The Republicans held the country hostage over the extension of the Bush tax cuts at the end of 2010. The deal: extend them for the wealthy or no extension for the middle class and for unemployment benefits. Now they’re ready to hold the country hostage again over the need to raise the debt ceiling. Paul Krugman outlines the catastrophe that would take place if the ceiling isn’t raised: the government couldn’t pay a third of its bills, consumer spending would crash, businesses would slash payrolls and cancel investments, markets here and abroad would panic. Yet House Republicans are threatening not to raise the ceiling unless the president agrees to large spending cuts and rules out any tax increases. Krugman wonders “what, if anything, will get the president to say no”–and he advises Obama to finally call the Republicans’ bluff, lest he cede all his power. From “America Held Hostage”:
...this is a hostage situation. If the president and his allies operate on the principle that failure to raise the debt ceiling is an unthinkable outcome, to be avoided at all cost, then they have ceded all power to those willing to bring that outcome about. In effect, they will have ripped up the Constitution and given control over America’s government to a party that only controls one house of Congress, but claims to be willing to bring down the economy unless it gets what it wants.
Now, there are good reasons to believe that the G.O.P. isn’t nearly as willing to burn the house down as it claims. Business interests have made it clear that they’re horrified at the prospect of hitting the debt ceiling. Even the virulently anti-Obama U.S. Chamber of Commerce has urged Congress to raise the ceiling “as expeditiously as possible.” And a confrontation over spending would only highlight the fact that Republicans won big last year largely by promising to protect Medicare, then promptly voted to dismantle the program.
But the president can’t call the extortionists’ bluff unless he’s willing to confront them, and accept the associated risks.
According to Harry Reid, the Senate majority leader, Mr. Obama has told Democrats not to draw any “line in the sand” in debt negotiations. Well, count me among those who find this strategy completely baffling. At some point — and sooner rather than later — the president has to draw a line. Otherwise, he might as well move out of the White House, and hand the keys over to the Tea Party.