New York Times: Delusional on the Debt Ceiling

In a recent New York Times op-ed, Bill Keller laid out a strategy for how President Obama can regain momentum when it comes to the fiscal cliff America faces on January 1, 2013. According to Keller:

President Obama should declare now that unless Congressional leaders come up with a serious bargain on fiscal reform, something very like Simpson-Bowles, he will allow all of the Bush tax breaks to lapse and all of the draconian cuts to take effect.

Assuming no deal is consummated in the poisonous pre-election climate, he should insist on a lame-duck session after Election Day. He should invite Congressional leaders to Camp David, put Simpson-Bowles on the table, and negotiate - not a lot, since the plan already includes considerable compromise, but enough to show good will. If no deal emerges, all the Democrats have to do is take a page from the Republican playbook: dig in their heels and do nothing.

Unfortunately for Keller, the thesis of his column is based upon wishful thinking, and it has other serious problems besides.  Below are six moderate to significant issues any reader of this column should be aware of:

1. For Keller to think that President Obama will aim for a deficit reduction plan close to what the chairs of the Deficit Commission outlined is to ignore recent history.  The president has ignored at least four so-called "grand bargain" plans:

• The president-created Simpson-Bowles Deficit Commission's chairs proposed some solid (if, again, decidedly centrist) reforms to federal spending and taxation, which the president promptly ignored.  Simpson and Bowles proposed these reforms in late 2010.
• The Gang of Six's plan was decidedly moderate but both reduced spending and had revenue increases.  This plan was introduced before the Budget Control Act was made law last year.
• Speaker Boehner offered to put $800 billion in revenues on the table during last year's debt ceiling debates.
• Senator Coburn's Back in Black plan was introduced in July 2011 and includes tax reform and spending cuts.

2. Keller writes that "blanket repeal of the tax cuts and across-the-board spending reductions are both pretty bad ideas. Taken together they are a kind of grotesque, automated austerity program."  Unless Keller is using a different political lexicon from what every other pundit and politician in the country has on hand, cutting $100 billion in a single year (which Keller says is the case under the Budget Control Act) is hardly austerity.  That amount is, in fact, 2.7% of the 2012 budget -- definitely not grotesque, especially when $400 billion in tax increases is also coming down the pike.

3. Keller's analysis totals the entirety of the tax increases set to start on January 1, 2013, but it says the entirety of those cuts are related to the Bush tax policies. In fact, this "fiscal cliff" includes tax increases via the Alternative Minimum Tax and the end of the payroll tax holiday, among others.  The Bush tax policies are important, and they deal with a large amount of money, but they are not worth $400 billion next year.

4. Additionally, Keller says the cuts coming down the pike are $100 billion next year, which is true insofar as Keller is just looking at the Budget Control Act's spending reductions, but that number ignores the Medicare reimbursement rate cuts set to kick in next year.  Those reductions are worth $30 billion, and they are expected to significantly impact doctor care for seniors who use Medicare.

5. Keller says the Republican Party "periodically threatens to let America default on its debt."  This is misleading for two reasons.  First, hitting the debt ceiling would never have resulted in a default on America's debt, as the Congressional Research Service pointed out in the summary of this paper.  In actuality, hitting the debt ceiling would have dictated either that spending be prioritized or federal revenues increase.  The former, yes, would have meant that some programs would have been cut or eliminated, but a default that is not.  Instead, the federal government would have been forced to automatically balance its budget.  While this process would have been painful, accusations of threatening default are inaccurate.

Additionally, Keller's accusation that the GOP threatens default ignores that barely over a third of House Republicans and well under half of Senate Republicans voted against raising the debt ceiling last year.  This is hardly a majority of the party.  Related, Keller ignores that a large number of Senate Democrats opposed raising the debt ceiling under Bush, as did many House Democrats.  If Keller believes that raising the debt ceiling is a necessity, he should criticize both parties for failing to support raising it at various times.

6. Keller takes a number of subtle digs at Republicans, most importantly by saying -- when it comes to the fiscal cliff -- that "Republicans are more focused on sparing the defense budget, and Democrats are pressing to preserve the middle-class tax cuts."  Never mind that Republicans have proclaimed again and again their wish to preserve tax cuts for all earners, not just those declared "middle-class," apparently.  To quote Speaker Boehner's press secretary, "Speaker Boehner has already announced that the House will act to stop the tax hike on every American taxpayer."

Keller is a liberal who writes for the Times, so his opinion about Republicans, tax increases, etc. are bound to be different from conservatives'.  However, that does not excuse him from getting some basic facts straight, especially when their lack of inclusion significantly impacts the ability of the reader to get the full story.