Business Times - 27 Jul 2011
Widening ideological differences
Clashing TV addresses indicate that while Obama is calling for compromise, Boehner is preparing for confrontation
By LEON HADAR
US PRESIDENT Barack Obama remained his usual cool self - and yet sounded a bit combative - during a brief televised address to the nation on Monday night, warning voters that Congress was at a 'stalemate' over raising the federal debt ceiling. He called on them to put pressure on their elected representatives to come up with a compromise that would avoid the possibility of a devastating default, and allow the federal government to continue borrowing money to pay its debts after Aug 2.
'America, after all, has always been a grand experiment in compromise,' President Obama said, as he invoked several Democratic and Republican presidents, including Ronald Reagan - the political icon of conservative Republicans who had raised the debt ceiling and made deals on managing the deficit with the opposition which included both spending cuts and tax increases.
This was President Obama's seventh prime time televised address and interestingly enough, the first address to the nation by any US president urging Congress to raise the debt ceiling. His address was followed by a rejoinder from the SpeakerÂ of the House of Representatives, John Boehner, a Republic from Ohio, the other leading man at the centre of the continuing political drama revolving around whether, and if so, how to raise the debt limit.
But while President Obama was calling for a compromise and expressed his hope that 'cooler heads will prevail', Speaker Boehner seemed to be preparing for a confrontation with the White House. He was not going to simply make a deal for the sake for making a deal, insisted the combative Republican leader.
'The sad truth is that the president wanted a blank cheque six months ago, and he wants a blank cheque today,' said Mr Boehner. 'That is just not going to happen.' Mr Boehner argued that he was elected to ensure that exploding government spending would not be 'business as usual' in Washington. 'I've got news for WashingtonÂ - those days (of big government spending) are over,' he added.
The clashing televised addresses by the President and the Speaker helped highlight the wide ideological differences between Democrats and Republican over fiscal policy. While both sides are committed to raising the debt ceiling and reducing the budget deficit, they seem to be promoting policy prescriptions that reflect their diverging political agendas.Â
Speaker Boehner and the Republicans are adamant that any increase in the nation's credit limit should be accompanied by equal cuts in government spending, including a major restructuring of major social-economic programmes.
Mr Boehner, echoing the views of members of the Tea Party movement, seemed to be placing almost all the blame for the runaway deficit on President Obama and the Democrats. 'Here's what we got for that spending binge: a massive healthcare bill that most Americans never asked for. Â A stimulus bill that was more effective in producing material for late-night comedians than it was in producing jobs. Â And a national debt that has gotten so out of hand it has sparked a crisis without precedent in my lifetime or yours,' Mr Boehner said.
And the Speaker argued that the plans to increase taxes would destroy American business, 'kill jobs' and retard the economic recovery. 'The solution to this crisis is not complicated,' Mr Boehner said. 'If you're spending more money than you're taking in, you need to spend less of it.'
President Obama and the Democrats caution that moving to make huge cuts in government spending in the aftermath of the Great Recession could threaten the current fragile economic recovery. And they stress that any strategy to cut the deficit should include both slashing government spending and increasing revenues by raising taxes on wealthy Americans and large corporations. The White House and Congressional Democrats would agree to make painful spending cuts and reforms to the large government-backed social-economic programmes, Mr Obama said during his address. But he insisted that deficit reduction should include cuts in government spending and increases in government revenue in the form of taxes, or what he described as the 'balanced approach' to controlling the deficit.
Mr Obama added that he and Mr Boehner had negotiated earlier in the month a plan based on such a 'balanced approach' to US$4 trillion in deficit reduction over 10 years that included spending cuts and increased taxes.
'The only reason this balanced approach isn't on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a cuts-only approach - an approach that doesn't ask the wealthiest Americans or biggest corporations to contribute anything at all,' Mr Obama explained. 'And because nothing is asked of those at the top of the income scales, such an approach would close the deficit only with more severe cuts to programmes we all care about - cuts that place a greater burden on working families,' he added.
But Mr Boehner charged that Mr Obama changed course last week in negotiations when he asked for US$400 billion more in new tax increases for deficit reduction, in addition to the US$800 billion that had already been agreed upon.
'I gave it my all,' the speaker said. 'Unfortunately, the president would not take yes for an answer. Even when we thought we might be close on an agreement, the president's demands changed.' What Mr Boehner did not mention in his address was that he and other centrist Republicans have failed to persuade the large contingency of ultra-conservative Republicans in the House of Representatives to support any compromise deal with the White House, even one that would include a set of limited tax increases. At the same time, any radical plan to cut the deficit drawn up by the Republican-controlled House is bound to be rejected - not only by the White House but also by the Democratic-controlled Senate. Hence the political deadlock in Washington.
Almost everyone in Washington seems to agree that Congress will have to fashion some sort of compromise in the next two or three days, allowing the lawmakers to draw the outline of legislation over the weekend so that President Obama can sign it into law by Aug 2. But no one is willing to bet that this is going to happen. In fact, some expect the game of political brinkmanship involving the White House and Congress to continue until midnight on Aug 1.
Mr Obama has made it clear that he would reject a current proposal by Mr Boehner that would raise the debt ceiling, but only by about a US$1 trillion in exchange for US$1.2 trillion saving in spending cuts and no tax increases. It would also require the White House and Congress to restart another round of negotiations to raise the debt ceiling by the end of the year. President Obama said during his address that the economy could not bear another debate over the debt ceiling in six months.
Instead, Mr Obama favoured a plan by Senate Majority Leader Harry Reid, a Democrat from Nevada, that calls for cutting more than US$2 trillion in government spending - and that includes money that would be saved through the planned withdrawal of US troops from Iraq and Afghanistan.
Republicans do not like the proposal that does not include any cuts in the large government-backed social-economic programmes. And many Democrats are saying that they would not vote for Senator Reid's plan because it does not call for any tax increases - or to use President Obama's terms, it is not based on a 'balanced approach'. A stalemate, indeed.
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