President Obama kicked off last weekend with a testy Friday night press conference warning of the drastic consequences of failing to raise the debt limit, the havoc it would wreak on financial markets, and the disastrous repercussions for the poor and middle class. That message of fear was reiterated throughout the weekend, bookended on Monday by a senior White House official who says there’s a 50/50 chance that the standoff in Washington will not be resolved by the August 2 deadline.
But it’s not fear for fear’s sake. The White House is employing the same cynical, irresponsible political strategy to force Congress’ hand that it started in January, using Wall Street as its foil. This morning, NPR—as usual and unsurprisingly—had the zeitgeist of the Obama White House just right. Cokie Roberts, its long-time commentator, said:
[T]here’s a certain element of waiting for the markets to weigh in and show Congress that they have to get serious here…You see the Administration almost kind of, almost daring the markets to respond, yesterday saying that the Congress had to act by 4:00 yesterday afternoon before the Asian markets started to open.
How true, and how irresponsible. The Obama Administration spent all weekend trying to talk down markets, hoping to make use of any artificial drop for political purposes.
Never mind that the financial security of hundreds of millions of Americans and others would be injured in the process. The Administration needs what it has already dubbed “the Boehner drop”—named after Republican Speaker of the House John Boehner—to try to get its way in the debt ceiling negotiations.
The attempt by senior members of the Administration, including Treasury Secretary Timothy Geithner, to make markets even more nervous than they are was noticed by other journalists. Veteran financial journalist Charles Gasparino vented his frustration on ABC’s This Week with Christian Amanpour by saying “it’s irresponsible for Geithner to go out there to talk about default. If he’s worried about the Asian markets tonight, why does he mention default? We are not going to default. We have cash on hand to pay bond holders.”
But that is the political game the White House is playing—and it’s a dangerous one. Investment adviser James Rickards wrote to Politico‘s Playbook, “Geithner and Obama are foolish to try to ‘scare’ markets over the debt ceiling. Markets are already scared. They’re looking for reassurance and a more mature dialogue.”
Instead, we have the President and his legion of foot soldiers running amok, hoping to threaten the markets to achieve their political ends.
But amid the maneuvering, there have been some moments of unvarnished honesty, if only accidental. Yesterday, White House deputy press secretary Dan Pfeiffer admitted on Twitter that President Obama will likely sign any debt deal Congress sends his way. Heritage’s Rory Cooper writes:
This revelation came in an exchange with Stephen Gutowski, the blogger known as The College Politico. Gutowski asked Pfeiffer: ‘Do you see a scenario where the house & senate pass a deal but the President doesn’t sign it?’ and Pfeiffer responded: ‘No, bc only something that has R and D support can pass both bodies.’
With those words, Pfeiffer highlighted a truth that has become increasingly clear. Obama is not the mediator of a grand bargain the White House has attempted to portray him to be, Cooper explains. Instead, his role in the debt ceiling debate has been subordinated to the House and the Senate, leaving him with nothing but veto threats, ultimatums, and rhetoric designed to force a resolution that suits his political ends.
Since Congress holds the cards, it’s up to them to get the job done. Now they should listen to their employers—the American people—and deliver a solution that meets the test of Moody’s and Standard & Poor’s to bring down our debt ratio through spending cuts, not tax hikes, and preserves our nation’s ability to defend itself.