The brinkmanship between the White House and Congress over raising the federal debt ceiling got uncomfortably dicey this week when both sides escalated their rhetoric and their maneuvering.
In the administration’s first definitive action to head off a default, Treasury Secretary Robert Rubin announced the government would scale back its borrowing next week because it is approaching its $4.9 trillion debt limit. He urged Congress to act immediately to increase the statutory borrowing limit.
House Speaker Newt Gingrich initially responded by offering to support a temporary boost in the debt ceiling, but he backpedaled quickly. Conservative GOP freshmen, it seems, bristled at Rubin’s pressure tactic and insisted that the debt ceiling continue to be used as leverage to gain the administration’s support for the GOP plan to balance the budget.
Republicans accused Rubin of irresponsibly using “Halloween scare tactics” and being less than candid about exactly when borrowing authority will expire. President Clinton charged Republicans with “threatening to plunge our country into default for the first time in the entire history of the republic.”
If this game of chicken were being played anywhere but in Washington, it might be mildly amusing. But because it’s taking place inside the Beltway and the stakes are so high, it’s sheer lunacy.
So far, Wall Street doesn’t believe either side would be brainless enough to allow a default. The real danger, however, may be that, with new players and no bipartisan cooperation, both sides could push so close to default that financial markets will become rattled. That alone could damage the nation’s creditworthiness, produce higher interest rates, increase borrowing costs and destabilize global markets.
Rubin says the government will run out of borrowing authority Oct. 31, although it probably can get by until Nov. 15, when a $25 billion interest payment on outstanding debt is due. Then, if Congress hasn’t acted, he may be forced to take more dramatic steps, such as tapping various federal trust funds.
Senate Majority Leader Robert Dole and other Republicans promise they’ll work hard to prevent a default, but they’re in no hurry to do so because they first want to see how long it will take them to finalize details of the budget-balancing package.
So there’s still plenty of time for more political scheming and tricks, but voters should put President Clinton and Republicans on notice: If this game blows up, they’ll have only themselves to blame.
