Upcoming financial issues best handled by Congress, not Wall Street by Robert Ketcham

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Events this September will be a key test for our Republican Congress—the land of Oz needs them to step up and shoulder the burden of governing.

The first agenda item is the debt ceiling. It needs to be passed by the end of September. On Monday, August 21st the Senate Majority Leader Mitch McConnell said there was “zero chance—no chance” that Congress would fail to raise the debt ceiling although he offered no clues about how that would be achieved. Treasury Secretary Steven Mnuchin has requested a “clean increase”- a bill similar to what has been passed as many as 80 times since 1960.

The debt limit was first established in 1917 to facilitate Congress’ ability to raise money on the eve of America’s entry into WWI. Before that short-term debt instruments had to be specifically legislated, even for specific appropriations. From the time a debt limit was first established the members of Congress have understood that the debt limit was a legislative act required to ratify the debt that their previous legislative actions had obligated the country to pay. These amounts are contained in the Budget that has been approved, in Appropriations bills passed and signed into law, and in “Entitlements” like Social Security and Medicaid that have already been voted on.

For a few years now the vote on the debt ceiling has been mischaracterized by some feckless Republicans as a vote to add more debt obligations, a statement that is simply not true. Since 1960, whenever the debt ceiling bill was brought up in the House or Senate there were usually partisan votes, mostly predicted by the party affiliation of the incumbent president. But it was well known to be a legislative charade without consequences since it was understood by whichever leadership was running the show that they had the votes to pass it when the vote was called. Members have a history of posturing during debate on both sides of the issue. Congressional leaders such as Nancy Pelosi, the then Senator Barack Obama, John Boehner, and Mitch McConnell each engaged in their own political debt ceiling drama.

But things changed starting in 2011. At that time Republican obstructionists decided to create legislative havoc and terrorize the Obama Administration by demanding unilateral policy changes in return for preserving the full faith and credit of the US. Some readers will remember the name Eric Cantor, the former House Majority Leader from Virginia who sought radical policy changes with his threat: to either cave into House Republican demands or there would be a default.

Last Monday’s statement by Mitch McConnell, the very leader so maligned by President Trump, is a hopeful sign that the Republican Congress is planning to get its act together and carry out its legislative duties in a responsible adult manner. If this turns out to be so, it will constitute a major policy shift. It should be noted that Democratic members also will be put on the spot. It is my hope that they will act in a bi-partisan manner and vote for the debt limit, and honor their obligation to continue funding for programs already legislated.

Republican leaders have their work cut out for them. A real leadership test is coming up. The Senate Majority Leader has stepped up, and the Treasury Secretary. House Speaker Paul Ryan, whose support is essential, has been around long enough to have been involved when former Speaker Boehner had his troubles with Eric Cantor and other conservative House Republicans. Ryan will also be tested. On Thursday, August 24, Speaker Ryan stated “there are many different options in front of us on how we achieve that,” he added. “We pay our debts in this country. We will continue to do so.”

The Republican congressmen who previously adopted or supported the tactics of obstruction will have to change their stripes. It is their party which is in power now, and with that power comes responsibility to govern. Not only should it dawn on these congressmen, but it surely will also be a standard that their constituents will require—just look what happened to Eric Cantor who went from being Majority Leader to losing his next primary!

Thus the first test for the Congress in September, as I see it, is to pass the Debt Ceiling bill, and get that business out of the way. Armed with that first success, they must then tackle the budget itself and several key pieces of legislation that are required for immediate action. Stay tuned. September will be a busy month for the Congress even without President Trump’s twitters and speeches. It remains to be seen if Congress can pull off the needed success in spite of him. It’s a tall order. And, waiting in the wings is the Republican’s stated interest in tax reform. If the Republican Congress demonstrates it can work together with Congressional Democrats to accomplish its key legislative business this fall, then this path will open up the possibility of tackling the issues involved in tax reform.

Reforming the United States tax code is an enormous undertaking even in normal times; the complexity of the task is usually stated as the reason why it’s been some twenty years since it was last accomplished. So many competing interests have a stake, therefore taking on tax reform requires an enormous commitment of time and hard work. To do it right will require regular legislative order, with many many hearings, followed by many many markups, then floor consideration, including amendments, passage in both houses then a House-Senate conference, and then the final passage in both houses. This kind of legislative hard work to produce good legislation has been sabotaged for the last eight years. Ironically, the last time Congress took on anything nearly this complicated was the Affordable Care Act, which may be no model at all since in the end it was adopted without bipartisan support.

In this first year of a new Republican administration, everything hangs in the balance until something positive happens in the Congress. Timely passage of the Debt Ceiling can get things started. At present we have to hope that our elected legislators in the Congress will find a way to work together for the common good to fill the leadership void, and by their actions provide the needed proof of who we really are as a nation.

Robert Ketcham served as the chief of staff of the US House of Representatives Committee on Science, Space and Technology and staff director of the Fossil and Nuclear Energy Subcommittee during the 1980s and 1990s. Prior to those positions, he was Special Counsel to the House Select Committee on Committees chaired by Richard Bolling (D-MO).  He holds a BA and JD from Washington and Lee University as well as a SG from Harvard University’s Senior Managers in Government Program. He has lived in Easton since 1999 with his wife, Caroline.

 

Letters to Editor

  1. Maile Beers-Arthur says:

    A thoughtful and thought-provoking piece. Thank you Mr. Ketcham for the history lesson on the debt ceiling.

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