What To Do About the Debt Ceiling

Republicans face the debt ceiling battle without a leader, strategy or any specific proposal. They are facing a president who refuses negotiation, a Democratic Senate, hostile media, and a President. The Treasury Department’s “extraordinary measures“To avoid default come to an halt this spring, the markets will tremble and business and investors are likely to pressure Congress for a fast fix. If the crisis isn’t dealt with properly, it could lead to a government shut down, economic contagion and downgraded U.S. bonds, as well as renewed GOP infighting. Oh, yes—in the worst-case scenario, federal spending would remain uncontrolled.

This briar patch can be tricky, but it is possible to get out. This requires learning from history, setting realistic goals in advance, dealing with inevitable attacks and looking long-term. This is a difficult task but not a reason why we should abandon the cause. The GOP’s renewed interest is welcome in limiting federal government size and scope. $31 trillion national debt is an ugly 124 percent of Gross Domestic Product. Expect multitrillion-dollar deficits years to come.

This is the sign of national decline. It encourages negative tax increases on work and savings as well as investment. High interest payments are a burden on future generations and crowd out defense spending. It is a national security concern that must be considered seriously.

It is important to take the precedents into consideration. Recent attempts to reduce debt and deficits have been viewed as cautionary tales by Republicans. They tried to convince Barack Obama and Bill Clinton to reduce spending with mixed results. After that, both Clinton and Obama won re-election.

Government shutdowns were the result of the 1995 budget battle. Clinton called Republicans the enemies of Medicare. Obama’s portrayal that Republicans are extremists was influenced by the 2011 debt ceiling dispute. Each case saw Democratic incumbents portray themselves as sober defenders middle-class entitlements and stoic defenders against antigovernment crazies. They were able to win second terms thanks to their performances.

However, Republicans didn’t leave empty-handed. The emotional and combative drama between Clinton, then-House Speaker Newt Gingrich may had shut down the government but it led to a successful welfare reform and capital gains tax cuts, as well as a balanced budget. The 2011 dispute over the debt ceiling was just as bitter and messy. Many fiscal hawks were pleased when the budget sequester, which included automatic spending cuts, was delivered.