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Latest debt limit plan merely kicks can down the road

House Republicans have tentatively agreed on a plan to extend the debt limit for about six weeks while keeping the government partially shuttered. But the deal would only briefly put off what has become an ugly and dangerous confrontation over the nation’s ability to pay its bills, Gleckman writes.

By Guest blogger / October 10, 2013

A man with an umbrella walks as it rains at the US Capitol in Washington Thursday. The latest debt limit plan will do little to address long-term fiscal concerns, Gleckman writes.

Jonathan Ernst/Reuters

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Washington may be about to do what it does best–kick the can down the road.

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Howard Gleckman is a resident fellow at The Urban-Brookings Tax Policy Center, the author of Caring for Our Parents, and former senior correspondent in the Washington bureau of Business Week. (http://taxvox.taxpolicycenter.org)

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House Republicans have tentatively agreed on a plan to extend the debt limit for about six weeks while keeping the government partially shuttered. Their idea: use the shutdown as a stick to get Democrats to negotiate over “pressing problems,” including more reductions in federal spending.

The White House hints that it might agree to a short-term debt limit extension. Like many ideas that win bipartisan support these days (remember the sequester), this one is terrible.

We’ll know more after the GOP leadership meets with President Obama later this afternoon. But the deal would briefly put off what has become an ugly and dangerous confrontation over the nation’s ability to pay its bills. That buys time—something pols love to do—but accomplishes nothing else. Somewhere along the line, Democrats will insist on also reopening the government for the same six weeks and the GOP may, in the end, go along. 

But then what? The still-incomplete House GOP idea is accompanied by vague talk about Democrats and Republicans reopening bigger fiscal negotiations. Maybe this would happen through some sort of super committee or by resuming the long-stalled budget process.

Don’t get me wrong. Talking policy is good. But these discussions will accomplish nothing and leave us in pretty much the same place six weeks from now as we are today. Except that we’ll have had six more weeks of uncertainty.

The chances of Congress and the president reaching a grand bargain, or even a mini-bargain, in the next 42 days are vanishingly small. Talks will founder on the same issues that have prevented serious budget progress for years. Democrats will not agree to any changes in Social Security or Medicare unless Republicans agree to new tax revenues. And Republicans won’t discuss tax hikes.

For all the hand-wringing and threats of the past month, nothing has changed that dynamic.

There is a more productive idea floating around the Senate. This one, first suggested by Republican Susan Collins of Maine, has reportedly attracted the interest of Senate Democratic leader Harry Reid (D-NV). It is exceedingly modest but may make sense in the current gridlocked environment.

Under this plan, both sides would agree to a debt limit extension through December, 2014 and to reopen the government through next September. In return, Democrats would agree to fund the government at sequester levels while giving federal agencies flexibility to make sensible cuts. 

This will do little to address long-term fiscal concerns. It will continue to squeeze discretionary spending, which is not the problem. It will do nothing to move the ball on tax reform. But it allows most everyone on Capitol Hill and at the White House to declare victory. Most Republicans will say they got more spending cuts. Most Democrats will say they protected Social Security. Obama will say he averted a real fiscal crisis.

Hardliners on both sides will still hate it. Tea partiers will complain that it makes no new spending cuts beyond those already agreed to and does nothing to roll back the Affordable Care Act. Liberals will complain that it locks in the sequester-level spending reductions. Pro-defense lawmakers will grumble that Pentagon spending levels are dangerously low.

But this plan–or something very much like it– is where lawmakers will eventually end up. The question is: Will they get there soon or only after more tiresome chapters of Perils of Pauline?

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on taxvox.taxpolicycenter.org.

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