“Washington is shifting the burden of bad choices today on to the backs of our children and grandchildren,” said the senator for Illinois, decrying a “failure of leadership” when the White House asked to extend the debt ceiling that limits government borrowing in 2006. He voted against it, knowing that President Bush had enough votes. Now that the senator is sitting in the Oval Office himself and the federal debt is a month or so away from reaching that limit again, it is his turn to squirm.
“Debt ceiling” is a misnomer – it is more like a barrier that one must cajole a cantankerous guard to move. That guard is Congress and, despite both houses being controlled by Democrats and the consequences of not raising the ceiling being unthinkable – an eventual sovereign default – budget hawks will use the process to extract their pound of flesh. The House has already approved a raise, but since the Senate must do so through a roll call vote, passage is an uncomfortable exercise even for Mr Obama’s allies.
Savvy senators may want to raise the $12,100bn ceiling enough to last past mid-term elections in 13 months. The House’s proposal will not suffice based on 2010 deficit projections. Conversely, a record boost – the ceiling has been lifted three times in the past two years – may enrage budget hawks and spook foreign creditors. A trillion here and a trillion there and soon you’re talking real money.
The best and most likely case for Mr Obama is partisan sniping followed by passage. The worst is what happened to Bill Clinton during his first term, when parts of the federal government shut down. Government funds had to execute costly accounting manoeuvres to avoid technical default and foreign lenders needed reassurance. But that only came after Mr Clinton’s big initiatives such as healthcare reform had flopped and the Republicans recaptured Congress. History repeating itself, not soaring deficits, is what really worries the White House.