An inability to raise the debt ceiling could put the country into a shutdown, the likes of which has never been seen before.
Today marks the fourth day of negotiations, and neither Democrats nor Republicans have gained any ground as the Aug. 2 deadline nears to raise the debt limit.
Despite the emerging culture of congressional standoffs in the face of deadlines, the failure to resolve this issue in time could put the government in a whole new bind, said Tom Shoop, editor-in-chief of Government Executive, in an interview with Federal News Radio.
“This is different than a shutdown due to a lapse in appropriations – that we’ve unfortunately had several mini-experiences with, and people know how it plays out,” Shoop said.”This time, there’s not this whole essential, non-essential employee thing that comes into play. There’s a question of whether government would be able to send paychecks to anybody. It’s really uncharted territory.”
Sen. Mike Lee (R-Utah), however, says that the danger of sloppily resolving this issue could have equally disastrous consequences.
“The fact that there would be significant consequences to our not raising the debt limit does not offset the fact that there would also be very significant consequences to raising the debt limit without attaching any significant conditions to that,” Lee said. “Both are fraught with peril.”
Lee, along with almost two dozen co-sponsors, has introduced the Cut, Cap, and Balance Act of 2011 as a way to rein in spending. He said his bill has more teeth than previously proposed balanced budget amendment proposals.
“We’ve gone out of our way as Republicans in the Senate to make sure it’s not something that can be circumvented easily or lightly,” Lee said. “In addition to requiring Congress to balance its budget each year – that is, saying outlays can’t exceed revenues – this would also say that Congress would have to spend no more than a fixed percent of GDP in a given year.”
If passed, the bill would cut $142 billion from the deficit by reverting the congressional budget down to 2006 spending levels. Lee said he would oppose any proposal that does not cut, cap, and balance the budget.
“We can’t raise the debt limit again until we guarantee the American people that we’re changing [congressional spending] in a fundamental, lasting way,” he said.
Jonathan Allen, a congressional reporter for POLITICO, said the $4 trillion “grand bargain” on tax and entitlement reform previously negotiated between Speaker of the House John Boehner and President Obama won’t gain any traction.
“What you’re hearing is a discussion, particularly among congressional Republicans, about a smaller deal of about $2 to 2.5 trillion, mostly of spending cuts with some revenue increases that wouldn’t be considered tax rate increases,” Allen said.
He said the additional revenue would trickle in from an increase in user fees, such as revenue the TSA earns on every flight.
Allen said the debt ceiling talks are just the latest in a long series of negations.”Over the course of time, the government has often chosen to have a short-term increase in the debt limit, kicking the can down the road a little bit while an agreement is reached,” he said. “The President has said he doesn’t want a short-term approach but that may be what happens – we may see multiple debt ceiling votes.”
Whether Congress solves this crisis in the short- or long-term, Shoop said party politics won’t forestall a resolution coming in time for the deadline.
“After a certain amount of posturing, both sides will say, ‘Well, we can’t have the worst-case scenario unfold here,’ in which we begin to default on our debt, so we’ll have to bite the bullet and take care of it,” said Shoop. “It’s just not going to happen until the last minute, and it’s not entirely clear when the last minute is. The White House keeps saying Aug. 2, and that’s when things really start to get bad.
Ultimately, however, Shoop said the deadline really comes down to how long the government can continue to pay what it owes. “It’s probably a little squishy there as to how long the Treasury can move things around and continue to pay its bills if there was a deal close.”