Obama’s Water­loo: Colos­sal over­reach in debt-limit talks

The Washington Times Weekly - - Commentary -

Repub­li­cans have a golden op­por­tu­nity to break Barack Obama’s pres­i­dency, en­sur­ing he will be a one-ter­mer. Mr. Obama has backed him­self into a cor­ner on the debt-limit talks; the GOP can smash his re-elec­tion prospects if they have the will — and in­tel­li­gence — to do it.

Mr. Obama has asked that the nation’s $14.3 tril­lion debt ceil­ing be raised, and he knows that can­not be done with­out sup­port from House Repub­li­cans. More­over, along with Trea­sury Sec­re­tary Ti­mothy F. Gei­th­ner, Mr. Obama warns that fis­cal Ar­maged­don is com­ing un­less the ceil­ing is lifted be­fore Aug. 2 — the date Mr. Gei­th­ner claims the United States be­gins de­fault­ing to its debtors.

Mr. Obama seeks a “grand bar­gain”: a debt-re­duc­tion pack­age that in­cludes $1 tril­lion in tax in­creases to ac­com­pany en­ti­tle­ment spend­ing cuts, in­clud­ing So­cial Se­cu­rity and Medi­care. He wants to go big. His tar­get is to slash $4 tril­lion over 10 years. He has re­peat­edly vowed to veto any “small” debt-limit in­crease — one that al­lows Amer­ica to keep pay­ing its bills un­til a more com­pre­hen­sive agree­ment is rat­i­fied. In other words, Mr. Obama has is­sued an ul­ti­ma­tum to con­gres­sional Repub­li­cans: Ei­ther break your 2010 cam­paign pledge not to raise taxes or else be blamed for the debt-limit de­ba­cle. As he put it, it’s time to “eat our peas.” The pres­i­dent is play­ing Rus­sian roulette with the econ­omy and our nation’s fu­ture.

Yet he has badly played his weak hand. Like the dic­ta­tor Napoleon Bon­a­parte, who sought to spread the rad­i­cal French Revo­lu­tion across Europe, Mr. Obama has com­mit­ted a fa­tal mis­take: over­reach. The pres­i­dent has is­sued a pub­lic ul­ti­ma­tum that ei­ther must be up­held or he must back down from. Ei­ther way, it is Mr. Obama’s po­lit­i­cal cred­i­bil­ity that threat­ens to be shat­tered.

In fact, the debt-limit talks rep­re­sent the cul­mi­na­tion of a Machi­avel­lian strat­egy that Mr. Obama has been pur­su­ing since he en­tered the Oval Of­fice. The pres­i­dent’s goal has been to erect a Franco-Ger­man wel­fare state. Mr. Obama is pri­mar­ily re­spon­si­ble for Amer­ica’s debt cri­sis. He is the one who rammed through Congress the nearly $1 tril­lion failed eco­nomic stim­u­lus. He is the one who has ap­proved suc­ces­sive bud­get deficits of $1.5 tril­lion. He is the one who has sad­dled us with Oba­macare, which will cost tril­lions of dol­lars and add more than 30 mil­lion Amer­i­cans to the rolls of Med­i­caid — al­ready the nation’s fastest­grow­ing en­ti­tle­ment pro­gram. In short, he has buried Amer­ica un­der a moun­tain of debt. Hence, it is the height of hypocrisy — not to men­tion chutz­pah — for him to be grand­stand­ing about the need for fis­cal re­spon­si­bil­ity.

How­ever, he un­der­stands one fun­da­men­tal re­al­ity: Euro­peanstyle spend­ing even­tu­ally re­quires Euro­pean-style tax­a­tion. His aim has been to pile up such high deficits and debt so he can force Amer­ica to ac­cept mas­sive per­ma­nent tax in­creases. Mr. Obama is us­ing prim­i­tive class-war­fare rhetoric, in­sist­ing on soak­ing “the rich.” He is not se­ri­ous about con­fronting our debt bomb; rather, he seeks to con­sol­i­date his so­cial­ist revo­lu­tion, pay­ing for the ex­pan­sion of the en­ti­tle­ment so­ci­ety.

Mr. Obama is cyn­i­cally seek­ing to po­si­tion him­self as a cen­trist, the only adult in Wash­ing­ton will­ing to tackle the coun­try’s real prob­lems. Hence, he claims that “ev­ery­thing must be on the ta­ble” and that both par­ties need to con­front “sa- cred cows.” For Democrats, that in­cludes en­ti­tle­ments; for Repub­li­cans, it refers to tax hikes. Yet the de­tails emerg­ing from the back­door dis­cus­sions tell a dif­fer­ent story. Mr. Obama is look­ing for GOP po­lit­i­cal cover on huge tax in­creases in ex­change for prom­ises of en­ti­tle­ment re­form. Much of the $1 tril­lion that Democrats have al­lo­cated pur­port­edly to re­duce do­mes­tic spend­ing over 10 years comes from money that was sup­posed to fund the wars in Iraq and Afghanistan, as well as $500 bil­lion in in­ter­est on those out­lays. In other words, the sup­posed “spend­ing cuts” are noth­ing more than smoke and mir­rors — fu­tur­is­tic, imag­i­nary money be­ing shuf­fled from one bud­getary cat­e­gory to an­other. Yet the taxes are very real. If Mr. Obama has his way, the rates on cap­i­tal gains, div­i­dends and up­per-in­come earn­ers will sky­rocket, es­pe­cially af­ter the Ge­orge W. Bush-era tax cuts ex­pire in 2012.

The pres­i­dent is try­ing to lure House Speaker John A. Boehner into a trap. Should the Ohio Repub­li­can ca­pit­u­late, this would vi­o­late the GOP’s prom­ise to vot­ers, en­rage its base and give Mr. Obama a his­toric vic­tory. Mr. Boehner, how­ever, rightly wants noth­ing of it. He has defini­tively ruled out any tax in­creases. He is hold­ing all the cards.

Ev­ery debt dol­lar raised should be cou­pled with a spend­ing dol­lar cut. That way, the pack­age pays for it­self. More im­por­tant, it places Mr. Obama in a no-win sit­u­a­tion. House Repub­li­cans will pass leg­is­la­tion that raises the debt limit. There­fore, they can­not be blamed for any eco­nomic fall­out should Amer­ica de­fault. Mr. Obama can veto it, which means he will be solely re­spon­si­ble for the fis­cal calamity. Or he can sign it — pub­licly stand­ing down from his ear­lier threats. Thus, he will be de­nuded among his lib­eral sup­port­ers and the larger elec­torate, and shown to be a weak leader whose words mean noth­ing. Ei­ther way, it will be his Water­loo — the ef­fec­tive end of his pres­i­dency. Am­bi­tion cost Napoleon his em­pire. For Mr. Obama, the “big pack­age” strat­egy is the mo­ment of colos­sal over­reach. He wanted too much, too soon. Now comes the long, hu­mil­i­at­ing and fa­tal re­treat.

Jef­frey T. Kuh­ner is a colum­nist at The Wash­ing­ton Times and pres­i­dent of the Ed­mund Burke In­sti­tute.

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