All but lost in the escalating rhetoric from Washington over raising the debt ceiling and cutting the federal deficit is the impact on families and communities if the Obama administration and Congress fail to agree on a reasonable compromise. Failing to raise the debt ceiling by Aug. 2 could have serious consequences, but the long-term damage from a poorly constructed deal could be worse. An unbalanced approach that cuts spending too deeply would have a ripple effect on a nation still struggling with high unemployment and an anemic economic recovery.
A handful of irresponsible Republicans, including presidential candidates Michele Bachmann and Ron Paul, continue to claim there would be nothing wrong with failing to raise the debt ceiling. That would foolishly create more economic uncertainty, and the United States should not start defaulting on its obligations. The federal government likely would set spending priorities and avoid stopping Social Security checks or critical health care services. But as President Barack Obama explained Friday, interest rates could immediately rise. Other government services could grind to a halt, creating more unnecessary hardships for families.
The price for an agreement on raising the debt ceiling, though, cannot be unreasonable spending cuts and bad policy. House Speaker John Boehner and Senate Minority Leader Mitch McConnell are revving up for votes next week that would embrace such an approach and include a constitutional amendment to balance the federal budget. Much of this will be political theater to satisfy the Republican conservative base. But it is a distraction that feeds the misguided notion that the United States can starve government and cut its way back to economic prosperity.
The manufactured crisis over raising the debt ceiling has shifted the focus from where it should be: creating more jobs and stimulating the economy, which are the best tonics for raising the revenue to reduce the federal deficit in the long term. Florida's unemployment rate remains above 10 percent, and home foreclosure notices in the Tampa Bay area jumped more than 60 percent in June over the previous month. Yet the federal stimulus money is drying up, and there is no appetite in Washington for investing more in communities in ways that would create jobs.
That makes it even more critical that Obama continue to push for a balanced approach that includes both spending cuts and additional revenue. He noted Friday that more than a trillion dollars in spending cuts over the next decade would essentially freeze spending at current levels and force cuts due to inflation and growth. To double those cuts without adding additional revenue would create unnecessary hardships in areas ranging from student loans to health care costs and leave nothing for investment in education, technology or infrastructure.
As the political theater plays out over the next several days, Americans should be skeptical of the rhetoric from the most partisan on either side and mindful of the real world consequences of failing to compromise.