Failure to raise the U.S. debt ceiling “would be a financial disaster, not only for our country but for the worldwide economy.” Interestingly, that apocalyptic warning about the inescapable requirement for Congress to increase Uncle Sam’s borrowing authority because “the federal government has obligations and we have obligations on our part” wasn’t issued by Obama Treasury Secretary Jacob Lew. Instead, that dire prediction came over two years ago from House Speaker John Boehner, the man who may yet single-handedly trigger the implosion of the American economy. That’s why, as both the New York Times and Washington Post reported Thursday, Speaker Boehner is privately telling the “terrorists” and “hostage-takers” of his House Republican majority that he “will act to raise the federal debt limit even if he has to rely on the votes of House Democrats.”
As it turns out, that’s not all Boehner is willing to acknowledge behind closed doors. Here are John Boehner’s 10 Secrets of the Debt Ceiling:
- "We Have No Immediate Debt Crisis."
- Failure to Raise the Debt Ceiling "Would Be Financial Disaster."
- Boehner Voted for All 7 of Bush's Debt Ceiling Hikes...
- ...Including a "Clean" $800 Billion Debt Ceiling Increase in 2004...
- ...to Pay for Bush's Unfunded Medicare Prescription Drug Benefit.
- Obamacare Reduces the National Debt.
- Republicans Want to Defund Obamacare Spending, But Keep Obamacare Revenue.
- The House Republicans' Ryan Budget Requires Multiple Debt Ceiling Increases.
- S&P Blamed Republicans for Its 2011 U.S. Credit Rating Downgrade.
- Even the GOP's Threat of Default Hurts the U.S. Economy.
(Click a link to jump to the details below the break.)
1. "We Have No Immediate Debt Crisis." This week, Speaker Boehner greeted the latest long-term budget forecast from the Congressional Budget Office (CBO) with predictable partisan warnings of doom. "CBO's latest report," Boehner declared, "serves as yet another warning that Washington must act now to rein in our massive deficits and debt, which are hurting our economy, costing jobs, and jeopardizing the American Dream for our kids and grandkids.
But in March, Boehner is a rare moment of agreement with President Obama, had a different take on America's debt picture, one which has only improved in the intervening six months:
"We have no immediate debt crisis."
Boehner was right in March. After all, as the CBO explained in May, after slashing $2.5 trillion from the next decade's red ink in just the past two years, the U.S. national debt as a percentage of the American economy has stabilized. (The dramatic slowdown in the rate of increase of health care costs could very well brighten the picture further.) May's 2013 deficit projection was now $642 billion, half the level Barack Obama faced on the day he first took the oath of office in 2009. And as the agency revealed this week, for the next decade U.S. national debt will remain at sustainable, stable levels.
2. Failure to Raise the Debt Ceiling "Would Be Financial Disaster." The United States may have no near or medium term debt crisis, but it will have an economic calamity of epic proportions should the America's borrowing authority not be raised as it has 41 times since 1980. But you don't have the take the word of Obama administration officials like Tim Geithner or Jacob Lew, independent analysts like Mark Zandi or journalists including Ezra Klein or Annie Lowrey for it. In early 2011, newly minted House Speaker John Boehner acknowledged as much:
"That would be a financial disaster, not only for our country but for the worldwide economy. Remember, the American people on Election Day said, 'we want to cut spending and we want to create jobs.' And you can't create jobs if you default on the federal debt."
Boehner isn't alone in admitting the GOP is risking American economic suicide. While President Ronald Reagan warned the consequences of default--or even a serious threat of default-- were "are impossible to predict and awesome to contemplate." Senator Lindsey Graham (R-SC) agreed, fretting "Let me tell you what's involved if we don't lift the debt ceiling: financial collapse and calamity throughout the world." House Budget Chairman Paul Ryan agreed, admitting simply, "You can't not raise the debt ceiling."
It's no wonder that in one of his more sober moments just days after the GOP's sweeping victory in the 2010 midterm elections, Speaker-elect Boehner warned:
"We're going to have to deal with it as adults. Whether we like it or not, the federal government has obligations and we have obligations on our part."
3. Boehner Voted for All 7 of Bush's Debt Ceiling Hikes... Paying off Uncle Sam's bills for obligations already made is why both parties routinely boosted the debt ceiling, at least until Boehner's Republicans took over the House in January 2011. Ronald Reagan required 17 debt limit hikes as he tripled the national debt during his eight years in the White House. President Bush needed 7 more, as he nearly doubled the Treasury's red ink from 2001 to 2009. And as it turns out, John Boehner voted for all of them.
Of course, he had to. Dubya's agenda, including the Bush tax cuts of 2001 and 2003, two wars, TARP and the unfunded Medicare prescription drug program, drained (and continues to drain) Uncle Sam's coffers. And as it turns out, Senator Minority Leader Mitch McConnell and House Minority Leader Eric Cantor along with John Boehner voted for all of it. As Utah GOP Senator Orrin Hatch summed up Republican mismanagement during the Bush years:
"It was standard practice not to pay for things."
