-budget.html?hp&_r=0

Ivy_B
Ivy_B

Charlie Pierce points out that the in the old House they could find time on the last day to let the Violence Against Women act expire because Eric Cantor is a dimwit and now can find enough money to spend to continue to fight DOMA in court because they can't wait for the Supreme Court. No money to help poor children and elderly get food, but fight teh gay marriage - how much do you need??

http://www.esquire.com/blogs/politics/house-defending-defense-of-marriage-act-010413?src=spr_TWITTER&spr_id=1456_6248167

outsider
outsider

67 votes against the Sandy relief bill. All GOPers. 


I hope the working class GOP supporters remember that, if they're ever hit by a natural disaster. 



outsider
outsider

Ironic, considering who closed the government last time.. :


Former House Speaker Newt Gingrich (R-Ga.) warned House Republicans not to hold the debt ceiling for political leverage Friday, contradicting Republicans who have strongly hinted at their plans to do just that.

"They’ve got to find, in the House, a totally new strategy,” he said on MSNBC’s “Morning Joe.” “Everybody’s now talking about, ‘Oh, here comes the debt ceiling.’ I think that’s, frankly, a dead loser. Because in the end, you know it’s gonna happen. The whole national financial system is going to come in to Washington and on television, and say: ‘Oh my God, this will be a gigantic heart attack, the entire economy of the world will collapse. You guys will be held responsible.’ And they’ll cave."

"He can't keep thinking the way he's thought the last few months without having a disaster on his hands," said Gingrich of House Speaker John Boehner (R-Ohio).

Gingrich's comments underscore the division among Republicans over whether to use the necessary debt ceiling increase to extract spending cuts not included in the deal resolving the so-called "fiscal cliff." Sen. Pat Toomey (R-Pa.) said Wednesday that Republicans should be willing to risk a government shutdown in exchange for a routine increase needed to pay the country's existing bills.


http://www.huffingtonpost.com/2013/01/04/newt-gingrich-debt-ceiling_n_2408764.html

superlogi
superlogi

@53_3 By advocating you work for your own nourishment rather than never getting weaned from the government teat.  Because, at some point in time, that teat's going dry and future generations will have to pay for your milk while getting none for themselves.  But then, you are a leftist "progressive" which by definition is intellectually incapable of any numeric reasoning and/or personal responsibility.

fitty_three
fitty_three

Wow you guys.

This has been up since this morning.  Aaaaand I hear crickets from GOPers.

Dead crickets.  Not a peep.  

I'm going to take their silence for what it really means:

The GOP has, outside of that tax cut, provided absolutely nothing for it's own middle class base.  Only the wealthy have benefited, and they keep playing the pipes leading their dittohead rats around and around in ever smaller circles.

Hell, what is it with their base?  I'm not saying be a Democrat but how slinging batfire stoopid can you be?

forgottenlord
forgottenlord

@53_3 

The GOP don't sell it as "we improve your life", they sell it as "the DNC destroys yours".  When was the last time you heard the GOP sell anything other than "tax cuts" or "destroy X"

jmac
jmac

@53_3 The GOP improved my life by letting my father-in-law give us a massive wind-fall that we paid not one red cent on in taxes.  If we had won the lottery we would have paid taxes.  We did win the lottery (having been in and out of the will) and, like most of the wealthy, we benefited due to the GOP fighting for us.  You can inherit up to five million and not pay one penny.   The GOP claims they are protecting small businesses and farms - bull.    Forbes:   "Even in 2001 when there was only a 2 million per couple exemption, the Farm Bureau could not cite a single example of a farm being sold to pay the estate tax."   

fitty_three
fitty_three

I'll start with the Bush tax cut, which is the only thing I can see that they've done.

jmac
jmac

@sremani Obama:  "When I took office in 2009, the deficit was 1.4 trillion.  According to the C.B.O. the deficit for 1012 will be 1.1 trillion."       I don't know what the National Debt will be at the end of Obama's eight years, but he has taken the deficit down for 2012.  Considering he inherited an economy on the brink of a Great Depression and has had to deal with Republicans wanting  slash and burn remedies in a time of economic peril as they've fought to have no revenue increase, I'm willing to give him the leeway of seeing what the debt will be after eight years.     

