According to Congressional Budget Office projections, in fiscal year 2011 Federal spending will amount to about $3.7T*, and tax revenue only to about $2.2T. That excess of spending over taxation of $1.5T, means we are borrowing about 40 cents of every dollar we are spending now.
Thus, if we hit the debt ceiling next month -- our credit card limit -- and have to immediately balance our budget, we will be forced to cut spending by 40%. Social Security, Medicare, Medicaid, and interest in the debt amount to something near 50% of current spending. If we insist that those are the most important things to do once the debt limit is reached, we will then have only about 10% of current spending to cover the remaining 50%.
Given the magnitude of the reduction in spending required to immediately balance the budget -- and that is what not raising the debt limit means -- it should be clear to Republican partisans that not raising the debt ceiling is not an option. Cuts of that magnitude would cause enormous turmoil in the economy. The President would have complete discretion on what to cut, and he would focus those cuts for maximum advantage to Democrats. The Republican House could not stand against the public pressure that the President would muster, and they would eventually be forced to raise the debt ceiling.
Democrats will not agree to any significant cuts in spending, and they control two of the three bodies that must agree in order for cuts to be enacted. If Republicans want to cut spending they must hold the House, and win the Senate and the Presidency in 2012, and to do that they need to focus now on accomplishing the greatest amount of persuasion of the electorate.
The best chance to achieve the needed persuasion is for the Republican House to put the the Democrat Senate and the President in a position where they will reject cuts in spending seen by the electorate as reasonable, and once those cuts are rejected, pass a medium term debt ceiling increase.
Please come along while I describe a way that the Republicans can play the end of the debt ceiling battle to focus the electorate's anger on the Democrats as the 2012 election rolls around.
The House should pass an omnibus appropriations bill in the form of a continuing resolution with spending cut by $250B from 2011, and a budget continuing that cut through the next nine years. Those 2012 cuts should not be targeted in any way, but should be a flat percentage of the 2011 spending. To cut $250B out of $3.7T that percentage needs to be 6.7% or just $1 in every $15. The cuts should include entitlements via an explicit cap: "Notwithstanding any other public law, not more than 93.3% of the amount spent in Fiscal Year 2011 on yata, yata, yata and yata shall be spent in Fiscal year 2012 or any succeeding year through 2021." Wrap all that up with a bow of a debt ceiling increase of $2.5T, so that their promise to exact spending cuts equal to the debt ceiling increase is met, and send it to the Senate. The majority of the electorate will see those spending cuts as reasonable, because everyone can understand that 1$ out of $15 isn't going to break anybody's back.
If the Senate refuses to act on the House bill, whether by not bringing it up, by voting not to debate it, or by voting to defeat it, the Republicans can use the votes of marginal red state Dem Senators against them in 2012.
If the Senate passes the House bill and the President vetoes it, the Republicans can use the President's refusal to cut spending against him in 2012.
In either case, unless their bill is passed by the Senate and signed by the President -- fat chance of that -- the House Republicans should then pass a clean debt ceiling increase of $1T -- rather than the $2.5T the President wants to get him past the 2012 elections -- and recess for August. The $1T debt ceiling increase will kick the can all the way down the road to early Spring 2012 and give them the chance to reaffirm their commitment to spending cuts by repeating their action on April 15, on tax day in the middle of primary season.
The timing is not completely last-minute. The House Republicans should very soon pass their combination continuing resolution and debt ceiling increase. That will give plenty of time for both the Senate and the President time to act. Once it's on to the Senate, they can spend full time selling it to the electorate. They should stand by to pass their clean $1T debt ceiling increase at the last minute or as soon as the Senate refuses to act or votes to defeat it, or the President makes clear that he will veto their spending cut bill.
In order to make the electorate see them as behaving responsibly, House Republicans can continue to negotiate with the President and the Senate. Throughout this, every one of them should, at every photo opportunity hammer home two things:
1) A cut of $1 in $15 is a reasonable belt tightening, not the $6 in $15 guillotine we chose not to use, and
2) We need to cut spending but Democrats will never do it.
Independents, Perotistas, and Reagan Democrats will see the Republicans' actions as a real attempt to stand by their principles and begin to solve the deficit problem and the Democrats' refusal as obstructionist.
Those with buckskin and war paint in their rucksacks who follow the Gadsden flag will accept that an immediate balanced budget is a bridge too far and that these tactics are the best way to achieve their long term goals.
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* $xT = x trillion bucks = $1000xB = x thousand billion bucks
