01.24.2013 0

The House’s Pyrrhic victory on the debt ceiling

By Bill Wilson — On Jan. 23, the House of Representatives overwhelmingly passed a measure suspending the $16.394 trillion debt ceiling until May 19, 2013 through passage of H.R. 325.

Ostensibly, the purpose is to buy the House time to address the $85 billion of sequestration cuts that go into effect automatically on March 1. And the continuing resolution for Fiscal Year 2013 that expires on March 27.

There was some talk on Capitol Hill over this sequencing of events somehow being advantageous for House Republicans. So, upon passage, and with promises of support from Senate Majority Leader Harry Reid (D-NV) and the White House, there likely was some celebration among members feeling they had won some sort of victory.

Only, it may prove to be a Pyrrhic victory.

Namely, because the only way House leadership could secure the votes was to promise a 10-year pathway to a balanced budget, and that the sequester cuts would remain in place.

That, according to a Jan. 18 joint press statement from the current and former chairmen of the House Republican Study Committee, which promised that “As part of [the] agreement, the House will work to put the country on the path to a balanced budget in 10 years.  House leadership also agreed to stand by the $974 billion discretionary number that is part of the sequestration process.”

Now that Republican leadership has gotten what it wanted, the onus is on them to deliver the spending cuts that were promised.

That means, in the continuing resolution debate in March, the 10-year pathway to a balanced budget must be included — complete with real spending cuts that actually lower the baseline. And then when the Senate and White House balk, they must be willing to stand firm to complete the process.

It means that the budget sequester passed in 2011 must be kept in place.

The “Full Faith and Credit Act,” which would prioritize interest payments when the debt ceiling is reached — taking the Obama threat of default off the table — must be passed. Which actually may be the only way to ensure that come May 19, the statutory debt ceiling — the only congressional check on rampant government borrowing — is reinstated.

Without those things, conservative members in the House will have been sold a bill of goods by their leaders. That’s bad enough, but what comes next may be even worse.

Through the elimination of the debt ceiling, even only through May 19, the American people now have no say on the amount of debt the government contracts. Why?

The periodic vote on the debt ceiling was the only real opportunity representatives had to affect some 60 percent of the $3.7 trillion budget that operates on autopilot, the so-called “mandatory” spending.

Without those votes, those programs will be financed automatically, adding to the debt without any congressional authorization. Therefore, the suspension of the debt ceiling actually represents a partial repeal of representative government.

It opens the floodgates for the U.S. Treasury to issue unlimited obligations until the debt ceiling is reinstated. What if the Treasury decides to start selling bonds to fund, say, the next ten years of Medicaid welfare expenses? Sure, a provision in the bill states that “An obligation shall not be taken… unless the issuance of such obligation was necessary to fund a commitment incurred by the Federal Government that required payment before May 19, 2013.” But what if Obama doesn’t see it that way?

After all, those expenses have already been authorized and can be actuarially projected going forward. Without any statutory limit on the national debt, now $16.4 trillion, what’s to stop such an unbridled issuance of new debt?

Even if the Obama Administration does not decide to stock up on debt to fund future obligations, now that it has been suspended, the debt ceiling may never be reinstated.

To complete Obama’s conquest, all the Senate needs to do come May 19 is again threaten default should the debt ceiling suspension not be indefinitely extended. By then, if House Republicans have failed to put the “Full Faith and Credit Act” in place — their only defense against Obama’s default threats — they would appear likely to fold under even the slightest pressure.

We all know what will happen — Harry Reid will demand an indefinite suspension, the House will boldly insist on no more than a two-year suspension, the final “compromise” will be a five year suspension and the GOP will proclaim victory!  We have watched this sad drama so many times now a 5th grader could write the script.

Of course, at that point, House Republicans will have ceded their constitutional authority over fiscal matters to the executive, marking an end to representative government in any true sense.

Perhaps the only real advantage that may be gleaned from suspending the debt ceiling is that if and when the final collapse of resistance in the House comes — whether on the sequester, or betraying conservatives by not attaching a 10-year pathway to a balanced budget to the continuing resolution — there will be no hiding the vapid emptiness of the promises so solemnly made to the American people by “leaders” they had trusted to get control of the rogue federal government.

Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.

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