Tero
Tero

@sremani 

These levels of debt are wholly unacceptable for any country. But that is what happens when Republicans have power; they destroy the economy and explode the debt. I don't understand why anyone votes for those clowns.

DonQuixotic
DonQuixotic

@shepherdwong 

I agree a lot with what Krugman has to say, but I do understand Obama's eagerness to deal with the "fiscal cliff" so that he wouldn't have to fight two battles at once with the GOP (specifically, the coming battle with the debt ceiling).

DonQuixotic
DonQuixotic

@Ivy_B 

I sincerely hope that TIME writes something about this - really this is one of the most disgusting things I've seen the GOP do in years, and that's saying a lot.

grape_crush
grape_crush

Oh, and apparently the House GOPers have introduced yet another bill to repeal Obamacare:

  • "House Republicans have unsuccessfully voted 33 times in the last two years to eliminate health care reform and wasted at least 88 hours and $50 million, while failing to pass a single piece of job creation legislation in the last session of Congress."

Republican priorities are hugely out of step with those of mainstream America.

rabbitwocky
rabbitwocky

@outsider2011 I'd be interested to know who voted against it, and why. is it online somewhere? (my internet-fu fails me.) for example, I've heard everything from 0.1% to 99% of the bill was 'pork' - though one' man's pork is another man's poison. Republicans do have a track record of throwing the baby away with the bathwater, but I'd like to see for myself. (apparently, my 'old adage fu' is still quite strong. which is nice. ;-)

forgottenlord
forgottenlord

@outsider2011 Pat Toomey proves that he fails to understand the distinction between a "Shutdown" and a "Default".

fitty_three
fitty_three

@superlogi

No, I mean all your bs aside, what has the GOP done for you?

Try to stay on track here, stupor.

forgottenlord
forgottenlord

@53_3 

In fairness to them, this is a three day old thread.  Not as many people are going to read it...

jmac
jmac

@53_3 The Bush tax cuts:  Even if an individual benefited from the Bush tax cuts, they lost in the long run by the debt being doubled and the economy tanking (yes,  the no taxes/no regulations mind-set is tied to the Great Recession and the banks running wild).  Republicans constantly shout about our children having to pay our debts when they are the ones who ran up the debt.  Republicans during Bush jr increased the debt ceiling NINETEEN TIIMES and increased the limit by 4 trillion as they gave the money away.   

sremani
sremani

I thought Obama would be going full force with Simpson-Bowles commission. He is not the "centrist" he pretends to be. I did not vote for Bush if that is what you are asking me.

shepherdwong
shepherdwong

@DonQuixotic I think that Krugman's (and many other progressives' point) is that it is never a good thing to capitulate to terrorists or, at least, to seem weak in negotiating with them. It only leads to more terrorism (see blog post above).

 Dennis G. at Balloon Juice:

"The wingnuts have very little leverage when it comes to the Sequester
and a Government shutdown, but they have convinced themselves that
taking the global economy hostage might improve their chances. And even
here they are a deeply silly and insane group of grifters. They demand
that the President agree to pay a ransom before they’ll allow the USA to
pay its bills, but they also refuse to say what that ransom should be.
They are like kidnappers who demand that you guess how much you’ll have
to pay to get get back your daughter while promising to kill her if you
guess wrong. It would be impossible to negotiate with such criminals and
it is impossible to negotiate with the GOP over the Debt Ceiling."


http://www.balloon-juice.com/2013/01/04/call-the-question/

nflfoghorn
nflfoghorn

@grape_crush On what grounds do they oppose Obamacare?  I've got one: "A black man keeps whuppin' us - we muststop him!!!"

outsider
outsider

@forgottenlord @outsider2011 


Saw that. Partial shut down.. 


They really do live on another planet. 


