Give Obama a break on the "fiscal cliff"

The president deserves credit for his handling of the crisis -- so long as he doesn't cave on the debt ceiling

By Steve Erickson
Published January 3, 2013 9:58PM (UTC)
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(Reuters/Jonathan Ernst)

This article originally appeared on The American Prospect.

The American Prospect When President Lincoln suspended habeas corpus in 1862 (a couple of times, actually), he conceded the possible unconstitutionality of what he had done but concluded that since the move was necessary in a time when half the country was at war with the other half, he would take his chances with Congress, the courts, and history. The country’s current chief executive finds Lincoln comparisons disconcerting, but this is a case where he might pay attention, because his legal grounds for unilaterally raising the ceiling on the national debt in a time of congressionally inflicted crisis are no weaker than Lincoln’s and probably stronger.

The latest furor over who should be paying taxes in this country is, as of 36 hours ago, over. This follows a presidential campaign in which the candidate who ran on raising revenue from those in the upper income bracket defeated by four percentage points and 126 electoral votes the candidate who makes more money in a year than you or I in a lifetime and pays a lower tax rate—assuming he pays anything at all, something he was unwilling to prove even at the cost of a job that he spent his entire adulthood coveting. Two things are clear to anyone who monitored the fiscal debate over the last month and has a grasp on reality. The first is that what passed the Congress on New Year’s Day was flawed to say the least. It wasn’t the all-encompassing solution that both the president and speaker of the House preferred and for which their hopes appear, in retrospect, to have been naïve. In terms of the law’s minutiae the raising of the income threshold (above which taxes would increase) from $250,000—an amount originally established at the dawn of the Clinton presidency in accordance with that era’s cost of living—to $450,000 is relatively trivial, largely dependent as it is on subjective notions of what constitutes wealth; of more importance is the White House’s inability to secure an extension of the stimulative break in payroll taxes. This is something that everyone will feel immediately and more acutely the farther down the economic ladder that their rung happens to be.

However, the second thing clear to anyone who lives in a universe not so ideological as to verge on the psychedelic is that what took place on the first day of 2013 clearly was the best resolution possible given the personalities and philosophies involved. As the right found out the hard way on election night but some on the left have yet to learn, math abides. The last time I added that high, 217 (the votes needed in the House of Representatives to attain passage of the bill) doesn’t immediately follow in numerical sequence 180 (roughly the total of Democrats who can be relied on to support the administration) no matter how highly convenient it would be to skip those mischievous digits from 181 to 216. As well, those not completely bereft of perspective might note that the last time anyone got congressional Republicans to agree to a tax hike on anybody, the Berlin Wall was still standing, and that as recently as a year ago the likes of arch right-wingers Nancy Pelosi and Chuck Schumer were inclined to set the threshold at not $400,000, not $500,000, but $1 million. To grouse that something better wasn’t achieved is to audaciously ignore what’s been apparent to the rest of us for some while, which is that—Obama re-election or no re-election—the Republican caucus remains in the grip of a collective psychosis that’s equal parts craven ambition and budgetary jihadism.

A theory persists that a preferable course would have been to let the clock run down and to allow all the tax rates to rise. The premise underlying this logic is that, on such occasion, lunacy on the right would dissipate with the first rays of the 2013 sun and that reason, perhaps born of public pressure, would suddenly take hold among profoundly unreasonable people as world markets and a looming second recession waited patiently. While the president clearly wasn’t ruling out this nuclear option, the same team around him that was smart enough to get him re-elected, as well as economists of every stripe, understood its peril. Should Barack Obama prefer JFK analogies to Lincoln comparisons, think of the president’s left flank as generals urging a Cuban invasion in October 1962 while counting on the Soviets to ultimately be more sensible than we were.

In any event the great mystery of the next two months has to do with cuts in government spending that this week’s deal failed to address along with the debt limit, which is to say the payment of expenditures already expended. Principally among Republicans but among Democrats as well there is talk that, from this point on, the negotiating leverage shifts from Obama to the wounded House speaker John Boehner (assuming he keeps his job) because, to put matters concisely, these are situations that scorn temperance  and reward zealotry. The president has vowed, as recently as two nights ago, not to “play [the] game” of letting Republicans use their intractability on raising the debt ceiling as a tactic, as they did in the summer of 2011, but unless his words are as empty as his adversaries claim and so-called allies sometimes seem perversely eager to confirm, he has a single option that in the past he has ruled out. He needs to rule it back in. He needs to announce that he will exercise the powers enumerated in Article Four of the Fourteenth Amendment and raise the debt ceiling executively if the Congress won’t do so. To be sure, timing matters. As the president understands, such a move has every likelihood of creating a crisis; the action would be challenged in the courts and, given the House’s predilection for the unhinged, impeachment proceedings aren’t out of the question. But the president is going to face a crisis anyway—in as soon as two months—and the invocation of the Fourteenth Amendment would put this crisis on his terms, political rather than economic, where his footing is more firm.

“My fellow Americans,” Obama would say in a speech to the nation, “this isn’t the way I wanted to do this. My preference is that the Congress perform the task with which it’s charged. But I don’t need to remind anyone how 18 months ago House Republicans held our economy hostage over this issue and how, as a result, for the first time our country’s credit rating was downgraded. For me to stand by now and let the same people who almost drove our economy over a cliff four and a half years ago do so once more would be a betrayal of my constitutional oath. I take this action so that no one need wonder if the United States keeps it promises. I take this action because too many of you have struggled too hard for these past five years and have endured too much hardship to allow the radical remnants of the once-great party of Lincoln to yet again place in jeopardy our very financial stability and well-being.”

Such a decision would be the economic equivalent of the one that Obama made, in the face of more cautious counsel, to eliminate Osama bin Laden. Such an announcement will be heard by the world as a president taking control of a situation for which Congress’ only demonstrated aptitude is chaos. It would command the respect of the markets notwithstanding whatever else Wall Street feels about Obama. The judicial system, including the Supreme Court, might well refrain from taking up any challenge to the action; in constitutional terms, the Fourteenth Amendment’s application in this case may be far from clear—indeed the fourth article has been ambiguous since it first was drafted to address Confederate debt from the Civil War—but at least as unclear is that it’s not applicable. In political terms, impeachment would never be upheld by a Senate trial and would backfire disastrously on the Republican Party with the country’s political middle. In economic terms, the debt ceiling as an issue suddenly would disappear, along with the leverage that Republicans now gloat is theirs.

Steve Erickson

Steve Erickson's new novel, "The Sea Came in at Midnight," will be published next spring by Bard/Avon.

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Abraham Lincoln Bill Of Rights Fiscal Cliff Habeas Corpus John Boehner The American Prospect