GOP’s adult moment

The high-stakes game of political chicken surrounding a necessary increase in the federal debt ceiling this spring will be an interesting test of which side — President Obama or the Tea Party freshman class — really has cojones.

The issue is petty straightforward. If Congress fails to raise the debt ceiling, the country will be in temporary default on its debt, little old ladies won’t get their monthly Social Security checks, tax refunds probably can’t be sent out, and much of the government would be shut down.

{mosads}The Republicans tried a variation of this in 1995 when they blocked passage of a continuing resolution (CR) to keep the government funded past the start of the fiscal year. Speaker Newt Gingrich ultimately had to back down when it became clear that the public was siding with President Bill Clinton on the showdown.

Failing to raise the debt limit is actually much more serious than the failure to pass a CR. It has international consequences and could put us on the par with Greece. Failing to pass a CR means that the government is out of money to pay its bills on a current basis. Failing to raise the debt ceiling means that the government cannot borrow money from either its own citizens or from foreign lenders to finance its operations and its past obligations, including service on its debt. No new bonds or notes could be issued.

Even on a temporary basis, this would embarrass our country internationally and would put into question our ability to borrow money in the future. It is certainly possible that foreign lenders would require a higher interest rate on U.S. government bonds and notes in the future even if Congress relented and ultimately raised the debt ceiling. We could lose our high credit rating, which virtually assures higher interest charges going forward.

Raising the debt ceiling is not a trivial matter.

The issue becomes, do we want to take the risk involved in refusing to authorize our government to enter the credit markets to pay for obligations already incurred? Do we want to be known around the world as a dead-beat nation?

There are risks here for both the president and Congress. If the debt ceiling is not raised, the president will be seen as a less powerful leader when dealing with the rest of the world. And Congress — not the president — will ultimately be blamed by the public since it is clear that a vote of Congress is required. The president can’t raise the debt ceiling by executive order. He needs an affirmative vote from Congress.

Republicans in Congress will try to attach future budget cuts to any measure raising the debt ceiling to pay past bills. It is possible that the president may agree to some cuts if they aren’t too severe; however, this would establish a dangerous precedent for him and for future presidents (Democratic or Republican). Will this and future presidents want to be held hostage by the Congress every time an increase in the debt ceiling is needed?

The severity of possible companion budget cuts will certainly be the question. What happens if Congress decides to cut education funding as a condition to passing a debt ceiling increase? What happens if Congress demands reductions in healthcare spending for senior citizens as a condition?

President Obama would then have to make a tough decision. Is he willing to let the country default on its debt (even for a short period of time)? Republicans would have an equally tough call — how long can they fade heat from senior citizens when Social Security checks don’t go out?

This is a game of chicken that only hurts the country if neither side blinks.

Having served with our new Speaker John Boehner for a number of years, my guess is that he ultimately won’t opt to take the country over the cliff. How he resolves this with his new Tea Party freshmen will be interesting for everyone to watch. He will need to get something from the Obama administration in return. The bargaining back and forth will be worth the price of admission.

Frost served as a Democratic member of Congress from Texas from 1979 to 2005. He 
is currently a shareholder in the Washington office of the Polsinelli, Shughart law firm.