The Debt Ceiling Play: My 'CliffsNotes' Version
Our country is in the midst of a clash between two competing moral visions. It is not, as we have known in recent history, a traditional fight between Republicans and Democrats. It is a conflict between those who believe in the common good and those who believe individual good is the only good. While a biblical worldview informs Christians that they should be wary of the rich and defend the poor, a competing ideology says that wealth is equivalent to righteousness and God's blessing. It is a morality play in which Washington, D.C. is the stage, politicians are actors, lobbyists are directors, the "debt ceiling" is the conflict, and we are the audience who will pay the cost of the production, whether we enjoyed it or not.
All the actors know that the scene will end with the debt ceiling raised, but now the question is, who will pay the price?
To help you follow the play, here is my "CliffsNotes" version:
1. The United States has the best credit rating in the world, for now. For years the safest investment in the world has been buying U.S. debt. But there is a legal limit on how much we can borrow, and we are about to max out. What's driving our deficits? If you look at the drivers of the budget deficit from 2009 to 2019, you'll see that there is a sharp increase from recovery measures for a few years. But by 2019, more than half of the deficit will be from the wars in Afghanistan and Iraq, and the tax cuts enacted under President Bush and extended under President Obama.
2. What had been a routine procedure is now center stage. Unless you were paying very close attention, you probably didn't hear about the seven times the debt ceiling was raised under President Bush and 17 times under President Reagan. But don't think using the debt ceiling as a partisan tool is anything new. These votes often fall along partisan lines, and President [then Senator] Obama voted against raising the debt ceiling under President Bush.
3. Yes, a default would be disastrous. None of the main characters is even considering it. It could set off a row of economic dominoes that could result in more than 600,000 jobs lost, a lot more debt than we have right now, and at a significantly higher interest rate. President Reagan put it like this: "Congress consistently brings the government to the edge of default before facing its responsibility. This brinksmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar." Not raising the federal debt limit isn't like cutting up your credit card. It's like cutting up your credit card bill. We have a long-term spending problem, but that doesn't mean we can stick our heads in the sand. And the most serious economists, from both parties, say that spending cuts alone cannot solve our deficit problem. Part of the solution has to be increasing revenues. Tax revenues are the lowest they have been in recent history. In 1980, federal revenue was around 19 percent of the GDP; in 1990 it was a little over 18 percent; in 2000 it was over 20 percent; and in 2010 it was just over 14 percent of GDP. Taxes, especially on the wealthy, are relatively low (historically and internationally) and need to be raised.
4. It looks like everyone is about to lose their balance. Some analysts thought a fair approach to facing our debt would be to cut spending $1 for every $1 in revenue raised. The Simpson-Bowles deficit reduction plan the promoted a 3-to-1 ratio of spending cuts to revenue, and then the president offered a plan in the same ballpark. Now it is being reported that Republicans aren't interested in a deal that would give a 5-to-1 spending cuts-to-revenue ratio. It's possible that they will refuse any revenue increases, including closing corporate tax loopholes and subsidies that allow some corporations to pay no taxes at all.
This play would be amusing to watch if it was just on a stage. Instead, these decisions will have real-world consequences. Should we end farm subsidy checks to millionaires in Manhattan, or baby formula rebates for new mothers? Should we end mortgage deductions for second homes, or house the homeless? Should we end a military tank program that no longer has use, or stop providing malaria bed nets for children?
The actors who are center-stage right now would have the audience believe that it is all much more complicated than that. The directors behind the scenes would like us to stay out of the way of the plot and leave it to them. But as a Christian, I can't sit quietly by while the audience of the poor watch silently and suffer.
Jim Wallis is the author of Rediscovering Values: A Guide for Economic and Moral Recovery, and CEO of Sojourners. He blogs at www.godspolitics.com. Follow Jim on Twitter @JimWallis.