In remarks today, President Obama made the simple and compelling argument that a US default would lead to an increase in interest rates that would be the equivalent of a tax increase on every American.
Here is the video from C-SPAN:
Keep in mind, if we don’t do that, if we don’t come to an agreement, we could lose our country’s AAA credit rating, not because we didn’t have the capacity to pay our bills — we do — but because we didn’t have a AAA political system to match our AAA credit rating.
And make no mistake -– for those who say they oppose tax increases on anyone, a lower credit rating would result potentially in a tax increase on everyone in the form of higher interest rates on their mortgages, their car loans, their credit cards. And that’s inexcusable.
There are a lot of crises in the world that we can’t always predict or avoid -– hurricanes, earthquakes, tornadoes, terrorist attacks. This isn’t one of those crises. The power to solve this is in our hands. And on a day when we’ve been reminded how fragile the economy already is, this is one burden we can lift ourselves. We can end it with a simple vote –- a vote that Democrats and Republicans have been taking for decades, a vote that the leaders in Congress have taken for decades.
It’s not a vote that allows Congress to spend more money. Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up. It gives the United States of America the ability to keep its word.
The President also urged the American people to keep the pressure on the GOP, “Now, on Monday night, I asked the American people to make their voice heard in this debate, and the response was overwhelming. So please, to all the American people, keep it up. If you want to see a bipartisan compromise -– a bill that can pass both houses of Congress and that I can sign — let your members of Congress know. Make a phone call. Send an email. Tweet. Keep the pressure on Washington, and we can get past this.”
The only way Speaker Boehner was able to get to votes to get his bill through the House was to make it completely unpassable in the Senate. After yesterday’s circus, it is clear that the problem is in the House of Representatives. The Senate could come to an agreement that Obama would sign today, but the House will never pass anything that the Senate will agree to or the President will sign.
The House will be passing essentially the same cut, cap, and balance bill that the Senate already rejected and Obama said he would never sign. The president has also stipulated that any two part debt ceiling plan be triggered by revenue increases. Republicans are never going to go along with that either.
The House will cap off two critical days of activity by passing a bill that gets the country no closer to a resolution. By being lost in the haze of their own ideology, a faction in the House of Representatives is wasting precious time.
Obama’s silver bullet argument against the no new taxes Republicans is that a default would equal a tax increase on every American. If they push the country into default, House Republicans can plan on seeing Democrats all across the country run against them by charging that they essentially enacted the biggest tax increase in the history of the nation because they caused the United States to default. Obama has his sound bite argument, and the Republican Party is running out of time.
The President is showing no signs of easing up on the pressure. I suspect that Obama is going to continue to be urging the American people to pressure the House GOP up until the last second that a deal is done. The important thing to remember about Harry Reid’s plan is that it contains NO cuts to Social Security, Medicare, or Medicaid. If the Republicans are forced to accept this plan, it will be a huge win for Obama and the Democrats.
While Republicans haggle over which method of political suicide they prefer, Obama can stand back and add fuel to their fire. Republicans can either have no entitlement cuts or a de facto tax increase on every American. Just like George W. Bush in Iraq, the Republicans never had an endgame strategy for the crisis they caused with the debt ceiling.
The Republicans have already lost. The only remaining question is will they be sore losers and take the American economy down with them?