Coming on the heels of last year’s downgrade, the very public way Boehner repeatedly issued his debt ceiling threat made it the equivalent of alerting S&P and the other rating agencies that little had changed since last summer. It also was an invitation to again downgrade U.S. debt.
To make matters worse, Boehner’s statements about the debt ceiling might encourage the agencies not to wait until the debate actually occurs to reconsider their ratings. His statements could provide them with all the evidence they need to justify a new review of the situation now. There’s no word for that other than irresponsible.
Boehner’s threat also was irresponsible because the immediate spending cuts he said were the only way he would allow a debt ceiling increase to be considered is the wrong fiscal policy for the current economic situation. At a time when businesses and consumers are still not spending and most state and local governments are continuing to cut back, the federal government is the only major gross domestic product component enhancing growth and creating jobs. Given the current slow recovery, the large spending cuts Boehner is demanding could push the economy back into recession.
It’s not hard to understand the political motivations behind Boehner taking the position he took on the debt ceiling. He needs the support of the House GOP caucus to remain Speaker. All indications are that, as has been the case since the 2010 election, House Republicans are not in a compromising mood on anything having to do with the federal budget.
Threatening another cliffhanger battle as he did last week doesn’t provide the leadership Boehner said was needed to deal with this. Instead of simply complaining that the president had “lost his” courage when it came to the budget, Boehner should have displayed some of his own.
Instead of following his caucus and doing the political equivalent of tying the debt ceiling increase to the track with a train barreling down, the Speaker should have been developing a way to avoid the downgrade and further erosion of confidence in the U.S. political system that, because of his action, is now more likely to happen.
Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”