It's been over two months since Osama bin Laden's death, and, with incidents of terrorism on a steady decline over the past few years, it seems that we're living in a more peaceful world. But while Americans are right to feel good about their national security, they should be worried about a new threat. Faced with a struggling economy and alarmingly high levels of unemployment, Republicans in Washington have decided to take the country hostage in order to score ideological points.
For the past few months Republican members of Congress have been holding up passage of legislation authorizing an increase in the nation's debt ceiling -- a limit on how much the government can borrow -- in order to force President Obama to slash government spending. Republicans claim that such measures are needed in order to reign in large budget deficits, a strange point given that the debt ceiling increase is needed to allow the government to pay back money that it has already borrowed. But despite the fact that the White House has proposed combining spending cuts with some modest tax increases as a condition for raising the debt ceiling, Republicans have decided to continue to postpone passage of the bill. In other words, congressional Republicans have decided to use an otherwise routine procedure -- since its introduction in 1917, Congress has always approved necessary increases in the debt ceiling -- to extract concessions on fiscal policy.
This matters because failing to raise the debt ceiling will have disastrous consequences for the American economy. If Congress does not increase the debt ceiling by August 2, the government will be forced to choose between paying interest to holders of its bonds, maintaining commitments for Social Security, Medicare, and Medicaid, and keeping other public programs up and running. The first of these will likely take precedence given that the Treasury Department will want to do everything in its power to maintain U.S. creditworthiness. But this would mean that vital government services, including national defense, would take a significant hit. Despite the government's best efforts interest rates would also skyrocket as investors start to question the stability of the American political system. And poverty and unemployment would increase as the social safety net is cut. All this at a time when greater government spending is needed to help kick start the economy.
The strangest part in all this is that Republicans recently walked away from a deal that, by all accounts, is extremely favorable to them. According to most reports, President Obama has offered congressional Republicans a long-term deficit reduction package that includes about 85% in spending cuts and 15% in tax increases. Despite the fact that most of these tax increases would come by closing tax loopholes for owners of corporate jets and energy companies, Republican leaders have decided to hold out for a deal made up entirely of spending cuts.
Moderate conservatives like David Brooks have called Republicans crazy for not taking the President's offer. But this stubbornness shouldn't come as a surprise. Over the last quarter century, the Republican Party has pursued an increasingly extremist economic agenda focused on cutting taxes for the rich. Forget abortion, militarism, and drilling for oil -- the Republican Party is united by a desire to reduce taxes on the wealthy, regardless of the costs. Decades of Republican activism has given the United States one of the most regressive tax systems in the world. And with rates on top earners at a historic low, it is little wonder that we have a large budget deficit and ballooning national debt.
Yet rather than embrace the President's desire for tax reform and deficit reduction, Republicans appear to have no intention of recapturing the spirit of fiscal responsibility and bipartisan compromise that long characterized their Party. George H.W. Bush and Ronald Reagan both increased taxes when the deficit got out of control. Richard Nixon authorized the creation of the alternative minimum tax in 1969 to prevent wealthy citizens from evading federal income taxes, and Dwight Eisenhower famously refused to lower taxes until the budget was balanced. In fact, Abraham Lincoln, our first Republican president, introduced the country's first national income tax in 1861 as a means to fund the Union during the Civil War.
The fact that Lincoln, Eisenhower, and Reagan would be facing a Tea Party challenge if they were currently president speaks to how far to the right the Republican Party has moved in recent years and should cause Democrats to rethink the wisdom of trying to reach across the aisle. For while President Obama has shown a willingness to compromise with Republicans on a variety of issues, Republican refusals to even discuss modest tax increases on the ultra wealthy as part of a plan to reduce the deficit indicates that the GOP is uninterested in good faith negotiations. Given the urgency of increasing the debt ceiling and addressing the more pressing issue of unemployment, President Obama and Democratic leaders should deal with this new national security threat in as quick and decisive a manner as possible.
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