Battle lines are being drawn as the White House and Congress prepare for a big showdown in the spring over a question that troubles a lot of households these days: how to manage the nation's credit card.
This spring the federal debt is expected to reach its ceiling, currently set by Congress at $14.2 trillion, which used to seem like a lot of money.
If the ceiling isn't raised, the government runs out of borrowing authority, international markets lose confidence in our ability to pay our bills and the government might have to shut down departments as it did in a similar 1995 standoff between President Bill Clinton and an earlier Republican majority led by Speaker Newt Gingrich. By the time that crisis ended, Gingrich's approval ratings plummeted and Clinton was on his way to be handily reelected.
Needless to say, incoming Republican Speaker John Boehner of Ohio, a man who unlike Gingrich is better known for deals than demagoguery, would rather not see another standoff like that, but he might not have much choice. The new House freshmen are a feisty, radical bunch.
"I can't wait for the bloodbath in April," chuckled former Sen. Alan Simpson with his characteristic folksy sarcasm. "When debt limit time comes, they're going to look around and say, 'What in the hell do we do now?' "
Simpson was speaking along with Erskine Bowles, his fellow co-chair of President Barack Obama's bipartisan deficit reduction commission, at a Christian Science Monitor breakfast with journalists, including me.
Some people don't like the Wyoming Republican's sarcasm, but I agreed with him. I can't wait for "the bloodbath," either. After interviewing tea party conservatives for the past two years and hearing them gripe about the debt, taxes and deficit spending, I can't wait to see the new crop of Republican lawmakers try to put our money where their mouths are.
According to Simpson, at least one tea party lawmaker greeted the possibility of a government shutdown with, "That's what I was elected to do." Maybe they did. But be careful what you ask for, freshmen.
In his welcoming speech, presumptive Republican Majority Leader Eric Cantor of Virginia sounded remarkably tentative in his desire to educate the public. He mentioned that "two-thirds of Republican voters believe the budget can be balanced without reducing spending on Social Security and Medicare." He did not mention that this belief was fundamentally not true.
But, instead of calling for a confrontation with the big budget hogs, Cantor attacked "earmarks," the money that lawmakers direct to projects in their home states or districts. Unfortunately, despite their usefulness as an applause line at tea party rallies, ending earmarks would not save money. That's because earmarks don't add money to the budget, they simply direct money to particular projects from a pot that Congress already has allocated.
Besides, earmarks amount to a trivial problem, less than 0.5 percent of the more than $3 trillion in this fiscal year's federal budget. That's peanuts compared to what Erskine Bowles called "the big earmarks" in our tax code. He was talking about the many special tax breaks that favor one narrow constituency or another.
Bowles and Simpson recommended across the board spending cuts and reductions of tax breaks, in return for a larger general deduction for everyone. Democrats were more critical of their recommendations than Republicans. Nancy Pelosi, still the Democrats' leader in the House of Representatives, called the idea "simply unacceptable." But Democrats should respond with plans of their own, like the thoughtful package of progressive reforms put together by Rep. Jan Schakowsky of Illinois, a Democratic member of the president's bipartisan commission.
Her plan would reduce the deficit in 2015 by $441 billion without any changes in benefits to Social Security or Medicare. Instead, her blueprint calls for reducing corporate tax breaks, cuts to defense spending and other new revenues, including taxing capital gains as ordinary income. That's attractive because workers and families in the middle and lower income brackets shouldn't have to bear a heavy burden of a financial crisis they didn't cause. But cuts do have to come from somewhere.
Republicans won't like Schakowsky's plan, but Simpson praised her for, at least, engaging in the debate with real numbers, not phony issues like earmarks.
Yes, like Simpson, I can't wait for the "bloodbath" this spring. Sometimes it takes a crisis to get politicians to pay serious attention to our deficit disorder.