WASHINGTON — The ink was still drying on the ‘fiscal cliff’ deal reached on New Year’s Day between congressional Republicans and President Barack Obama when fighting began again in Washington over the next coming fight over spending cuts and the nation’s debt ceiling.
It is coming quickly. Obama is re-inaugurated on Jan. 21, and Congress returns to work the next day with just six weeks before facing a March 1 deadline to raise the debt ceiling. Also in March, Congress must enact or discard deep spending cuts which were originally supposed to start on Jan. 1 but were delayed for two months.
Iowa’s congressional delegation has already joined the jump-started fight over spending. Republicans say Obama got the tax increases he wanted from the fiscal cliff deal, and that now he must bend on spending cuts, noting that the federal deficit has jumped from $10 trillion to $16 trillion since 2008.
“The tax legislation passed on Jan. 1 didn’t address Washington’s spending problem,” Sen. Chuck Grassley, R-Iowa, said before leaving Washington for the mid-month break. “It’s time to start focusing on the spending side of the ledger. There’s no time to waste.”
Iowa Democrats, however, have joined the rest of their party in insisting they have already offered responsible spending cuts and that they will be on guard against any cuts that imperil the country’s safety net for the neediest Americans. They also accuse Republicans of jeopardizing the country’s economic future by continuing to practice brinksmanship with the debt ceiling.
Sen. Tom Harkin, D-Iowa, circulated a quote from Republican President Ronald Reagan during a September 1987 national radio address. Reagan, exasperated at congressional inaction on the debt ceiling, said it “threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the federal deficit would soar.”
“As it has in the past, it is the responsibility of Congress to pass a clean hike in the debt ceiling,” Harkin said. “To do otherwise is to risk default, which would further damage the economy by raising interest rates on government debt and every new mortgage and loan.”
The coming fight will be somewhat different from the stop-and-start wrangling in December. While that debate was largely over taxes — the eventual deal raised tax rates for individuals earning more than $400,000 and households earning over $450,000, or less than 1 percent of U.S. taxpayers — the next fight will be mostly over spending.
While Democrats will seek to raise some revenue through closing loopholes and limiting tax deductions, Republicans want to slash $2 trillion from the federal deficit over the next decade, starting with the $110 billion in spending cuts that are scheduled to take effect in March.
One fact both Democrats and Republicans representing Iowa have agreed on so far: There is an immediate need to start talking again.
“As we have seen time and again, eleventh hour negotiations do not lead to solutions that benefit the American people or the economy,” said Rep. Dave Loebsack, D-Iowa.
Political observers in the Hawkeye State say there will be blood, despite Obama’s notable vow on Jan. 1 that he would not negotiate with Republicans over raising the debt ceiling because it pays bills that Congress has already incurred.
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Dave Peterson, a professor of political science at Iowa State University, said acrimony over the fiscal cliff deal in the recent lame-duck session of Congress could be nothing compared to the acrimony that likely lies ahead.
“Nobody liked the deal they got last time, but I think the leaders on both sides told their members, ‘It’s alright, because next time we’ll be in a better position and we’ll get what we want.’ But I don’t think that’s the case,” Peterson said. “They’ll have to compromise again, and I think they will. Nobody wants to see the consequences.”
On Friday, Senate Democratic leaders wrote Obama to urge him to consider “any lawful steps” to raise the debt ceiling — possibly by unilateral executive action — to avoid “economic catastrophe” at Republicans’ hands.
On Saturday, Republican leaders shot back in their weekly radio address response to Obama. Delivered by newly elected GOP Sen. Deb Fischer of Nebraska, the address calls for reforming Social Security, Medicare and Medicaid — the “primary drivers of our national debt” — as part of any discussions over the debt ceiling.
“Such reforms will require political courage and will demand strong leadership from the president and leaders of Congress. But without making these hard decisions, America will never rein in spending or achieve a balanced budget,” Fischer said.
Iowa State’s Peterson said Iowans would be wise to expect another short-term solution.
“I think people understand what happened before was a temporary fix and that there was no grand deal,” Peterson. “Unfortunately, with the lay of the land right now, I don’t think a grand deal is possible.”