The Not-So-Happy Anniversary of the Debt-Ceiling Crisis

It is worth noting that President Obama -- again, much to the chagrin of many members of his party -- seemed eager to avoid turning the dispute into a constitutional question. He denied that he had constitutional authority to raise the debt ceiling by himself. In fact, Obama actually wanted to be painted into a corner: He thought he could achieve a grand bargain on debt reduction with congressional Republicans. Invoking section 4 would absolve them of any responsibility to negotiate in good faith. Bill Clinton, by contrast, argued that Obama should not have taken this possibility off the table. He should have threatened to invoke the 14th Amendment early on, and dared the courts to tell him otherwise.

These interesting constitutional questions were not resolved by the debt-ceiling crisis. They are unlikely to be resolved in the future, and for a fairly straightforward reason. Consistent with the government's duties under section 4 of the 14th Amendment, the Obama Administration calmly informed bondholders that no matter what happened, they would be paid on time. Giving priority to bondholders meant that some government programs would not be funded, which would inevitably lead to a partial government shutdown. Once the shutdown began, it would be more or less a replay of 1995. Both sides would quickly reach an agreement to raise the debt ceiling, and, once again, it is likely that the Republicans in Congress would take most of the blame for the fiasco. (Moreover, if the shutdown continued, the markets might also begin to decline precipitously, making an agreement even more urgent.) Knowing this, congressional Republicans had good reason to agree to raise the debt ceiling before a shutdown occurred, and that is precisely what happened.


For this reason, the debt-ceiling crisis was a phony crisis, entirely self-inflicted. There was little doubt, at the end of the day, that the president and Congress would agree to raise the debt ceiling. The only issue was the price that would be exacted, and how much damage the economy would suffer in the interim. Moreover, both the president and Congress negotiated against the backdrop of the expiration of the Bush tax cuts in January 2013, which would go a long way toward resolving current concerns about the deficit.

That does not mean that the debt-ceiling crisis was unimportant. After all, it slowed down the economic recovery, and probably increased economic misery. Politically, the most interesting feature of the debt ceiling crisis is that it marked yet another episode in the continuing struggles of an increasingly radicalized movement party -- the Republicans -- to remake American government.

It should come as no surprise that the contemporary Republican Party is a social movement party; what is remarkable is how radical an insurgency it has become. For a generation or more, Republicans have tried to complete the Reagan revolution and fundamentally change the way government is conducted in the United States. Yet they have repeatedly failed, each failure leading to a new wave of insurgency more radical than the last. The present Republican Party, strongly influenced by the Tea Party, is the most extreme version of all.

The debt-ceiling crisis achieved some debt-reduction measures and made President Obama look weak. Yet despite the Republicans' temporary gains, the crisis was a failure -- an attempt to stage a political revolution by leveraging control of only one chamber of Congress. It demonstrated that the Republicans need to control the presidency to have a genuine chance at realizing their vision.

The problem is that it is very hard for a political party to fundamentally change government if it does not control the White House. In fact, if a party does not hold the presidency, it's hard to achieve lasting change even with control of both houses of Congress.

Think about two transformational moments in 20th-century American governance. In 1932 and 1936, Franklin Roosevelt enjoyed two landslide victories, along with overwhelming majorities in both houses of Congress that enabled him to push for New Deal reforms. In 1964, Lyndon Johnson -- who also won a landslide victory -- benefitted from a bipartisan liberal majority in Congress that made it possible to pass the landmark civil rights acts and his Great Society programs.

The conservative movement has long sought a transformation as significant as these two. But since 1980 it has had only one similar opportunity.

If Mitt Romney wins the presidency and the Republicans take the Senate, the first thing they'll probably do is reform the filibuster rules. If Barack Obama is reelected, on the other hand, the debt ceiling crisis will have a very different meaning.

Ronald Reagan was much more successful at stating broad principles than actually dismantling the basic structure of government created by the New Deal and the Great Society. The central social insurance programs remained intact. Moreover, due in part to Reagan's tax cuts and a large defense buildup, federal deficits soared, and Reagan was forced repeatedly to raise taxes.

Three waves of conservative mobilization have sought to finish the task that Reagan started. The first was led by Newt Gingrich in 1994. Gingrich tried to direct domestic policy as speaker of the House. His attempt crashed on the rocks of the government shutdown in the winter of 1995. President Clinton faced down the revolutionaries, who ultimately blinked, and Clinton coasted to reelection in 1996. The radicals in the House, taking full advantage of Clinton's self-destructive tendencies, then impeached him, effectively crippling the second term of his presidency.

