Dancing On The (Debt) Ceiling

I MAY owe Mitch McConnell an apology. I’m not sure yet. I’ve been looking into this whole debt ceiling thing and I’m actually starting to see the cleverness in his plan, especially compared to the alternatives. Wanna talk about the debt ceiling? You know you do. Don’t worry, I’ll make this as painless as possible.

Ok, here are some basics.

1. The debt ceiling was first put in place by statute in 1939 by the Public Debt Act, which set the maximum amount the government could borrow. This number has been raised many times and currently stands at $14.294 trillion. . . roughly 4 trillion Big Macs.

2. The government will break through this ceiling on August 2 like a clown bursting out of a cake. . . hmmm, cake.

3. Everyone has a plan for dealing with this.

● the Do Nothing Plan: Do nothing. Kind of self-explanatory. Of course, this means that 80 million people won’t be getting their checks, and our cost of borrowing will go up, and a bunch of investment stuff with explode like a Congressman in a microwave.

● the Dumb~ss Plan: S&P and Moodys want Congress to eliminate the debt ceiling, which would be like parking your armored car at a thieves convention.

● the Double Dumb~ss Plan: Bill Clinton thinks Obama should just declare himself king and say that he has the power to raise the debt ceiling. Clinton also thinks yer kinda sexy.

● The Tom Coburn Plan: Tom Coburn is ready to do some serious cutting. He proposes $9 trillion in cuts over the next 10 years. This would include a trillion from the Pentagon budget, modernizing military health care, significant reforms of Social Security and Medicare, and the elimination of “corporate welfare” through the elimination of subsidies (e.g. ethanol and targeted tax credits) and many deductions. Grover Norquist (which I swear is the name of a Muppet) says: “it is now clear Sen. Coburn’s plan all along was a trillion dollar tax hike. . . [I have you now Coburn, there's no escaping the Grovernator]!”

● The Gang of Six: This group of reprobates are proposing a $3.4 trillion plan that isn't a real plan. It goes a little something like this.

(1) Find $500 billion in cuts now, mainly by reducing the cost of living increase for Social Security. Impose spending caps until 2015, freeze congressional pay and sell unused federal property. . . like Hawaii.

(2) Within 6 months come up with a plan to find more cuts.

They also suggest guidelines like simplifying the tax code by making three brackets (8-12%, 14-22%, 23-29%), setting the corporate tax at 23-29%, and eliminating the Alternative Minimum Tax (which sucks when it hits you. . . “what do you mean my deductions don’t count?! Alternative what?! Did I step into an alternative reality? If that’s true, then where’s my beard Mr. IRS ‘you owe us’ letter?! Where's my beard?!”).

Beyond that, this is just a plan to work on things... kind of like the Underwear Gnomes on South Park.

● the Tea Party Plan: The House just passed a really cool bill (Cut, Cap and Balance Bill) that does a lot of cutting ($5.8 trillion), would require a balanced budget amendment, and doesn’t raise taxes and it’s really cool and I like it a lot and stuff. . . but it’s D.O.A. at the Senate. Move along, nothing to see here.

● the McConnell Plan: Finally, we come to the McConnell Plan.

When I first heard the McConnell Plan, it sounded downright stooopid. As filtered by the press, McConnell was proposing to give Obama the power to raise the debt ceiling. If Congress wanted to stop him, they would need to pass a law stopping him. Since he could veto it, that meant Congress needed 2/3 support to stop him. . . and that ain't gonna happen.

The purpose of this plan seemed to be to let Obama get his debt ceiling increase, while claiming the Republicans tried to stop him, without actually stopping him. I was not pleased. And seeing Nancy Pelosi clapping her hands over this like one of those monkey toys with the symbols made me even more suspicious. If Pelosi likes it, it can’t be good.

Then I heard more details of exactly what McConnell is proposing. Apparently, to raise the debt ceiling, Obama also would need to recommend $1 of spending cuts for every dollar he wants to raise the debt ceiling. Now that is a horse of a different shade of green. That would mean for Obama to get a $1 trillion extension to the national credit line, he would need to propose $1 trillion in cuts. Wow! Me likely!

Not only would this mean Obama would be the one responsible for raising the debt limit (as he could avoid it by offering cuts instead), but he would also be forced to make cuts. Cuts which his peeps will absolutely hate! What’s more, the Republicans can vote against those cuts (claiming they would have made different cuts) because Obama has more than enough Democrats to let his veto survive!

Now, there are some caveats here. First, I think the Republicans need to send a series of budget cuts to him and have him veto those first -- as a showing to the public that they tried to get cuts. Secondly, they need to be very careful in how they write this. It better not include any chance of him raising taxes or this will go over like a lead balloon with the public (although... it might be a good way to let him do some of the dirty work of tax simplification to keep the Grover Norquists off Republican backs).

At this point, we don’t know exactly what the deal entails, but this may actually be a smart plan. Hence Obama and the monkey with the clap (Pelosi) are now rooting for the gang of six proposal instead (Reid doesn’t like it).

Stay tuned.

There... that wasn’t so bad was it? If you have any complaints, please leave them below.