Thursday, July 14, 2011

Politics as Usual: Playing Chicken with Economic Catastrophe for PR Bonus

Preserving the public perception of the Republican Party and its candidates seems to be the paramount objective of Senate Minority Leader Mitch McConnell’s latest policy proposal.

In case you have been vacationing on an exotic island for the past month (if so - lucky you), the United States has hit its self-imposed debt ceiling – the $14.3 trillion limit on government borrowing. Treasury Secretary Timothy Geithner has set August 2, 2011, as the deadline for congress to forge a deal to raise this limit and allow the government to spend more money. If congress does not raise the debt limit the U.S. will default on its loans, causing massive trauma to markets across the world and to the value of the U.S. dollar. A government default would - best case scenario - push the economy into a double dip recession.

You would think that forging a deal to avoid economic catastrophe would be a piece of cake. Then you realize the sad, divisive state that the American political system is in.

Talks between the Obama administration and congressional leaders to raise the debt ceiling have been akin to a roller coaster. Republicans came out swinging, saying they would only vote to raise the debt ceiling if legislation came paired with slashes to government spending (with focus on entitlements). Democrats first rejected any cuts to entitlements but then regrouped around Obama to offer Republicans a “grand compromise,” which paired entitlement cuts with tax raises - a deal that would save the government $4 trillion.

It was looking good for a while, democrats and republicans seemed to be climbing towards an agreement. The grand compromise included major selling points for both parties and avoiding a looming economic catastrophe.

But of course, the deal was too good to be true. Last weekend Republican leadership formally rejected the compromise and left the talks at a stalemate with only weeks until the government default. It was then that Senator McConnell threw a corkscrew into the roller coaster’s path. On Tuesday, July 12, McConnell proposed a last resort bill in which Congress would cede its power to raise the debt ceiling to the White House. This odd proposal would allow Obama to raise the debt limit in increments for the remainder of his first term. Congress could only block these elevations with a supermajority two-thirds vote.

Why would Republican leadership even propose a bill like this? Easy: to paint Obama as fiscally irresponsible for not tackling the deficit while being able to vote against a debt ceiling raise without jeopardizing the economy. It’s a purely political move to thwart Obama’s reelection attempts without creating any progress at all on managing the nation’s debt, progress which Obama and most reasonable politicians are advocating.

As more proof of McConnell’s dubious PR move, I offer his own words:

"If we go into default he will say Republicans are making the economy worse," said McConnell on Wednesday morning. "And all of a sudden we have co-ownership of a bad economy. That is a very bad position going into an election. My first choice was to do something important for the country. But my second obligation is to my party and my conference to prevent them from being sucked into a horrible position politically that would allow the president, probably, to get reelected because we didn't handle this difficult situation correctly."

In short: Republicans look bad if they cause the economy to crash. Democrats look good if Obama can forge a bipartisan compromise that will secure the economy and attack the deficit. Both of these are unacceptable end results for McConnell.

It is irresponsible to let public perception impede national progress. In fact, it’s a bad public relations move as well. Now Democrats can label McConnell’s proposal as preserving politics as usual, a phrase that tastes sour in the mouths of the American voters.

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