In case you haven’t read it yet, today’s WSJ editorial defends Sen. Mitch McConnell’s complex “last-ditch” plan that would end up raising the debt-ceiling unless two-thirds of Congress thought the president’s proposed cuts weren’t large enough. It concludes:
The entitlement state can’t be reformed by one house of Congress in one year against a determined President and Senate held by the other party. It requires more than one election. The Obama Democrats have staged a spending blowout to 24% of GDP and rising, and now they want to find a way to finance it to make it permanent. Those are the real stakes of 2012.
Even if Mr. Obama gets his debt-limit increase without any spending cuts, he will pay a price for the privilege. He’ll have reinforced his well-earned reputation as a spender with no modern peer. He’ll own the record deficits and fast-rising debt. And he’ll own the U.S. credit-rating downgrade to AA if Standard & Poor’s so decides.
We’d far prefer a bipartisan deal to cut spending and reform entitlements without a tax increase. But if Mr. Obama won’t go along, there’s no reason Republicans should help him dodge the political consequences by committing debt-limit harakiri.
It’s worth noting that the WSJ didn’t always hold this opinion; the paper used to be more optimistic about these debt-ceiling negiations. From their April 1st editorial:
Also looming is a vote to increase the debt ceiling. This is an opportunity for Republicans to explain to the public that it isn’t enough merely to honor our national debts, as important as that is. It is also crucial to cut up Congress’s credit card so we don’t have to keep raising the debt limit again and again.
This ought to mean reforming the current budget process that Democrats rigged in 1974 to make it easier to raise spending and taxes. The “current services” baseline builds in inflated spending levels each year. The absence of a cap on entitlement spending puts double-digit increases on cruise control. Tax cuts to grow the economy are scored as budget busters. Republicans should insist on a rewrite of the budget process, including annual spending caps enforced by automatic cuts, in return for raising the debt limit.
Even orthodox Keynesian policy doesn’t recommend a tax increase with growth under 2% and the jobless rate at 9.1%. The White House game here can only be an attempt to see if he can use the prospect of a debt-limit financial panic to scare Republicans into voting to raise taxes. We doubt the GOP is this dumb.
Republicans should stick to their plan of insisting on spending cuts in return for a debt-ceiling vote. Every dollar in lower spending means one less dollar taken from the private economy in borrowing or future tax increases. As for revenues, they will increase when the economy shakes its lethargy caused by Mr. Obama’s policies. A tax increase won’t help growth—or revenues.