Our Day at the Circus

by Harvey Asher, Ph.D. on January 15, 2013

in COLUMNS, ESSAYS, POLITICS

we the peopleI think Harvey Asher’s ongoing analysis of the political landscape is of a particularly important kind in an age vexed by political punditry, where various news organizations have been co-opted as paid spokesmen for the two parties. Harvey was a history professor for 35 years and he seeks to analyze events through the lens of historical context that have lead to current events. His analysis is fair and unbiased, well researched, and based on historical fact so that we might better understand the causes of our political discord. As the philosopher and poet George Santayana said, “Those who cannot remember the past are destined to repeat it.” To buy Harvey’s new book: America, the Owner’s Manual, click here. TS

debtceilingprojection_0No sooner had the fiscal cliff been avoided by the New Year’s Eve last minute compromise than pundits began proclaiming the fight over the debt ceiling would be worse and could even undo the gains Mr. Obama had secured. David Leonhardt of the New York Times worried that Obama’s failure to obtain a larger agreement left the president “to find solutions to other budget deadlines without the leverage that came with the prospect of automatic tax increases.” E.J. Dionne held out some hope, but only if the president “hangs tough as he now says he will” and insists on more revenues in the next round of discussions.

The fact is that despite the alarms, a limited agreement will be reached on the debt ceiling (the present extension is set to expire in March) and other financial deadlines. Interestingly, a statuary limit restricting the public debt only originated in 1917, when Congress passed the Second Liberty Bond Act. It allowed the United States Treasury to issue long-term liberty bonds marketed to the public at large, thereby holding down the interest rates for the government to borrow money to finance WWI expenditures. The cap on Treasury debt was set very high to assure that the government had the flexibility to borrow as much as it needed.

What was meant as a tool for government flexibility in servicing public debt has turned into a political football. Indeed, in 1995, Congressional stalemate resulted in the government shutting down twice. House Speaker Newt Gingrich and his party paid a stiff political price for bringing the business of government to a standstill.

Since then, Congress has more or less routinely raised the debt ceiling, five times since 2001. Why did things change so dramatically in 2008 and on into 2012? Part of the answer is the exponential surge begun under George W. Bush and sustained under Barack Obama, whereby the national debt went from $5.73 trillion to more than $16 trillion. Republicans and Democrats share the blame for the “free ride,” because they approved unfinanced wars coupled with tax reductions and did not control the soaring costs of so-called entitlement programs, especially those related to health care.

The astronomically high debt numbers, including periodic bond downgrades by rating agencies like Moody’s, led members of both parties to agree on the need to reign in costs. The real question is why they couldn’t reach a compromise, however begrudging, to come up with a broad plan to raise revenues and cut taxes while exhibiting their usual flexibility over the debt ceiling?

The answer to the question is twofold:

1. Many Republicans continue to follow Senate Minority Leader Mitch McConnell, who declared the party’s number one goal was the prevention of a second term for Present Obama even before the president officially took office. Any compromise that potentially helped Obama was – and continues to be – off the table.

2. Tea Party and other radicals elected to office in 2008 and 2010 adamantly hold to the position of no new taxes, even as part of a broader package to bring down the debt.

The result of this intransigence has been the paroxysms recently displayed by House Republicans, even among the third of them who voted for the Midnight Madness compromise brokered by the Senate. Regardless of what one thinks of the compromise-–who won and who lost–the Republicans wound up giving ground on a cherished principle. For the first time since 1990, they agreed to tax increases, and they are still livid about being forced to cave.

The bitterness all but assures the new Congress, especially the House, will renew its rancorous, strident, hyperbolic, parochial and partisan onslaught to extract maximum concessions before yielding on the debt ceiling. And, once again, the American public will be forced to listen to endless screeds and recriminations by legislators they regard as selfish and oafish, whose approval ratings remain mired in the teens. But we can be equally confident that when the clowns finally ride off in their tight-fitting car, American practicality will once again claim the center ring, because failure to raise the debt ceiling for a protracted time would be an unmitigated disaster for the American economy and for the party that forced the government to renounce the faith and credit of the United States.

Harvey Asher

After receiving his doctorate from Indiana University, Harvey Asher taught a variety of courses in history and interdisciplinary studies for thirty-five years at Drury University, a liberal arts school in Springfield, Missouri. His articles on themes in Russian history, American history, and the Holocaust have appeared in the Russian Review, Kritika, the Journal of Genocide Research, the Russian Dictionary, the SHARF Newsletter, Federalism in America: An Encyclopedia, and Lessons and Legacies of the Holocaust. He is also the author of The Drury Story Continues, an informal but thorough history of the school.

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