Articles

How House Republicans Can Seal a Budget Deal

July 20, 2011

President Barack Obama gave quite a performance at last Friday's news conference.

He blamed everyone else for the debt-ceiling crisis—including, of course, his predecessor. He even trashed the Democratic Congress, saying it "has run up the credit card," though it was just doing his bidding the last two years. He's yet to offer his own plan in writing but demanded that Congress needed in "the next 24 to 36 hours to . . . show me a plan . . . for deficit and debt reduction."

The president said "the least attractive option" to resolve the crisis was raising the debt ceiling without "any progress on deficit and debt." Yet a "clean debt-ceiling vote" is precisely what the president and his people had advocated for months, starting last January.

Mr. Obama also claimed that a "clear majority" of Republicans and "80 percent" of voters want "balanced" deficit reduction that includes higher taxes and spending cuts. But a July 10 Gallup Poll, for example, found that fewer than one in three people surveyed support reducing the deficit "equally with spending cuts and tax increases."

Americans do hold complicated opinions about the debt- ceiling controversy. A Washington Post/Pew Research Poll on July 7-10 found that 78% were concerned "that raising the debt ceiling would lead to higher government spending and make the national debt bigger." Yet 74% expressed concern "that not raising the debt ceiling would force the government into default and hurt the nation's economy." Anxiety about hurting the economy has been rising since late May, while concerns about higher spending have been flat.

Public opinion, in short, is up for grabs. If the congressional GOP wants to emerge from these negotiations in good shape, it must stay on offense. House Republicans helped their cause on Tuesday by approving the "Cut, Cap and Balance Act." It was a serious, concrete measure. But it's not enough. There are not enough supportive Democrats to provide a two-thirds majority in both chambers needed to pass a balanced budget amendment as required by "Cut, Cap and Balance." And Senate Majority Leader Harry Reid refuses even to consider the bill.

So now what? Not the sweeping, complex, yet vague "Gang of Six" proposal to cut spending and reform entitlements. Regardless of its merits, it is just too complicated to be written, debated and passed before the Aug. 2 debt-ceiling deadline.

And now press reports indicate the Senate is likely to take up portions of Sen. Mitch McConnell's proposal to allow the president to raise the debt-ceiling subject to congressional approval. To pressure the House, Mr. Reid reportedly might start Senate debate on this measure as soon as Saturday, seeking to pass it by July 29. This would give the House four days to take it or leave it before the Aug. 2 debt-ceiling deadline.

Having gone on offense with "Cut, Cap and Balance," House Republicans must keep moving forward by now proposing a plan B. Led by Vice President Joe Biden, bipartisan discussions over the last few months have produced what White House Press Secretary Jay Carney declared on July 14 are a trillion and a half dollars in cuts that "everybody can agree on." Fine: The House GOP should bundle the majority of those cuts with a debt-ceiling increase smaller than the total of the cuts, making certain the cuts are real and happen sooner rather than later and include easy and popular cuts as well as hard and controversial ones.

The House GOP should then pass the package, likely with Democratic votes. Even if Mr. Reid won't like it, the Senate will have to take it up and pass it. It's inconceivable that Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke would allow Mr. Obama to make good on his threat to veto any deficit reduction that doesn't raise taxes. And yesterday afternoon the White House said Mr. Obama might be willing to sign on to a short-term debt-ceiling increase, though probably not with big spending cuts.

But a robust package of cuts paired with a smaller debt-ceiling increase would buy Republicans months to fight for additional spending cuts and possibly fashion a revenue-neutral tax reform that cleans out and simplifies the code while lowering rates. Next spring, the House GOP can run the spending cut/debt-ceiling play a second time if needed.

House Republicans must not stand still. In a close-fought campaign, whichever side has momentum near the close of the contest tends to win. The same for congressional action. If the GOP hopes to win this important battle to make a down payment on reducing the debt, it needs to build on the momentum of Tuesday's vote by running yet another successful play.

This article originally appeared on WSJ.com on Wednesday, July 20, 2011.

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