House Republicans passed a continuing resolution on Friday that would fund the government at current levels while completely defunding Obamacare. But Democrats are demanding a ‘clean’ resolution and a hike in the debt ceiling with no strings attached.
“From the White House perspective, they’d like as high of a funding level for government agencies as they can possibly take and they don’t want these measures to be complicated by all the things that Republicans want. You know, defunding Obamacare and tax reform and other measures like that that the White House doesn’t want to debate and doesn’t want to accept,” said Larry Haas, who served as spokesman for the Office of Management and Budget in the Clinton administration.
“So you’ve got two different perspectives here where the administration would like clean legislation and the Republicans would like very dirty legislation, dirty in the sense of having a lot of things attached to it,” he said.
Haas believes it is incumbent upon Congress to pass a “clean” continuing resolution and a no-strings attached hike in the debt ceiling weeks later.
“I always believe clean is better than dirty when it comes to the debt limit because frankly when it comes to debt limit legislation, we are talking about the full faith and credit of the United States. If you don’t raise the debt limit on time what it means it you’re not paying the bills. You are defaulting, which is akin to a family falling into bankruptcy. We’ve never done that and we never should do it,” said Haas, who believes there shouldn’t be a debt limit in the U.S.
“We really shouldn’t have a debt limit because we alone among major industrialized nations have this very arcane system in which debt rises and somehow we have a statutory limit on how much debt we can have at any one time and we have to pass laws to raise the debt limit,” said Haas. “If you want less debt, the way to accomplish that to to stop cutting taxes and to stop raising spending. The debt limit is the net effect of what lawmakers have done for months or years. So I feel very strongly that we not only should have clean debt limit legislation that should pass but that in an ideal world, we wouldn’t have a debt limit to begin with.”
A common conservative counter to that argument is that the debt ceiling is an ideal time to demand greater fiscal discipline in an effort to slow the growth of debt and eventually reverse it. Haas says Congress and the president have that power any time they wants to exercise it.
“They have all the authority that they need. They can vote to cut spending and they can vote to raise taxes. What they really should do, probably, is a combination of those two thing. Raise taxes on those who can afford to pay more and also take a very serious look at cutting spending in places where we see waste, where we see unnecessary spending, but not in places where we’re making investments that actually will help the economy down the road like biomedical research or infrastructure and things like that,” said Haas.
The current operating debt of the United States is approaching $17 trillion. Many estimates add unfunded liabilities to the tune of another $90 trillion. Some estimates go even higher. So how dire is our debt?
“A lot less dire than you’re making it out to be. Those are very frightening figures. The fact of the matter is what is key here is the relationship between the size and direction of the debt and the size and direction of the economy as a whole. Debt can continue to rise if the economy is growing faster than the debt is rising. And we have had numerous examples that through the course of the World War II era, where while the debt was continuing to rise, the economy was growing so much faster than the debt that debt as a percentage of the economy was shrinking. And that’s what we want to see,” said Haas.
Haas admits that recent years of trillion dollar deficits increased our debt at “rather frightening rates.” Now, he says projected deficits of about $600 billion this year have us on a sustainable course.
“We’re actually not not too far from a situation in which we could stabilize the debt as a share of the economy and actually get it to start shrinking. We don’t have to do that much more, probably save about a trillion over the course of the next ten years,” said Haas. “I’m not saying we don’t have any work to do. I’m not saying it’s not a serious problem, but we’re actually within striking distance of being at a place which would make our situation a hell of a lot better than it seemed to be than it seemed to be three or four years ago.”
