House speaker John Boehner decided on Tuesday to fire the first round in the coming battle to deal with the huge tax increases taking place after the first of the year (“Taxmageddon”) by setting the terms for the debt ceiling debate. In a speech at the Peter G. Peterson Foundation’s 2012 Fiscal Summit in Washington Boehner said that any discussion would revolve around his “Boehner principle”—every dollar of additional debt increase for the federal government must be matched by an equal or greater reduction in government spending.
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…
Just so we’re clear, I’m talking about real cuts and reforms—not these tricks and gimmicks that have given Washington a pass on grappling with its spending problem…
Previous Congresses have encountered lesser precipices with lower stakes and made a beeline for the closest lame-duck escape hatch. Let me put your mind at ease. This Congress will not follow that path, not if I have anything to do with it.
Democrats immediately fired back. White House spokesman Jay Carney called Boehner’s remarks as inviting brinkmanship similar to that last summer that resulted in an increase of the debt ceiling along with some future spending cuts. Said Carney:
It can’t possibly be the case that the right prescription for what we need to do right now is to engage in the kind of political brinkmanship that, unfortunately, congressional Republicans engaged in last year.
So we’re not going to do that.
The debt ceiling deal arrived at last summer called for a supercommittee to recommend cuts sufficient to meet Republicans’ demands, but it failed, leaving in place automatic cuts to the Defense Department—called a “sequester”—as well as to some cabinet agencies and Medicare payments to doctors.
Treasury Secretary Timothy Geithner, speaking at the same conference as Boehner, warned him not to use the debt ceiling discussions (which will likely happen after the first of the year when government spending is expected to exceed the current debt ceiling of $16.4 trillion) as a political bargaining chip:
This commitment to meet the obligations of the nation, this commitment to protect the creditworthiness of the country, is a fundamental commitment you can never call into question or violate because it’s the foundation of any market economy.
This [freedom from any spending restraint] allows us to govern, to fight wars, to deal with crises, recessions, to adjust to a changing world.
The issues facing Congress over the next six months—called Taxmageddon by some observers—is staggering: an estimated $5 trillion in tax increases will take place automatically unless Congress acts, including expiration of the two Bush tax cuts, the ending of long-term unemployment benefits as well as the payroll tax “holiday” that ends on December 31st. The issues are complicated by the upcoming election and the politicians’ innate desire to appear to be doing something that won’t offend their constituents, as well as the “lame duck” session following the election.
Boehner did leave the door open, albeit slightly, to tax increases to ease the pain and avoid a potential shutdown of the government. Calling them “stopgap” measures, he said:
If [adhering to my principle] means we have to do a series of stopgap measures, so be it—but that’s not the ideal. Let’s start solving the problem. We can make the bold cuts and reforms necessary to meet this principle, and we must.
It’s clear from Boehner’s remarks that he is hoping to set the tone for the conversation towards which Congress, with each tick of the clock, is heading. He’s also hoping that those 235 members of the House who promised not to raise taxes will stick to their guns and support him as the day of Taxmageddon draws nearer.