Wall Street Journal...
The GOP’s Reality Test
Republicans who oppose Boehner’s debt deal are playing into Obama’s hands. 
July 28, 2011 

The debt-limit debate is heading toward a culmination, with President Obama reduced to pleading for the public to support a tax increase and Speaker John Boehner and Senate Majority Leader Harry Reid releasing competing plans that are the next-to-last realistic options. The question now is whether House Republicans are going to help Mr. Boehner achieve significant progress, or, in the name of the unachievable, hand Mr. Obama a victory. 

Mr. Obama recognizes these stakes, threatening yesterday to veto the Boehner plan in a tactical move to block any Democratic support. The White House is afraid that it will pass the House and then become the only debt-ceiling vehicle if Mr. Reid can’t get 60 votes for his own proposal in the Senate. This would short-circuit Mr. Obama’s plan to blame the GOP for a U.S. credit downgrade, any market turmoil, a possible default, and the lousy economy too. 

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Under the two-phase Boehner plan, Congress would authorize $1 trillion in new debt in return for $1.2 trillion in budget cuts over the next decade. Most of that will come from caps on domestic discretionary spending over 10 years—the Pentagon and homeland security are exempt—with automatic spending cuts if the caps are breached. While one Congress cannot bind another, the proposal would at least guarantee real reductions in fiscal years 2012 and 2013. 

In the second stage, the House and Senate would convene a 12-member joint select committee with a deficit reduction goal of $1.8 trillion by November. The majority and minority of both chambers would each make three assignments, and any plan that secured seven votes or more would get an up-or-down vote in both chambers with no amendments. 

The danger for the GOP is that the committee could end up proposing tax increases, since the committee’s only remit is the deficit, not the larger fiscal landscape or the size of government. A poorly chosen Republican nominee could defect, and any structural change to entitlements almost certainly can’t pass the Senate. 

Then again, unless the plan passed, Mr. Obama couldn’t request the additional $1.6 trillion debt ceiling increase that he would soon need. The political incentive is for a reasonable package, and many Senate Democrats also don’t want to vote for tax increases before 2012. 

Strangely, some Republicans and conservative activists are condemning this as a fiscal sellout. Senator Jim DeMint put out a statement raking the Speaker for seeking “a better political debt deal, instead of a debt solution” (emphasis, needless to say, his). The usually sensible Club for Growth and Heritage Action, the political arm of the Heritage Foundation, are scoring a vote for the Boehner plan as negative on similar grounds. 

But what none of these critics have is an alternative strategy for achieving anything nearly as fiscally or politically beneficial as Mr. Boehner’s plan. The idea seems to be that if the House GOP refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue, and the public will turn en masse against . . . Barack Obama. The Republican House that failed to raise the debt ceiling would somehow escape all blame. Then Democrats would have no choice but to pass a balanced-budget amendment and reform entitlements, and the tea-party Hobbits could return to Middle Earth having defeated Mordor. 

This is the kind of crack political thinking that turned Sharron Angle and Christine O’Donnell into GOP Senate nominees. The reality is that the debt limit will be raised one way or another, and the only issue now is with how much fiscal reform and what political fallout. 

If the Boehner plan fails in the House, the advantage shifts to Mr. Reid’s Senate plan, which would raise the debt ceiling by $2.4 trillion in one swoop through 2012. That would come without a tax increase but also $2.7 trillion in mostly fake spending cuts like less government “waste, fraud and abuse” and a $1 trillion savings from troop drawdowns in Iraq and Afghanistan that are already built into the baseline. As fiscal reform, this is worse than Mr. Boehner’s plan. 

If the Reid plan passes the Senate after Mr. Boehner’s plan failed in the House, Mr. Boehner would be forced to beseech Nancy Pelosi and the White House to deliver Democratic votes to raise the debt limit. Mr. Obama’s price could be the tax increases that the GOP has so far rejected. But who knows what else Mr. Obama would demand, and Congress might rush through, amid a political panic and financial market turmoil as the Treasury closed down government services to meet its debt obligations. 

It’s true that the Boehner plan doesn’t solve the long-term debt problem, but Mr. Obama won’t agree to anything that does. The GOP plan also may not prevent a U.S. national credit downgrade, but it has a better chance of doing so than Mr. Reid’s. The Boehner plan is the most credible proposal with a chance of becoming law before the 2012 election. 

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The Speaker has made mistakes in his debt negotiations, not least in trusting that Mr. Obama wants serious fiscal reforms. But thanks to the President’s overreaching on taxes, Mr. Boehner now has the GOP positioned in sight of a political and policy victory. If his plan or something close to it becomes law, Democrats will have conceded more spending cuts than they thought possible, and without getting the GOP to raise taxes and without being able to blame Republicans for a debt-limit crackup or economic damage. 

If conservatives defeat the Boehner plan, they’ll not only undermine their House majority. They’ll go far to re-electing Mr. Obama and making the entitlement state that much harder to reform. 

Read it at the Wall Street Journal