4. ...Including a "Clean" $800 Billion Debt Ceiling Increase in 2004... In April 2011, Speaker Boehner backed away from his past warnings about the need to avoid a U.S. default by dealing with the debt ceiling as adults. Determined to prove his bona fides to his critics on the hard right, Boehner announced "there's no daylight between the Tea Party and me":
House Speaker John Boehner (R-Ohio), fresh off the budget talks, told donors this weekend that if Obama wants an up or down vote on the debt ceiling he's not going to get it.
Of course, a clean bill is exactly what John Boehner and his colleagues gave Republican President George W. Bush in November 2004. That October, Bush called for his fourth hike in the nation's borrowing authority. His Treasury Secretary John Snow warned, "Given current projections, it is imperative that the Congress take action to increase the debt limit by mid-November," adding that his arsenal of fiscal tools, including tapping money intended for the civil service retirement fund, "will be exhausted."
But as the New York Times explained on November 17, 2004, Bush had to wait for his debt ceiling increase for a very simple reason:
Though an increase in the debt ceiling was never in doubt, Republican leaders in both houses of Congress postponed action on it last month, until after the elections, to deprive Democrats of a chance to accuse them of fiscal irresponsibility.
5. ...to Pay for Bush's Unfunded Medicare Prescription Drug Benefit. The ironies in that 2004 debt limit boost didn't end there. As it turned out, John Boehner along with leaders McConnell and Cantor needed to enable President Bush to borrow more money to pay for a massive new health care program.
In December 2003, they added another budget-buster to Bush's ledger, the Medicare prescription drug benefit. And, as I noted previously, it was a doozy:
Within two months of signing the Medicare Modernization Act (MMA) into law, President Bush quietly informed Congress that the true cost of the program would be $550 billion, not $395 billion, over the next decade. When Medicare actuary Richard Foster sought to present the true price tag to Congress in late 2003, then agency chief Thomas Scully threatened to fire him. By the time the program was launched in 2006, the estimated 10 year price tag for the Medicare prescription plan had increased to $720 billion.
Ultimately, the costs of the initially unpopular Part D program came in closer to the original forecast. As Ezra Klein detailed, that was primarily due to the greater use of generic drugs and the lower rate (77 percent versus 93 percent) of enrollment by America's 43 million Medicare recipients. Regardless, Bush, Boehner and company never raised a single penny of new revenue to fund a program that needlessly enriched private insurers and pharmaceutical firms at Uncle Sam's expense. It all went on America's credit card.
6. Obamacare Reduces the National Debt. On that point, the contrast between Bush's Medicare Part D and Obama's Affordable Care Act could not be greater. Thanks to its mix of new tax revenues and savings from Medicare providers, Obamacare isn't just paid for. Over the next two decades, the ACA will reduce the national debt.
Since 2010, the nonpartisan Congressional Budget Office has repeatedly made that point:
On net, CBO and JCT estimate, repealing the ACA would increase federal budget deficits by $109 billion over the 2013-2022 period. Repealing the coverage provisions discussed in this report would save $1,171 billion over that period, but repealing the rest of the act would increase direct spending and reduce revenues by a total of $1,280 billion.
But for Republicans, that is the truth that dare not speak its name. In January 2011, Eric Cantor attacked the CBO over its inconvenient finding that repealing Obamacare would increase the national debt. "I think what we do know is the health care bill costs over $1 trillion," Cantor complained, "And we know it was full of budget gimmickry. And it spends money we don't have in this country." To which the Washington Post's Klein could only marvel:
"Repealing health-care reform would cost hundreds of billions of dollars -- and Eric Cantor knows it."
Mitt Romney knew it, too. But during the 2012 presidential campaign, he also pretended up was down and white was black:
"Obamacare raises taxes on the American people by approximately $500 billion. Obamacare cuts Medicare -- cuts Medicare by approximately $500 billion. And even with those cuts and tax increases, Obamacare adds trillions to our deficits and to our national debt, and pushes those obligations on to coming generations."
7. Republicans Want to Defund Obamacare Spending, But Keep Obamacare Revenue. Also left unmentioned by Romney then and virtually every Republican since is that the GOP's own budget proposals require all of the revenue raised or saved by the Affordable Care Act they would repeal.
Even if John Boehner and friends were to somehow triumph in their effort to "defund" Obamacare (which they can't really do, since most of its spending is "mandatory" and not "discretionary"), his Republican Party plans to keep all of its revenue. As it turns out, Paul Ryan's House GOP budget--supported by 95 percent of Congressional Republicans three years running--depends on it.
While they don't say so, that's exactly what House and Senate Republicans voted to do when they blessed Paul Ryan's budget in 2011, 2012 and 2013. While repealing Obamacare, slashing Medicaid funding by a third and leaving roughly 38 million more people uninsured, the Ryan budget still runs up trillions in new red ink thanks to its massive tax cut windfall for the wealthy. And yet, the Ryan plan still assumes every single dollar in revenue generated to fund the Affordable Care Act. The $716 billion in savings from Medicare providers, the capital gains and Medicare payroll tax surcharges for households earning over $250,000 a year and more is all still in there. As Ezra Klein explained "Paul Ryan's love-hate relationship with Obamacare" in March:
Every Ryan budget since the passage of Obamacare has assumed the repeal of Obamacare. Kinda. Ryan's version of repeal means getting rid of all the parts that spend money to give people health insurance but keeping the tax increases and the Medicare cuts that pays for that health insurance, as without those policies, it is very, very difficult for Ryan to hit his deficit-reduction targets.
