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Wednesday, July 13, 2011

Obama’s Debt Ceiling Veto Threat Has a Credibility Problem

By: Jon Walker Tuesday July 12, 2011 11:02 am - fdlaction.firedoglake.com
Veto! - 3d Illustration by DonkeyHotey

President Obama’s new threat to veto any short-term debt ceiling increase seems to have created a real credibility problem for the White House. The administration has made many conflicting statements about the debt ceiling, and it is difficult for me to fit them all together with this veto threat in any logical framework.
The administration claims:
  • Not raising the debt ceiling and defaulting on the public debt would be very bad, and “playing politics” with the debt ceiling is highly irresponsible.
  • August 2nd is the drop dead date to raise the debt ceiling.
  • The administration doesn’t have a Plan B, like invoking the 14th Amendment,  to get around the debt ceiling limit if Congress doesn’t act.
  • Obama will veto any short-term increase in the debt ceiling.
I find it hard to see how these four positions can all be true.
Scenario 1 – Every Obama administration statement is true
Imagine if no overarching deal is reached, and on July 29th Speaker John Boehner passes a 30-day debt ceiling increase. He says he wants a deal but just needs another two weeks. Are we to believe Obama would veto this increase, causing a default shortly thereafter? This allows Republicans to claim that Obama is solely responsible for the default, and that he is being unreasonable. This would not only be bad for the economy, it would also make it tough for Obama to maintain the “only adult in the room” image that he is desperate to cultivate. Republican could say Obama was the one irresponsibly “playing politics” with the national debt.
I can’t picture Obama actively causing a default by using his veto in this scenario. If the first three administration positions are true, I suspect Obama would be forced to back down.
Scenario 2 – There is a plan B, or August 2nd isn’t the real drop-dead date
I could see Obama actually vetoing this hypothetical July 29th short-term debt ceiling increase — but only if he knows it won’t cause a devastating default which would certainly be blamed on him. Of course the only way he could veto a last minute short- term debt ceiling increase without causing a default would be if one of the Administrations’ past positions about the August 2nd deadline, or their lack of a plan B, were not true.
As it stands now, if the August 2 deadline comes and goes without triggering a default or without the President invoking a mechanism to ignore the debt ceiling, it will seriously harm the administrations’s credibility.
The Obama administration has back its self in a logically inconsistent corner
The White House has been trying to maneuver everyone into reaching a big austerity deal, but I simply can’t see Obama carrying out his short-term veto threat unless the administration had been lying about other fundamental claims they have made regarding the debt ceiling issue.
Considering that the primary objective of the Republicans all along has been to damage the President politically in these negotiations, it seems like putting Obama’s veto threat to the test by offering a last minute short-term extension would be an opportunity they could not pass up.


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