Speaker of the House John Boehner (R-OH) traveled to Manhattan on Monday to deliver a speech to the Economic Club of New York, during which he said that House Republicans will refuse to raise the nation’s debt ceiling unless government spending is reduced by “trillions.” (At the same time, Boehner admitted that failing to raise the debt ceiling would be “irresponsible.”) Yesterday, 2012 GOP presidential hopeful Tim Pawlenty released a statement praising Boehner’s call and adding that Republicans should demand two favorite Republican budget gimmicks — a balanced budget amendment to the Constution or a cap on federal spending — in return for agreeing to raise the debt ceiling:
While President Obama continues to offer America a false choice between more debt or default, I applaud Speaker Boehner’s comments yesterday. Speaker Boehner is right that we must offset any increase in the debt ceiling with trillions of dollars of real spending cuts. We also need a mechanism, such as a Balanced Budget Amendment or real spending caps to ensure that we never get into this debt mess again. Now is the time to say ‘enough’ and force Washington to make the hard choices to fix our budget mess.
A balanced budget amendment is a cockamamie conservative solution to all that ails the federal budget, but, as former Reagan official Bruce Bartlett has clearly explained, actually implementing one is a “phony” solution that would force the government to make recessions worse by slashing spending during a downturn. That Pawlenty would risk the country’s credit worthiness over such a scheme says something about his priorities.
Pawlenty’s second demand, a cap on spending as a percentage of the overall economy, is an idea that has been gaining steam in Washington recently. But, in addition to forcing the government into debilitating cuts to Medicare and Social Security, a cap in no way ensures, as Pawlenty put it “that we never get into this debt mess again.” After all, there are two sides to the federal ledger: spending and revenue. Capping one without paying attention to the other does not result in an instantly balanced budget. If government spending is consistently capped at 20 percent of GDP, but revenue is consistently lower, the debt goes up!
Failing to raise the debt ceiling would have widespread consequences for both the U.S. and global economy, but Republicans continue to play games, asking for any number of concessions in return for an action that all responsible parties agree is necessary. Pawlenty is merely encouraging this irresponsible behavior by laying out pie-in-the-sky demands that would require, as Paul Krugman noted, “savage cuts in federal programs.”