Debt-Limit Remedy Gives Fiscal Hawks Leverage
What happens when an unstoppable force meets an immovable object? House Republicans can pass all sorts of legislation to reduce the burden of government spending, but they don't control the Senate and they can't override a presidential veto. President Barack Obama, meanwhile, lacks the power to compel Congress to approve Democratic goals, including higher taxes.
This is a recipe for gridlock. And gridlock means bigger government: Democratic proponents of the status quo are in much stronger position to prevail because there are few ways for budget cutters to exert their will.
But there is some hope because of a "must-pass" piece of legislation. The president wants Congress to increase the statutory debt ceiling of $14.3 trillion so that government operations remain unaffected. Republicans oppose this business- as-usual approach and are insisting on real fiscal reforms in exchange for a higher ceiling.
Quite simply, Toomey's bill would require the federal government to fulfill obligations to bondholders before making any other disbursements.
To the extent that investors actually are worried, Toomey's legislation would remove ambiguity and, to borrow from the title of the bill, make clear that the "full faith and credit" of the U.S. government would be preserved.
Toomey's proposal has generated a lot of angst among Beltway insiders because it would change the political dynamics of the budget fight. Politicians love to pontificate about the dangers of debt, but many of them are MIA when it comes to putting real limits on the growth of government spending.
It's much easier to put the budget on auto-pilot and delay tough choices, which is usually what happens with closed-door budget compromises in Washington.
If the Toomey legislation is adopted, fiscal reformers will have a powerful weapon at their disposal. Secure in the knowledge that default no longer is a possibility, they can be much tougher in their negotiations with the politicians who favor the status quo. [...]
THAT would be change I could believe in.