Earlier this afternoon, Georgetown student body President Mike Meaney appeared on ABC’s Top Line to discuss Do We Have a Deal Yet, an initiative spearheaded by Georgetown students that has been co-signed by over 120 student body Presidents across the country.
In a public letter addressed to the President, Harry Reid, Mitch McConnell, John Boehner, and Nancy Pelosi, the signatories “urge [the leadership] to work together to find a solution to this problem in an aggressive yet balanced way. We support the framework laid out by the bipartisan fiscal commission and the efforts of the bipartisan group of leaders in the Senate as a realistic basis from which to work. Shared sacrifice and common purpose must underpin whatever compromise is reached.”
On ABC, Meaney explained that students would be participating in a conference call featuring President Obama tomorrow, indicating that the group has achieved a fair amount of critical momentum.
It’s great to see student’s actively seeking out a reasonable solution to the debt ceiling crisis, but I’m very reluctant to support the group’s conciliatory approach. The events of the past few weeks have been overwhelmingly distressing, and the final outcome of the impending showdown will in no way resemble Bowels-Simpson or the Gang of 6. Proposals well to the right of these approaches have been rejected out of hand by House Republicans.
Republican debt ceiling nihilism has been consistently (and ineffectively) met with a conciliatory approach by Democrats. The approach of Republicans, demanding spending cuts without any revenue increases and no room for negotiation, has allowed the GOP to talk itself into a corner and bring the country to the brink of catastrophe. For a basic summary of recent events here’s Ezra Klein:
Originally, the Democratic position was that we should simply raise the debt ceiling. Republicans said “no.” There would have to be a deal that reduced the deficit by at least $2.4 trillion — which is the size of the debt ceiling increase needed to get us into 2013.
Then the Democratic position was that we should raise the debt ceiling through a deal that reduced the deficit by about $2.4 trillion, with $2 trillion of that coming from spending cuts and $400 billion coming from taxes. Republicans said “no.” There would have to be a deal that disavowed taxes.
Then the Democratic position was that we should raise the debt ceiling through a deal brokered by Barack Obama that reduced the deficit by $4 trillion, with about $3 trillion of that coming from spending cuts and about $1 trillion coming from tax increases. Republicans said “no.” There would have to be a deal that disavowed taxes, and it would have to be cut between the congressional leadership of the two parties. Obama couldn’t have this as a win.
Now reports have surfaced that Harry Reid is contemplating a 2.7 trillion dollar deal with no revenue increases that will almost certainly be rejected by House Republicans due to the nature of the proposed savings.
While Do We Have a Deal Yet is an improvement on the prevailing status quo, it would be nice to see students move past platitudes and engage with what is actually happening in Washington. The Washington Post has reported that Pell grants, which provide tuition assistance to low income students, may suffer from substantial cuts. Surely students could stand up and defend these relatively small contributions by the federal government for those who are least equipped to pay for rising college tuition. This is just one relatively small program that is threatened by the GOP’s debt ceiling absolutism, all at a time when the nation faces a jobs crisis and 9% unemployment. Call me the last Keynesian in Washington, but the true crisis in America today is a jobs crisis and robust growth will only resume when we acknowledge this fact.
By urging compromise without acknowledging the irresponsible mentality that led to the looming crisis we now face, student leaders inadvertently support the one-sided approach to this problem. Historically, increases in the debt ceiling served as a cosmetic way for the opposition party to highlight the fiscal impropriety of the governing administration. By taking this fight to a frightening extreme and refusing to compromise, House Republicans hold the country’s future hostage unless their agenda—that is far out of step with the public’s priorities—is implemented. To avoid highlighting this fact misrepresents the cause of the crisis, which could prove to be the most costly unforced error in the nation’s history.
Ultimately, House Republicans seek to levy the cruelest tax increase on the American people that would come in the form of higher interest rates. If this crisis persists past the drop dead point, interest rates to service US debt will rise, pushing up the benchmark rate that serves as the foundation for lending in the US economy. Pushing up this rate automatically results in a tax hike and a pointless drag on growth as US debt is more expensive to service and lending activity is more costly.
I’m not optimistic about the final events that will lead to an increase in the debt ceiling. However, the present course is unsustainable, and a deal will eventually be worked out. We court danger in the future by refusing to acknowledge that certain policies will only prolong the Great Recession and by failing to assign blame for the highly unfortunately gridlock here in Washington.