Outside editorial: A necessary ultimatum on debt

The following editorial first appeared in the Chicago Tribune:

Let’s call it Boehner’s Law: When you issue an ultimatum, make sure that whatever you’re threatening really is ... the ultimate. In that spirit, House Speaker John Boehner, R-Ohio, says Republicans need to see trillions of dollars in spending cuts in exchange for letting the Obama administration raise the nation’s debt limit.

Hair-on-fire Democrats react that it’s perilous to delay upping the debt limit, now just shy of $14.3 trillion. Global credit markets will lose faith in U.S. securities, the Dems warn, if Washington even tiptoes close to a nix on raising the debt limit and the world-shattering default they say would follow. Only two fatal flaws in their Chicken Little routine. First, the markets have been pushing interest rates down, not up, which means yawning investors increasingly expect a deal to raise the debt ceiling. And, second, everyone in Washington plainly wants that deal to occur.

So the real question is: That deal will come at what cost to Democrats who resist budget cuts. How much federal spending, that is, will the president — who doesn’t want any whiff of default on his watch — be willing to surrender? Thus Boehner’s confrontational remarks Monday night to the Economic Club of New York:

“It’s true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process. ... Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase. And the cuts should be greater than the accompanying increase in debt authority the president is given.”

Of course it’s perilous for Boehner to threaten to freeze the debt ceiling. That’s why he now has the attention of the White House and congressional Democrats. They have driven spending to extraordinary heights. Now Boehner’s ultimatum threatens ... the ultimate.

He is correct to assert, though, that the even greater risk is to let federal spending continue to soar. The danger there isn’t just a noisy default skirmish that the world already sees as Washington’s political spat-du-jour. No, the danger from continued free-spending is an America so deep in hock that it truly does look to the world as if it will be unable to pay its debts.

If credit markets ever flip to that pessimistic view, the Chinese and other big holders of U.S. paper really will race for the exits. What would be the resulting crisis? Look to Europe. Our guess is that finance ministers in places like Greece, Ireland, Portugal and Spain would erect statues of this guy Boehner if they magically could turn back the clock and embrace his brand of fiscal austerity. Instead they’re struggling to simultaneously stabilize their shaky economies, reduce their runaway debts, and persuade global investors to trust that they’ll be able to make their interest payments in coming years. Whew.

Also on Monday, Sen. Jon Kyl of Arizona put a number to Boehner’s theme: Kyl, a GOP budget negotiator, said Republicans want $6 trillion in spending reductions over the next 10 years in return for lifting the debt ceiling. That’s roughly what the plan offered by Rep. Paul Ryan, R-Wis., would achieve. It’s considerably more ambitious than the $4 trillion over 12 years that Obama has offered.

Just as important as these rival numbers: Republicans want real cuts, as in, here’s how much we won’t spend. Democrats, by contrast, prefer to set debt targets or deficit caps. That approach would allow for a combination of spending cuts and tax increases if Congress doesn’t hold deficits to set goals.

We take the big picture here as hopeful: For once, Democrats and Republicans are seriously debating how, and by how much, this debt-riddled nation needs to reduce spending. A companion debate on cutting unsustainable entitlements also needs to combust, and the sooner the better.

For now, then, we’ll applaud the essential message the House speaker is projecting: Yes, we need to raise the debt ceiling — but no more than we need to slash the indebtedness that already has put this nation’s future prosperity in danger.

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