It's also worth noting that the Romney/Ryan 2012 budget plan did exactly the same thing.
8. The House Republicans' Ryan Budget Requires Multiple Debt Ceiling Increases. Since his first successful debt ceiling hostage-taking, the Speaker of the House has been touting what he likes to call the "Boehner Rule." As he has repeatedly demanded, "we're not going to increase the debt limit without cuts and reforms that are greater than the increase in the debt limit."
Now, there are a few problems with Boehner's formula when it comes to the Paul Ryan budget he and his GOP colleagues have repeatedly endorsed. For starters, Ryan's budget not only doesn't balance in 10 years, it actually adds trillions of dollars to the national debt. And that means Speaker Boehner and his successors would have to raise the U.S. debt ceiling repeatedly were the Ryan blueprint to become the law of the land.
During his few flirtations with the truth, Boehner had grudgingly admitted as much. In April 2011, he spoke the truth to a gathering of Tea Party activists in his home state of Ohio. Boehner was asked if he would agree to boosting the debt limit:
According to half a dozen attendees interviewed by Reuters, the most powerful Republican in Washington said "yes."
"We're going to have to raise it again in the future," he added. With the mass retirement of America's Baby Boomers, he explained, it would take 20 years to balance the U.S. budget and 30 years after that to erase the nation's huge fiscal deficit.
And in May 2012, Boehner acknowledged that the Paul Ryan budget almost all Republicans backed would violate "my simple principle of cuts and reforms greater than the debt limit increase":
"Yeah, the big bad House Republican budget that would just gut everything under the sun, according to my friends across the aisle, would still require a $5 trillion increase in the debt ceiling over the next 10 years. Why? Because of the great big demographic bubble -- baby boomers like me, that are going to retire and continue to retire for the next 20-25 years. It's a big challenge."
9. S&P Blamed Republicans for Its 2011 U.S. Credit Rating Downgrade. When Congress and President Obama reached their August 2011 deal that averted the first-ever default by the United States, Speaker Boehner declared, "I got 98 percent of what I wanted."
Among the things John Boehner got was the sequester process, the automatic $1.2 trillion in nondefense discretionary spending over the next decade that the CBO forecast could slash GDP by 0.6 percent and cost the U.S. 750,000 jobs in 2013 alone. (Nevertheless, Boehner has more than once played dumb on that point, declaring, "I don't know whether it's going to hurt the economy or not. I don't think anyone quite understands how the sequester is really going to work.") What Boehner--and all of the United States--also got was a downgrade of its AAA rating from Standard & Poors.
Just days after the August 2011 deal, S&P explained who was responsible for what should rightly be called the "Tea Party Downgrade."
A Standard & Poor's director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default -- a position put forth by some Republicans. Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that "people in the political arena were even talking about a potential default," Mukherji said. "That a country even has such voices, albeit a minority, is something notable," he added. "This kind of rhetoric is not common amongst AAA sovereigns."
10. Even the GOP's Threat of Default Hurts the U.S. Economy. That kind of rhetoric may not be common amongst AAA sovereigns, but it's now everyday talk for the Tea Party dominated House GOP. And even though S&P raised its U.S. outlook earlier this year, the ratings agency delivered a not-too-thinly veiled warning about another round Republican debt ceiling hostage-taking:
Although we expect some political posturing to coincide with raising the government's debt ceiling, which now appears likely to occur near the Sept. 30 fiscal year-end, we assume with our outlook revision that the debate will not result in a sudden unplanned contraction in current spending--which could be disruptive--let alone debt service...
We believe that our current 'AA+' rating already factors in a lesser ability of U.S. elected officials to react swiftly and effectively to public finance pressures over the longer term in comparison with officials of some more highly rated sovereigns and we expect repeated divisive debates over raising the debt ceiling. We expect these debates, however, to conclude without provoking a sharp discontinuous cut in current expenditure or in debt service.
Given the AAA rating the U.S. still enjoys from Moody's and Fitch, S&P's guidance can be taken with a grain of salt. But the America's experience two years ago cannot In the wake of that confrontation, the U.S. lost 1 million jobs and faced $19 billion in higher interest costs. Consumer confidence plummeted and the Dow plunged by 16 percent in three weeks. Presenting his "two charts that show why another debt ceiling fight is a very bad idea," Josh Barro lamented:
Of course, that threat of mutual assured destruction is no longer inconceivable. For John Boehner and the radical Republicans who would destroy America in order to save it from the dreaded Obamacare, that horror is all part of the plan.
(An earlier version of this piece previously appeared at Perrspectives.)