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Feminspire | April 24, 2014

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The Debt Ceiling, the Fiscal Cliff, and Presidential Power: An Explanation

The Debt Ceiling, the Fiscal Cliff, and Presidential Power: An Explanation

Remember the summer of 2011? In the U.S., it was one of the hottest on record since the 1930s, the Dust Bowl era. We had an earthquake on the East Coast! The world’s attention was turned to Libya as rebels fought against Qaddafi. Almost no one had Instagram yet! (I’m actually not sure if this is true.) Donald Trump confirmed he was not going to run for President! And we had a financial crisis over the debt ceiling that shook America’s confidence in our leaders, as the Republicans (no doubt encouraged by the Tea Party’s rising moon), refused to vote to raise the debt ceiling unless certain conditions were met. The U.S.A. lost its AAA credit rating from Standard and Poor, the approval rating of Congress sank to historical lows, and political instability led to falling stock values in a weakly-recovering market. Remember that?

Well, guess what? You may think that it is December 2012 right now. It would make sense. Holiday decorations and music dominate stores and Main Streets, and people are planning end of the world parties for the 21st on the off chance that the Mayans were on to something. But it is not. It is summer 2011 and we are fighting about the debt ceiling.

Okay, that’s overstating things. It is December 2012, and while a lot of the terms and ideas of the fight are the same, the context is totally different and the stakes are totally different. In 2011, the consequences would be dire, but economic in nature. This fight is about defining the office of the Presidency and the limits and extents of Presidential power, and the checks and balances that are so integral to the U.S. governmental system. President Obama has made it about that, with full awareness, haunted by the specter of July 2011.

In 2011, the debate was because the debt ceiling, last raised in February 2010, was met, which meant that Congress had to vote to raise it again. This routine exercise has occurred periodically since the debt ceiling was enacted in 1917. In 2011, the combination of the rise of the Tea Party (especially the 2010 midterm elections) and growing concern about the national debt and budget deficit made it a hot-button issue. The European sovereign-debt crisis was fresh in the public’s mind. The Republicans began threatening to vote against raising the debt ceiling, even though that does not affect the government’s ability to incur more debt, but could force the country into default. It made good PR, though, especially to the millions of Americans who were not familiar with the complicated intricacies of political economics. The Republicans only voted to raise it once the Democrats had agreed to spending cuts (which some argue were the GOP’s goal in the first place.) During this crisis, many people suggested eliminating the debt ceiling altogether, claiming that it is redundant. (Some facts to put it in perspective: the only other country that has a debt limit is Denmark, and they have set it so high that they will probably never reach it. Since 1960, the debt ceiling has been raised 78 times as of summer 2011. This includes 18 times under Reagan, 8 times under Clinton and 7 times under George W. Bush.)

Today, the debt ceiling debate is a bit different. It started with the fiscal cliff negotiations. A reminder: the fiscal cliff refers to the economic legislation that will go into effect in 2013, including the Bush tax cuts, which some economists have argued will be a negative shock to the economy and will, at the very least, stop its slow growth. The debt ceiling is not due to be raised for another few months, but it has become very relevant to this month’s economic negotiations.

President Obama proposed a budget plan that included higher tax increases on the top two percent and cuts in military spending–while leaving Medicare and Social Security untouched. Speaker John Boehner rejected it outright, claiming, “And if the president doesn’t agree with our proposal and our outline, I think he’s got an obligation to send one to the Congress – and a plan that can pass both chambers of Congress.” The White House has rejected GOP offers as well. The GOP abandoned the harsh Ryan plan, but still proposed a budget that would cut social spending, leave the military alone, and extend tax cuts on the wealthy, insofar as they proposed a plan at all.’s analysis of the counteroffer claimed that there were no specific policies, the tax reforms did not make sense, and it didn’t even avert that damned fiscal cliff.

So, what did the Republicans do when the White House rejected their plan as flatly as they had rejected the White House plan? They threatened to use the debt ceiling as a political tool once again, especially as it seems less and less likely that they will be able to block tax increases on the super-rich, which is an important part of their platform. (Even The Simpsons’ Mr. Burns agrees with the previous statement.) Aware of a weakened bargaining position, some even suggested folding on middle class tax cuts and postponing the fight over spending cuts and tax reform till March–when the debt ceiling vote will put pressure on the negotiations. This tactic is extortionistic, if not simple extortion. They claim they oppose the debt limit increases because they want to cut the deficit. That’s fine,  but the 2011 debt-ceiling crisis cost the Treasury 1.3 billion dollars due to increased borrowing costs.

In response, Obama proposed a new approach to the debt ceiling, one that cuts out Congress. On Wednesday, while addressing a business group, he stated “If the Congress in any way suggests that they are going to tie negotiations to the debt ceiling and take us to the brink of default once again as part of a budget negotiation…I will not play that game because we’ve got to break that habit before it starts.” Many Democrats felt that Obama had been too weak in the 2011 debt ceiling negotiations and had given up too much. Obama is undoubtedly keenly aware of this and will do everything he can to avoid a repeat of 2011, where many Democrats felt he was “taken hostage” by the debt ceiling negotiations. He has proposed an extension of the McConnell Provision. The McConnell Provision (named after Republican Mitch McConnell) allows the President to ask Congress to raise the debt ceiling, Congress to disapprove, and the President to veto their disapproval. McConnell cooked it up as a way for the Tea Partiers to vote against raising the limit –therefore preserving their credentials with the movement–while avoiding a financial panic. It essentially cuts out Congress.

By all reports, Obama is extremely passionate about this provision and will not back down. Sources close to the President have said that he finds it a matter of separation of powers, and that he is attempting to preserve the powers of the Chief Executive.

John Boehner certainly seems to be gearing up for a fight. He has “purged” several dissident Republicans, taking away their Committee assignments. The removed Representatives included Tim Huelskamp and Justin Amash, both of whom had voted against Paul Ryan’s budget plan. Walter Jones, who has voted against Boehner more than any other Republican, and David Schweikert. On Thursday, Senator Jim DeMint announced his retirement, shortly after criticizing Boehner’s plan (the post-Paul Ryan plan, just to clarify) and claiming it will destroy American jobs. DeMint was a major Tea Party figure, who contributed to the rise of Tea Party challengers to Republican incumbents in Congressional primaries. Don’t worry, he’s not going far–just to lead the Heritage Foundation, the influential conservative think tank that helped launch the Christian right. (Is it a fight with the Democrats? Will he, believing that Obama is bluffing, attempt to call that bluff? The fact that it is some of the more conservative, Tea Party-affiliated members of the party who he has ‘purged’ suggests that he may be planning to try and get a deal through and avert financial crisis, even one unfavorable to Republicans. The GOP took a beating in public opinion after 2011, with many blaming them. The effects of this were surely felt in the 2012 election.)

This is the dominating fight in American politics right now, and the outcome of the fiscal cliff negotiations and the fate of the March 2013 debt ceiling vote will do much to set the tone of Obama’s second term. If he can go into his inauguration fresh off a hard-fought win, he will be in good shape to take on the more aggressive, more liberal persona that many Democrats hoped he would. Without the periodic debt ceiling vote, it will be much harder for an obstructionist party to threaten financial calamity if they don’t get their way. Obama’s inclusion of the McConnell Provision raised the stakes on the current negotiations–now, it’s about more than taxes. Now it’s a fight to define the Office of the Chief Executive.

Written by Jess Mary Aloe
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