Republicans have an opportunity for a much more important debate, which will frame the election campaign next year. Republicans should tell President Obama they will vote to increase the debt ceiling, in a clean bill with no other provisions, provided he promises three things:
- The administration will submit a revised budget that will deal with the deficit. Upon the president’s agreement, the first installment of the debt ceiling increase should be $500 billion; further installments will await the revised budget. The nation has a right to expect that the president will be serious about the deficit issue.
- Republicans will support a second clean increase of $500 billion in the debt ceiling when the president submits the revised budget. The president agrees that the Congressional Budget Office should score the revised budget according to its “alternative budget scenario.” The February budget systematically understates future outlays and overstates future revenues. CBO’s alternative scenario scores the budget on what is most easily described as a current services principle rather than according to current law, which understates the likely future deficit. For one example of this problem, current law and the president’s budget include the assumption that doctor reimbursements under Medicare and Medicaid can be cut in future years. The CBO alternative scenario is based on the more realistic assumption that reimbursements will be at about the current level.
- When the CBO analysis is in, the president will submit a second revised budget reflecting that analysis. At that time, Republicans will agree to accept an increase in the debt ceiling large enough to finance the government through mid‐2013.
What if Obama refuses to make this promise? Then, instead of a clean bill, the Republicans should attach a clause requiring that the president submit a revised budget to address the deficit. The point would not be to argue about how to address the deficit — we already know that the parties are deeply split on their vision as to the role of the federal government — but instead to require that Obama present an actual plan. A Treasury default would then be squarely the president’s responsibility because he refused to present a plan to address the deficit.