The frustrating thing about Washington's ongoing budget negotiations is that any effort to seriously rein in spending is automatically hammered by loud voices accusing people of cruelty to the poor and needy, while efforts to increase spending and debt are seldom attacked as being cruel and irresponsible negligence that is pushing the nation closer to a devastating tipping point of insolvency.
Cruelty isn't really an issue here. The nation's ability to continue functioning as the world's leading economy, however, is.
The nation will run into its debt ceiling this week, with no deal to increase it in sight. Treasury Secretary Tim Geithner is set to impose emergency measures to keep the government from defaulting on its loans for a few months. Earlier in May, he ordered the Treasury to stop issuing securities that help cities and states manage their debt. This week, he was to cash out some debt held by a federal pension fund and to keep other funds from making new investments, giving Washington enough liquidity to stay solvent until August.
That should be enough time for politicians to reach some sort of meaningful agreement on cuts — if they can set aside the demagoguery of special interests.
The debt ceiling, in reality, has little direct association to the discussion. The ceiling would be raised to meet spending obligations already approved by Congress. But the ceiling is a symptom of the nation's biggest problem — it spends far more than it collects, and that practice cannot continue.
The decision by Standard & Poor's a few weeks ago to apply a "negative" outlook on the long-term credit rating of the United States ought to have been a clear signal to both major political parties that serious cuts are called for. The rating agency said there is "material risk" that politicians won't get serious about the nation's mounting debt, and the subsequent squabbling has proven this observation true.
Republicans are trying to use the debt ceiling as leverage to extract meaningful cuts that will include entitlement programs. After initially backing significant reforms to Medicare and Medicaid, but not Social Security, GOP leaders had backed off, but now they have re-embraced those demands. In a meeting between the White House and the Senate Republican caucus last week, Republican Sen. Mitch McConnell of Kentucky urged a bipartisan agreement that would remove the issue as a campaign weapon in 2012.50 comments on this story
Politics being what they are, it seems unlikely that entitlement cuts could be eliminated from next year's campaign, but even any substantive discussion that included competing plans for debt reduction would be a positive sign for global markets, and for the U.S. economy.
Republicans are disingenuous when they refuse to include Social Security in that discussion. Democrats are dangerously misleading the public when they refuse to discuss entitlement cuts at all. The nation's looming fiscal crisis calls for major changes that can't be made without causing some pain.
Americans deserve to see at least some progress toward real solutions in coming months. If the debt ceiling is a catalyst for that, so be it.