Facing a debt crisis in which the nation risks defaulting on its debt obligations – destroying its AAA credit rating, and increasing the federal government’s borrowing costs – President Obama is squared off in a virtual game of “chicken” against Republicans led by House Speaker John Boehner of Ohio.

And, for now, it appears that the president is not blinking.

The White House has worked with congressional leaders, trying to reach a “Grand Deal” consisting of a “balanced” array of spending cuts and revenue increases. Yet, from the very beginning, Republicans have stood virtually unanimous in their opposition to any deal that includes taxes, even for the very rich.

“I’m asking you all to make your voice heard,” Obama said in his hastily arranged prime time speech. “If you want a balanced approach to reducing the deficit, let your member of Congress know. If you believe we can solve this problem through compromise, send that message.”

Apparently, the president’s message was heard as the switchboard at the Capitol was jammed for the entire day.

Ralph Everett, president of the Joint Center for Political and Economic Studies, a D.C.-based African-American think tank, believes that ultimately Republicans will blink and compromise. “My sense is that most people hope the president is ultimately going to be able to broker a deal that is fair to all segments of our society. I believe that what is right will ultimately carry the day.”

If Republicans continue to play chicken and refuse to flinch, the entire nation will suffer said internal medicine specialist Dr. Gary J. Sheppard, chairman of the National Medical Association’s Board of Trustees. “African-American physicians believe we cannot balance budget off the back of those who are sick. There has to be cuts, however, there must also be sufficient revenue to avoid undue harm to those who need government the most,” said Sheppard.

Some such as Senate Republican Leader Mitch McConnell (Ky.) have decried any deal that would undermine their “primary mission” to defeat President Obama and take back the White House.

Yet, a deal of the magnitude desired by the president was taking shape until late last week. To extend the nation’s credit-borrowing cap for an additional two years, the president offered to slash over $1 trillion in defense and other discretionary spending, $650 billion in Medicare, Medicaid and other entitlement programs, and eliminate $1.2 trillion in federal tax loopholes, breaks and deductions. And in the president’s opinion, his proposal was still tilted too heavily towards cuts than revenues.

According to Boehner, this inclination of the president was likely the cause for the collapse of the grand deal. Even though Republicans were willing to compromise their “all cuts-no revenue” position, the deal broke down when the president pushed for $400 billion in more revenue stated Boehner at a July 22 press conference.

With the deal nixed, Congressional Republicans and Democrats scrambled to offer new debt-cap increase proposals.

On July 25, Speaker Boehner proposed a plan to immediately lift the nation’s $14.3 trillion debt-spending limit by $1 trillion in exchange for over $1.2 trillion in federal spending cuts. A second $1.6 trillion borrowing-authority increase would come next year, provided the White House approves an additional $1.8 trillion in spending cuts, for $3 trillion in total cuts. This measure would also require a vote in both houses of Congress on the Republican balanced-budget amendment.

Senate Majority Leader Reid also offered a measure cutting $2.7 trillion in federal spending and raising the debt limit by $2.4 trillion in a single step — enough borrowing authority for two years. The legislation also establishes a new special joint committee of Congress charged with recommending additional savings that would be voted upon before the year’s end.

Neither the Republican nor the Democratic Congressional proposals required federal revenue increases.

In the face of these proposals, the president took to the airwaves Monday in a prime time speech to the nation. Rather than announcing his support for either of the Congressional plans, the president urged the American people to contact their congressional representatives to urge support for a “balanced” deal that extends the debt cap beyond next year, cuts the budget, and increases taxes and other revenues.

Beyond the sick, the cuts-only approach also threatens the nation’s overall economic growth, contends Hillary Shelton, vice president for public policy with the NAACP. According to Shelton, the solution lies in ending the tax cuts of President George W. Bush, which cost the American people $400 billion a year for 10 years ($4 trillion in total).

“Currently, we are more than $3 trillion in debt. If we ended the cuts, in two years, we would be nearly a third of the way of eliminating our deficit—you do the math,” Shelton said.

 

Talib I. Karim

Special to the AFRO