The House Republicans appear to be poised to pass a bill that would forbid increases in the federal debt limit beyond six months from now unless Congress sends out to the states for ratification a balanced budget amendment to the Constitution.
This will never happen. There aren't enough votes in the Senate, and maybe even the House (two-thirds), to approve the amendment.
And I predict that if the federal debt limit isn't raised by August 2, as appears increasingly likely, American voters will be horrified by the prospect of a balanced budget amendment -- dooming this foolish proposal forever.
Why? Because after August 3 we will have a de facto balanced budget. As a story in my hometown Salem Statesman Journal said today:
A July analysis by the Bipartisan Policy Center concluded that the Treasury Department will face an Aug. 3-31 cash deficit of about $134 billion. It will have only a projected $173.3 billion coming in to pay the month's $306.7 billion in expenses.
So if the once-unthinkable happens and the federal government can't borrow money to finance its already incurred obligations, everybody in the United States will get an up close and personal look at how a balanced budget amendment would affect this country.
It won't be a pretty sight.
If the roughly $100 billion in Social Security and Medicare-Medicaid obligations are met, tough choices will have to be made about how the remaining $44 billion or so is spent.
National defense, the Justice Department, including the FBI, and other vital government functions likely could not escape unscathed. The federal government shutdowns of 1995-96 would pale in comparison, experts say, because this time even mandatory spending would be affected.
Federal salaries, jobless benefits, Internal Revenue Service refunds and housing and nutrition assistance for low-income families could go unfunded in a worst-case scenario as could departments and agencies such as the Environmental Protection Agency, the Centers for Disease Control and Prevention and the Education Department.
With the economy still in the doldrums, this is a horrible time to be slashing more than a hundred billion dollars a month from U.S. economic activity.
“There’s nothing that you can look at here that is signaling some revival in growth in the second half of the year, and in fact we may see another catastrophically weak quarter next quarter if things go wrong next week,” said Nigel Gault, chief United States economist at IHS Global Insight. By “things going wrong,” he said he means “if Congress actually starts implementing a massive contraction by suddenly cutting government spending immediately,” as many Republican representatives hope to do.
Well, that's what the Tea Party wants: economic catastrophe. The best way to cut government is to throttle the economy. No profits or income, no taxes. Do the American people want this to happen? Of course not.
So Obama has been presented with a marvelous opportunity to do what's right for this country, now that Boehner has thrown his lot in with the balanced budget amendment crazies (ask a business executive if companies should be prohibited by law from borrowing money; yet this is how Republicans want government to be run -- which certainly isn't businesslike).
Now he has more reason to assert his presidential power and tell the country that he will not allow the federal government to default on its obligations, which would lead to huge increases in unemployment and other economic disruptions.
Or, if the worst comes to pass and a default happens, Obama and his fellow Democrats will be able to say "this is the consequence of a balanced budget amendment." As people see what the effect of slashing federal spending to current revenues is, they'll quickly realize why the amendment doesn't make sense.
Yesterday Ezra Klein wrote a persuasive column, "What the final deal is likely to look like." He correctly points out that there's a fairly easy way for reasonable Democrats and Republicans to come together on a debt limit bill that will avoid catastrope.
But today Klein said that Boehner's problem is that the Republican party doesn't want compromise. He's correct about that also. The Tea Party isn't reasonable, so they've got us on the edge of an economic cliff and are pushing as hard as they can in the wrong direction.