Reflections on the debt ceiling debate
Let me see if I have this right. It took months of wrangling, bitter statements and debate, and then the Congress and president came up with a “solution” to the debt ceiling increase and possible default that talks in terms of cuts in spending over 10 years, but makes cuts in the next year’s budget of a tiny fraction of the total, shifts responsibility for the heavy lifting to a commission of 12 people, has default provisions if the commission’s recommendations for major cuts are not adopted, leaves real debt reduction still to be addressed, and puts off further discussion of future debt ceiling increases until after the 2012 election.This is something that our president and legislative leaders supported?From afar, a few observations:The reaction of world stock markets to the deal was not encouraging, with markets seeming to say the compromise package was more politics than economics, and still leaves the United States with over $26 trillion in debt in 10 years, down from the expected $29 trillion, still dramatically too high.Tea Party members expressed concern about the deal since some of the default provisions could result in tax increases and nothing in the compromise addresses the automatic expiration of the “Bush tax cuts” at the end of 2012, which would raise many federal taxes to their 2001 levels, when the country had a balanced budget, and had the cuts not been made, the debt and deficits would have been dramatically smaller.Why this is a concern is a mystery to me, but it was balanced by concerns from liberal Democrats that the cuts would “hurt the poor disproportionately,” even though most of the immediate cuts come from the defense budget. The fact is that entitlement programs still have to be addressed, along with revenue reform and increases.It is interesting that the distance a member was from facing re-election seemed directly proportionate to his or her willingness to vote no, at least in the New Hampshire delegation, probably not a statistically significant sample.Both Congressmen Charlie Bass and Frank Guinta, Republicans with different philosophical orientations, up for re-election in 2012, voted for the bill. Sen. Jeanne Shaheen, safe until 2014, voted for the bill, and Sen. Kelly Ayotte, not required to face the voters until 2014, voted against it.The committee of 12 was praised as a reasonable way to study the problem in depth and criticized as a way to avoid individual votes on proposed cuts and an unconstitutional abdication of the responsibility of each house of Congress to act. The Base Closure Commission, which made recommendations on the closure of military bases, is precedent for this type of mechanism when a politically volatile subject is being considered. That system seemed to work, but the deficit and debt is a much larger topic than base closures, and if the motivation for the committee was to avoid individual responsibility of members to vote on individual proposals, it is a sad commentary on the fortitude of members of Congress.There have been many committees and commissions and organizations in the last 30 years or so that have studied the debt and deficit issue, most if not all of them ignored, so there is a lot of research available to help the committee do its work. The question is whether the willingness to act has changed – Congress and a series of presidents have seemed willing to keep spending, but not to have the revenue to pay for the spending. The voters have to require that mindset be changed.All of this occurred as July turned into August and the summer was half over – more than half for those with schoolchildren or young adults returning to college in the fall, facing decreased student aid and increased costs. Nevertheless, the weather was pleasant, the flowers grew, the corn was high in the fields, and the natural optimism of Americans, especially in New Hampshire in the summer, was evident. Let us all hope that natural optimism continues, but that we not forget how the politicians acted as a whole these last weeks. If we forget and do not hold our representatives responsible to find a long-term solution to debt and deficit, it will be at our peril – and our grandchildren’s.Brad Cook, a shareholder in the Manchester law firm of Sheehan Phinney Bass + Green, heads its government relations and estate planning groups. He also serves as secretary of the Business and Industry Association of New Hampshire.