In about three weeks, the United States of America might default on its debts. Think about that! The richest country in the world, the paragon of democratic governments, could become a deadbeat.
The problem is not that America cannot come up with the money to pay its obligations. Its credit is good, even though it has made a habit of spending more than it takes in. This problem is more political than fiscal. Congress must approve an increase in the debt limit in order for the Treasury to come up with the money to pay the bills on time.
Republicans in Congress, particularly those who were elected last year on pledges to never, ever, under any circumstances raise taxes, don't want to increase the debt limit. They think America should live within its means. Good sentiments, but America cannot fight wars all around the globe, pay the promised benefits to Social Security and Medicare recipients, fight terrorism at home and abroad, respond to catastrophic natural disasters, maintain a space program, keep up interstate highways, pay the interest on debts already incurred, provide nourishment for the poor and all the rest without either raising taxes or borrowing money. If raising taxes — and many in Congress and the political action groups that do their thinking for them — say any increase in revenue, even if it comes from closing tax loopholes and ending unjust preferences in the tax code, is a tax increase. And any tax increase in any form is off the table.
New York Times columnist David Brooks (one of the most thoughtful and sensible columnists I've read) decries the no-tax ideology of the Republican right wing. If Republicans are unwilling to compromise, if they are unwilling to snatch the deal of a lifetime when it's being handed to them, they are no longer a political party; they are a medieval college of cardinals burning at the stake people who say the earth is round and revolves around the sun.
America's $14 trillion in debt is a real problem. Our $1 trillion-plus budget deficit is shameful. But the answer is not to force the government to implode into anarchy. President Obama is offering to go along with $4 trillion in spending cuts if Congress will agree to less than $1 trillion in revenue increases, mostly from tax reforms and closing loopholes. It's a heckuva deal for Republicans; it represents significant cuts in federal spending. All they have to do is agree to comparatively minor and relatively painless revenue increases.
I think the American people might go along with even harsher measures. Rep. Paul Ryan's highly touted deficit reduction plan, which has become an icon of the Republican Party (it raises no taxes), would not eliminate the budget deficit. The Bowles-Simpson deficit reduction commission did a better long-term job of reducing the deficit but still didn't put the federal government back in the black.
No politician seems prepared to boldly make the elimination of the deficit and the paying off of the federal debt a national priority. This could be done by returning to tax rates in effect before the 2002 Bush tax cuts and reducing federal spending in a deliberate and rational way. Remember that those 2001 tax rates already had been reduced from peak rates of the 1950s by Kennedy's and Reagan's income tax cuts. Who will stand before the public and pledge, "Before this decade is out, we shall pay off the federal debt"?