Fiscal responsibility! Let's not pay the debt we already approved.. 

superlogi
superlogi

@bobell @53_3 @superlogi Booby, isn't it time you get off the nipple and gain a bit of self-respect, rather than help create a country which will destroy your children's legacy?

superlogi
superlogi

@53_3 @superlogi 53_3 superlogi Keeping my taxes reasonable and providing some hope for future generations rather than sliding into a social kleptocracy of unlimited spending and government. However, it appears they're losing the battle if not the war against a parasitic nation. Your question is proof of it. Just what more would you like your country (party) to do for you?

fitty_three
fitty_three

@bobell

Let's hope he can take those to the bank.

Seems to me a guy like him would ask why should he vote for them if they insist that people like him do without health care or welcome the collapse of the company he works for.

Things like that, but I guess that stupor is a bit short on "Numerical Reasoning", whatever the hell that is.

bobell
bobell

@53_3 @superlogi One thing the GOP has done for superlogi is give him an infinite supply of talking points, which he can then share with his friends (if he has any) and the rest of us.  And he's certainly good at sharing them.

fitty_three
fitty_three

@sremani  

A question I would like to ask you is this:

Why didn't you know about the GOP in the house opposed Simpson-Bowles?

forgottenlord
forgottenlord

@sremani 

He's tried to implement a number of bargains including a variation of Simpson-Bowles that Boehner had signed off on but was killed by the other members of the House (because it had a non-zero increase in taxes) that would've killed the deficit.  The problem has always been Republican staunch refusal to accept tax increases as a possible portion of the deal.  Every single Republican Presidential Candidate said they would not accept a 10:1 deal of spending cuts to tax increases, an 85/15 deal was scuttled before a 100/0 deal was scuttled and Republicans have argued twice that their concession in a particular deal was allowing the government to operate at all - a way to argue that every change to the structure of the budget should be a Democrat concession.  How is that Obama's fault?

DonQuixotic
DonQuixotic

@sremani 

The House was staunchly against it.  If Obama is not a centrist I don't know what he is.  He's certainly not a left leaning liberal.

shepherdwong
shepherdwong

@DonQuixotic There's also an opportunity cost to all of this. We have no idea how much better-off the economy would be without all of this Republican malfeasance (and treason).

Ezra Klein:

"The 112th found legislating so difficult that lawmakers repeatedly created artificial deadlines for consequences and catastrophes intended to spur them to act. But like Wile E. Coyote with his endless supply of Acme products, when the 112th set a trap, the only sure bet was that it would explode in its collective face, forcing leaders to construct yet another hair- trigger legislative contraption...

The near-shutdown of the federal government in early 2011 was the first of these self-detonated disasters, the near-breach of the debt ceiling in August 2011 was the most damaging, and the fiscal cliff was the dumbest. In each case, Congress mainlined a dose of fear and uncertainty into an economy already beset by too much of both. In each case, the deadline failed to spur responsibility; instead, Congress punted on hard decisions while setting up a new deadline to supplant the old, discarded one."


http://www.bloomberg.com/news/2013-01-02/good-riddance-to-rottenest-congress-in-history.html

outsider
outsider

@rabbitwocky @outsider2011 


Here we go, see who voted, how:


http://clerk.house.gov/evs/2013/roll007.xml


Voting no:

Amash
Barr
Benishek
Bentivolio
Blackburn
Bridenstine
Brooks (AL)
Broun (GA)
Chabot
Collins (GA)
Conaway
Cotton
Daines
DeSantis
DesJarlais
Duffy
Duncan (SC)
Duncan (TN)
Fincher
Fleming
Flores
Foxx
Franks (AZ)
Gohmert
Goodlatte
Gosar
Gowdy
Graves (GA)
Graves (MO)
Harris
Holding
Hudson
Huelskamp
Hultgren
Jenkins
Jordan
Lamborn
Marchant
Massie
McClintock
Meadows
Mullin
Mulvaney
Neugebauer
Palazzo
Pearce
Perry
Petri
Pompeo
Price (GA)
Roe (TN)
Rokita
Rothfus
Royce
Ryan (WI)
Salmon
Schweikert
Sensenbrenner
Stutzman
Thornberry
Weber (TX)
Wenstrup
Williams
Wilson (SC)
Woodall
Yoder
Yoho