So now it's official--Treasury Secretary Paulson says that the federal government will hit the current debt ceiling of $8.965 trillion in early October. And he says Congress needs to act to raise the debt limit for the fifth time during Bush's presidency. In September. Right around the report from General Petraeus that will give Bush his marching orders on Iraq, and Congress will finally deal with the war funding issues, and right in the middle of the debates on the appropriation bills.
The Herald Tribune notes that
Economists doubt Congress will refuse to raise the limit. A federal default is considered unimaginable because it would rattle bond markets, force interest rates higher and shake the economy. (snip)
In the past, Treasury has resorted to numerous accounting maneuvers to pay its bills while the government waited for Congress to expand its borrowing authority. Paulson argued against being forced to use such measures, saying they "would create unnecessary uncertainty for the financial markets and result in costs to the government." Such actions, he said. "should be reserved only for extraordinary circumstances, and should be avoided."
But these are extraordinary times. To many of us, we are already in a constitutional crisis, with an incompetent and mendacious Attorney General presiding over an overtly political Justice Demartment that serves the interests of the GOP and its patrons rather than the country as a whole; with a President and Vice President who consider themselves a unitary monarch and thumb their collective nose at the Congress; and a Congress that has so far mostly been afraid to see much less do its constitutional duty in this crisis.
So maybe the debt limit will become a factor in the war funding battle and the fight over the appropriations bills, at least eight of which (out of 12) Bush has already threatened to veto. Clinton won the showdown with Newt Gingrich in 1995 because the public supported the programs that he wanted funded, and viewed Gingrich, who refused to pass a funding bill after Clinton's veto, thereby shutting down the government, as a Grinch. Now it is Bush who is unpopular. But does the public still support the kind of spending that the Dems champion? Part of Bush's strategy has been to make government look so incompetent that it undermines public support for government programs, traditionally part of the Dems' appeal. But it is likely the public still supports funding security measures at the ports, higher education, children's health and the myriad of other programs included in the spending bills.
Every confrontation actually weakens the Bush/Cheney regime, because it fractures the GOP coalition; this one is no exception. The Dems need to play their full funding hand and play it well, and that includes not rolling over prematurely on raising the debt limit. There are a great many things the Bush/Cheney regime can do on their own, but authorizing borrowing and spending are the two big things that they can't do alone. Congress must get something tangible on the war in return for accommodating Bush/Cheney's fiscal needs.