On June 28, the day Congress is planning to leave for the July 4 recess, Treasury Secretary Paul O’Neill has warned that the government will run out of money to pay its bills unless Congress increases the limit on how much the Treasury can borrow. This means parts of government, if not all of it, will no longer properly function, and government will default on its bills. This has been publicly described as a showdown between the Bush administration and Congress, but in fact it is really a showdown between Bush and the Republicans in the House.

On June 28, the day Congress is planning to leave for the July 4 recess, Treasury Secretary Paul O’Neill has warned that the government will run out of money to pay its bills unless Congress increases the limit on how much the Treasury can borrow. This means parts of government, if not all of it, will no longer properly function, and government will default on its bills. This has been publicly described as a showdown between the Bush administration and Congress, but in fact it is really a showdown between Bush and the Republicans in the House.

The Senate already approved a bill to raise the debt ceiling by $450 billion, up from $5.95 trillion, on June 11, the same day that Sen. Phil Gramm (R-TX) proposed permanent repeal of the estate tax which would have cost another $100 billion over ten years. It was ironic that the same day the Senate was debating increasing the amount the government can borrow, it was also voting on increasing the debt by giving a tax break to the very, very wealthy. Nonetheless, the Senate approved the debt extension -- although at an amount lower than the $750 billion the Bush administration requested.

House Republicans are in a Bind
The White House now wants the House to pass an increase as well, but House Republican leaders are refusing to bring the issue up for a vote because they say they don’t have enough support from their Republican colleagues to pass it. The reason the debt ceiling has to be increased is because of last year’s $1.35 trillion tax cut -- and they do not want to draw attention to that fact, especially in an election year. In an attempt to sidestep this political stumbling block, House Republicans included provisions in its supplemental bill that would allow the increase to the debt ceiling to be added during the House and Senate conference on this piece of emergency spending legislation providing funds for anti-terrorist activities. In other words, they are trying to bury it in other more popular legislation.

Democrats want the debt ceiling extension bill to be on its own and to be publicly debated. Senate Majority Leader Tom Daschle (D-SD) has said he will not support an anti-terrorism spending bill that has the debt ceiling on it, which forces the House Republicans to face this difficult issue head on. House Democrats have said they will support only a one-month increase of $100 billion and want to use the month to come to an agreement on a budget for FY 2003.

Yet House Majority Leader Dick Armey (R-TX) acknowledges that Republicans do not have enough votes to pass a debt ceiling bill if it is free-standing. He has made the argument that the administration is playing the part of "Chicken Little" and says that there are gimmicks that can be used to give the House more time to find a way to accomplish the debt extension. O’Neill is having none of that. He notes that payments to Social Security beneficiaries will be suspended at the beginning of July and interest payments to various trust funds, including Social Security, will also come due.

But, maybe it’s really just an old fashioned game of "Chicken" that we’re witnessing -- O’Neill has also noted that, "It's not a question of whether we're going to do it or not, it's just a question of how close to the cliff we're going to run before we do what we know we need to do." The current debt limit was set in August 1997, and there have been more than 25 temporary and permanent increases in the last 20 years. So, why the hang-up on this seemingly cut-and-(very)-dry issue?

For politicians who are reluctant to be seen by their colleagues and their constituents as spendthrifts, the decision to vote to raise the debt limit can be a difficult one. But, as noted above, it is more than a little perplexing that a chamber so eager to spend billions of dollars to make costly tax cuts permanent is so unwilling to pass a measure that would make it possible for the government to continue meeting its financial obligations. Instead of arguing over the debt limit, our country’s elected officials should be debating the merits of last year’s tax cut and the huge strain it will continue to place on our resources for at least the next 10 years. Since few in Congress seem to be willing to do that, they should pass the necessary increase and move on to the business of allocating the country’s remaining resources to our many needs.