That Congress is locked in a state of dysfunction is not news. Ideological rigidity is in, compromise is out. Nobody needs reminding of that.
Yet House Speaker John Boehner, who has the unenviable job of herding a vitriolic, tea party fueled caucus, has chosen to put congressional dysfunction front and center, once again raising the specter of a U.S. Treasury default. A replay of last summer’s debt-ceiling debate may be coming soon, and it’s the last thing the nation needs.
Perhaps the speaker intended it as election year symbolism. But his recent insistence that Congress not wait until early next year to deal with a needed increase in the U.S. credit limit, and that it be accompanied by spending cuts but not tax increases, could have very real, and very negative, consequences.
The economic recovery remains fragile. Europe teeters on the financial brink. Markets are already jittery — the Dow Jones Industrial Average has lost 5 percent of its value this month, giving up nearly all of its gains for the year.
Let’s be clear: The U.S. debt and deficit problem is the central challenge facing the nation. It needs to be debated, thoroughly. The debt ceiling, however, is not where it should play out. It would be like testing matches in a fireworks factory.
Last summer, the histrionics over raising the debt ceiling got so intense that for the first time in history, the United States’ credit rating fell. It’s one thing for Congress to be unable to compromise, it’s another to wear it like a crown to score political points.
Before last year’s pitched battle, Boehner and President Obama appeared to come close to a grand bargain that would have combined spending cuts, modest tax increases and some entitlement reform to get the deficit down to a manageable level. The president’s bipartisan deficit reduction panel had recommended a similar menu of ideas.
But the extreme wings of both parties rebelled, revealing a Washington that was unwilling to apply practical solutions to a solvable problem. Markets, along with a leading credit rating agency, reacted predictably. Faith in U.S. debt, long the global standard for safety, became less than rock solid.
Another hit could raise interest rates for businesses and consumers, threatening the recovery and making the deficit worse.
Real solutions to the deficit problem won’t come before the election, something else everyone already knows. Another fight over the debt ceiling this year has zero upside. The downside could be huge.