"As deficit shrinks, debt-ceiling crisis looms" by Steve Benen, Maddow Blog 7/12/2013
Back in April, the federal government ran a surplus of $113 billion. In case anyone's forgotten what a surplus is -- the word largely disappeared from our vocabulary after Bush/Cheney took office in 2001 -- it's the opposite of a deficit. In the month of April, the federal government took in $113 billion more than it spent.
And then in June, it happened again.
The U.S. government posted an unexpectedly large budget surplus in June, a further sign of the rapid improvement in public finances that has taken the heat off Congress to find savings and raise the nation's borrowing limit.
Rising tax revenue, public spending cuts and big payments to the Treasury from government-backed mortgage companies helped the government take in $117 billion more last month than it paid out, the U.S. Treasury said on Thursday.
It was the largest monthly surplus in the United States in over five years, and the largest June surplus in the nation's history.
This does not mean the annual budget deficit has vanished altogether, but it is shrinking at a remarkable pace. For those of us who think the deficit should be larger, not smaller, this is not encouraging news, but given that the public, most news organizations, and a few too many politicians are under the impression that our budget shortfall is spiraling out of control, I'm glad reality occasionally rears its head, even if few take notice.
If the American political process were, say, sane, these developments would matter quite a bit. For the last few years, Republican policymakers who created record-high deficits during the Bush/Cheney era have insisted that deficit reduction must be a top national priority. Indeed, it offered a convenient pretense for the GOP to push the policies they wanted anyway -- fewer public investments and a weaker safety net.
Now that we're running occasional monthly surpluses and the deficit is shrinking at the fastest clip we've seen since World War II, is there any chance Republicans can ease up a bit? Actually, no -- GOP lawmakers are not only pushing more austerity, they're eagerly laying the groundwork for a new debt-ceiling crisis.
CNBC's John Harwood for example, reported yesterday that a senior House Republican told him that the chamber won't resolve the immigration dispute "until after" the debt ceiling is settled.
This follows National Journal's report from earlier this week noting that GOP lawmakers are drawing up a "menu" of options -- they'll threaten to hurt Americans on purpose unless Democrats agree to more spending cuts, and Dems will be given a series of options to make the issue go away temporarily.
Dave Weigel added yesterday:
But after the summer ends, Congress is going to confront another debt limit increase. This increase has been delayed for a few months, because the tax hikes and automatic cuts put into law by previous Congresses have created a smaller deficit. Yet the party's committed, again, to forcing a cuts-for-debt limit deal. How do they avoid looking like the aggressors?
Well, they don't. They're the aggressors. They've said in no uncertain terms that they intend to hold the nation's economy hostage, and will deliberately hurt the country unless their still-vague demands are met. "How do they avoid looking like the aggressors?" I suppose they can start by disavowing their own stated hostage strategy, though they're apparently not interested in this option.
Before we move on, let's also note that the "Boehner Rule" in debt-ceiling negotiations is apparently no more. House Speaker John Boehner (R-Ohio), you'll recall came up with a rule in 2011: for every dollar the debt limit goes up, Democrats have to give an equal, dollar-for-dollar amount of spending cuts. What was the substantive policy rationale for the rule? There wasn't one -- the Speaker, who's never been especially interested in the details of policymaking, simply thought it sounded nice, so he adopted it, called it a "rule," and demanded that literally everyone involved in the process accept it as gospel.
That was in 2011. In 2013, with memories of his own fiasco fading, the Speaker continued to say he backs his made-up Boehner Rule. Why? Again, for no apparent reason other than he thinks it has a pleasant ring to it. (Remember, we're dealing with a post-policy party, and rationales for major policy pronouncements only require the sophistication of a typical first grader's book report.)
But House Republicans quietly realized that this no longer makes any sense, so they're dropping it ("Republicans Cleverly Unveil Latest Hostage-Taking Plan"). How gracious of them.
"Lew: Debt limit increase not up for negotiation" by Ben Goad, The Hill 7/13/2013
The White House is not open to negotiating terms for the next debt ceiling increase, Treasury Secretary Jack Lew says.
During an interview to air Sunday on CNN’s FAREED ZAKARIA GPS, Lew said top administration officials are intent on separating the debt ceiling from the broader debate over fiscal policy this year.
“The president has made very clear that we will not negotiate over whether or not the government should default and we will not get into a negotiation like 2011, over the debt ceiling,” Lew said.
The messy 2011 fight, which paved the way for this year’s sequestration cuts, was too painful to repeat, Lew said. Though an eleventh-hour deal narrowly averted a government shutdown, U.S. markets - and the country’s credit rating – took a hit.
“It caused real damage to the economy. That can never be allowed to happen again,” Lew said. “That's one of the reasons the president said Congress has to just increase the debt limit and we have to put at ease the concerns that the United States could once again find itself in a crisis of its own.”
Congressional Republicans, however, aren’t likely to approve another increase without something in return.
Late last month, Speaker John Boehner (R-Ohio) scoffed at the idea that Congress would raise the debt limit without a conversation about the underlying issues.
“We're spending more money than what we're bringing in. We have to deal with this problem. And if we're going to raise the debt limit, then we've got to do something about what's causing us to spend more money than what we bring in,” Boehner said on June 20. “So guess what? We're going to have a debate, and we're going to have a negotiation."
Treasury is expected to reach the debt ceiling sometime around Halloween.
This time around, Republicans are in no position to demand a ransom in exchange for a vote, Lew argued, saying "they can't go back to where they were in 2011." Since then, the federal government has achieved roughly $4 trillion in deficit reduction through higher taxes and spending cuts over a ten-year period, he said.
Lew said the administration is open to negotiations over the fiscal 2014 budget, which will also be the subject of intense debate this fall.
“When we say we won't negotiate over the debt limit, that we can't debate over whether or not the government of the United States should default for the first time in 237 years, that is a different question than are we open to a reasonable accommodation on budget policy,” he said.
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