In Search of Fiscal Responsibility

As we approach another round of debt-ceiling debates–conveniently timed to land after November–Speaker John Boehner made his position crystal clear at Peter G. Peterson’s Fiscal Summit.  As the Speaker proclaimed:

Yes, allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without taking dramatic steps to reduce spending and reform the budget process. We shouldn’t dread the debt limit. We should welcome it. It’s an action-forcing event in a town that has become infamous for inaction…. When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt limit increase. This is the only avenue I see right now to force the elected leadership of this country to solve our structural fiscal imbalance.

 As one might guess, such talk drew the fire of Democrats. As the Christian Science Monitor reports, Senate Majority Leader Harry Reid issued a clear judgment on Boehner’s position:

“American people have had enough of this brinkmanship,” Mr. Reid told reporters Tuesday afternoon. “It’s pretty clear to me that the tea party direction to the Republican Party is driving them over the cliff.”

It looks as if the nation is ready to witness another principled battle over the issue of fiscal responsibility, each side driven by a commitment to responsible government, albeit a commitment that is shaped by deep philosophical differences regarding the role of the state.

At the same time, we can question the depth of these convictions.

The Speaker, for example, has been working to secure $150 million in federal transfers to a uranium enrichment plant in Ohio. Since the corporation in question is headquartered in Kentucky, Minority Leader Mitch McConnell has been a strong source of support. And in a fine example of bipartisanship in the name of fiscal responsibility, the Obama administration has been supportive (there is no better was to secure the gratitude of a swing state than to provide transfers). Jonathan Allen provides the details on this story here.

So, it appears that the Speaker’s heroic embrace of fiscal responsibility is only limited by the appeal of ladling corporate welfare to a firm in the fine state of Ohio (insert expression of shocked disbelief here).

As for Senator Reid, one has reason to question his sincerity as well. In a stunning profile in courage, the Democratic majority has failed to propose or pass a budget in three years.  As Scott Wong explains:

The Democratic-led Senate on Wednesday is expected to reject all four GOP budget plans, including the contentious House-passed proposal authored by Rep. Paul Ryan (R-Wisc.). A fifth budget, offered by Republicans and based on President Barack Obama 2013 spending blueprint, also will likely fall short of the 50 votes needed to pass, dealing the White House an embarrassing election-year blow.

But Democratic leaders have defiantly refused to lay out their own vision for how to deal with federal debt and spending, arguing that last summer’s debt-ceiling deal essentially serves as an actual budget. While a budget resolution is non-binding, they say, the Budget Control Act was signed into law.

So while Senator Reid has described the GOP budget as “ridiculous,” “absurd,” and “all just for show,” he has countered with…nothing. If Senator Reid is convinced (as the earlier quote suggests) that the tea party dominated GOP is driving the economy off the cliff, one can only question why he, as leader of the world’s greatest deliberative body (insert snicker here), refuses to take the wheel. The answer is clear: fear of the political repercussions of passing a budget since it would force attention on entitlement reform.

If one is in search of fiscal responsibility, it is clear that it may be a difficult quest at least until capital markets turn on our debt. On one side, we can achieve fiscal balance as long as we eschew tax increases and nod and wink as we work around the so-called earmark ban when politically advantageous. On the other side, we can achieve it as long as we reject entitlement reform and refuse to pass budgets.

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