The disputed 2000 election gave conservatives a second chance -- their best so far. Indeed, one would think that George W. Bush's election should have completed the Reagan Revolution. After all, for most of the period between 2001 and 2007, the Republicans controlled the White House and both houses of Congress, as well as enjoying a conservative majority on the Supreme Court. This is as close as Republicans have gotten to the configuration enjoyed by Roosevelt and Johnson, albeit with smaller majorities in Congress. Yet after Bush pushed through two large tax cuts early in his first term, the conservative revolution stalled. Government did not get smaller; it only got bigger. Bush's signature domestic accomplishments expanded Medicare and federal regulation of education. Following the 9/11 attacks, Bush oversaw extensive growth in national surveillance capacities and the creation of the Department of Homeland Security, which further expanded government. Perhaps even more important, he also conducted two expensive wars in Afghanistan and Iraq without paying for them with new taxes. His second term plan to partially privatize Social Security went nowhere. Bush's presidency was ultimately consumed by his decision to attack and occupy Iraq, and, as, in Reagan's presidency, federal deficits soared. Finally, as Bush left office, the entire economy collapsed.

Bush's failures led to the third wave of conservative radicalism, embodied by the Tea Party. The Tea Party was a response to the Republican Party's failure to do what it had promised once it gained complete power over the political branches -- shrink government and limit the growth of federal spending. As in 1995, Republican insurgents tried to stage a revolution without holding the White House, but this time, they controlled only one house of Congress plus a cohesive Senate minority that was willing to use the filibuster as a routine instrument of politics.

Even so, the Republicans obtained significant concessions from Obama, who appeared to be far less canny than Bill Clinton. As Speaker John Boehner explained, he got 98 percent of what he wanted, while Democratic Representative Emanuel Cleaver compared passing the Budget Control Act to a "sugar-coated satan sandwich."

And yet the victory may prove pyrrhic unless Mitt Romney gains the White House in 2012. The balanced budget amendment went nowhere. The supercommittee, stocked with Republicans adamantly opposed to tax increases, failed to reach agreement with their Democratic counterparts. This triggered automatic cuts to defense spending that are unacceptable to most congressional Republicans. Perhaps most important, all of the central issues of taxation and spending will have to be refought again after the election -- either in the lame duck session, or after January 2013, when the tax cuts expire and the sequester goes into effect. And when that happens, the Republicans, who were perfectly willing to hold the economy hostage to score a political victory, will find that the shoe is now on the other foot. All the Democrats have to do is sit on their hands and tax rates will return to Clinton-era levels, government revenues will increase by trillions, and the federal budget will go a long way toward being balanced once again, as it was during the Clinton Administration. No wonder Republican politicians have begun, without a hint of shame or irony, to accuse the Democrats of taking hostages.

If Mitt Romney wins the presidency and the Republicans take the Senate, they can effect major changes. The first thing Republicans will probably do is reform the filibuster rules. After all, Mitch McConnell surely has no intention of allowing the Democrats to block him in the way that he repeatedly blocked the Democrats. Next, the Republicans can repeal the Affordable Care Act. They can pass a version of the Ryan budget, converting Medicare into a premium support program that pushes the elderly into private insurance markets. And they can enact Romney's proposed tax policies, producing a significant redistribution from lower income workers to the wealthiest Americans. Whether these results will actually shrink government or produce deficit reduction is quite unclear. It is also possible that once Republicans control all the levers of government, we will see a repeat of the Bush years: tax cuts mostly for the benefit of the rich, a bellicose -- and expensive -- foreign policy, and expanding deficits. Either way, the debt-ceiling crisis will have proved, in hindsight, to have been a political battle lost that helped Republicans win the electoral war, because it weakened both Obama and the U.S. economy, and therefore led to Obama's defeat.

If Barack Obama is reelected, on the other hand, the debt-ceiling crisis will have a very different meaning. It will be yet another failed attempt in the conservative movement's crusade to transform government, a bookend to the 1995 government shutdown. But it will by no means be the end of the story. Conservatives will regroup, continue to harass Obama in any way they can, and wait for another Reaganite savior to arise.

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Jack M. Balkin is the Knight Professor of Constitutional Law and the First Amendment at Yale Law School, and the founder and director of Yale's Information Society Project.

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