If you live and work in Washington, D.C., you might be excused for believing that the American way of life could come to an end if Washington goes over the “fiscal cliff.” The fiscal cliff means cutting (sequestering) annual federal expenditures — which are currently more than $3.5 trillion, nearly 40 percent of which is borrowed — by a little more than $100 billion. The real problem is that it also means letting the Bush tax cuts expire, which would mean a return to Clinton-era income tax rates on everyone. Supposedly, no one wants that. The purpose of the fiscal cliff was to force Congress to restore some semblance of fiscal sanity to the federal budget. It did not work.
It failed because Democratic policy has evolved from Lyndon Johnson’s Great Society to Barack Obama’s Entitlement Society. It seems that nothing can or should stand in the way of America’s dependency on entitlements. We are now at the point where Democrats are willing to play Russian roulette with the future of the country to preserve their prerogative to spend endless sums of money that the government does not have. On the other hand, Republicans believe reforming entitlements and restoring budget discipline are moral imperatives, and that giving the government more money is not the answer. As Milton Friedman observed, increased taxes only lead to increased spending. As important as this debate might be, there now appears to be something even more significant at stake in this confrontation: the very fabric of our constitutional system of government. Last week, Treasury Secretary Timothy F. Geithner proposed on behalf of the administration that Congress should delegate to the executive the power to borrow, which is an increasingly important part of the power of the purse. That power is reserved under the Constitution exclusively to the people’s elected representatives in Congress. Our Founding Fathers created a framework for government on the basis of the same principle that guided the transition from monarchy to democracy in Great Britain — that the executive cannot and should not ever be trusted with the purse strings of government. Parliament gradually limited the power of British kings by controlling the authority to raise taxes and borrow money. The nation was birthed with a rebellion over taxes levied to pay the debts of the British crown. Our forefathers fought and died for the liberties and guarantees enshrined in the Constitution, including preserving the people’s power over the purse. The administration apparently now wants the president to have the powers of a king.
It is a stunning proposal. Both Madison and Hamilton in the Federalist Papers regarded the power of the purse as arguably the most important power Congress has. Madison described it as “the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people.” It was, and is still, a vital check on the power of the executive. President Obama, who no longer has to face the people in another election, wants to dispense with it.
House Democratic leader Nancy Pelosi is apparently willing to abdicate her constitutional responsibility for political gain. She says she agrees with the administration’s proposal. Perhaps she actually believes that preserving the entitlement society at the risk of the liberty of future generations is more important than preserving the rights and balance of power the Constitution prescribes. Perhaps she fundamentally does not understand the Constitution and her duties under it. She does seem to think that either the 11th Amendment (state sovereign immunity) or the 14th Amendment (state due process and equal protection) — she is not quite sure which — guarantees the power of the federal government to spend money it does not have and incur debt Congress has not authorized. It would be a case of disturbing ignorance for any American citizen, much less a member of Congress. For a party leader, it is nothing short of terrifying.
House Speaker John A. Boehner now has more on his plate than reforming entitlements. He must do what he has sworn to: support and defend the Constitution of the United States against its enemies. As long as there are Democrats like Mrs. Pelosi, he must ensure that they never come to power in the House. His Republican caucus may be all that stands in the way.
The speaker is in a difficult position. It may be hard for the public to fathom why an extension of most of the expiring tax cuts is really a tax increase. After all, that the tax cuts expire under current law generates the tax increase, and many may well see it that way. In addition, there may be some Democrats, including some in the administration, who would like nothing less than to see all of the Bush tax cuts expire and be able to blame Republicans for it. The administration’s negotiating strategy makes one wonder.
The most viable option, therefore, is to protect as many of the expiring tax cuts as possible. If Mr. Obama wants Clinton-era tax rates on upper-middle-class wage earners, then maybe he should own them. To protect the economy, the House could exclude small-business employers from the new rates. Perhaps all taxpayers also should get a credit for the new Obamacare taxes they will have to pay next year. After all, not even Mr. Clinton had those. A good case can be made that the payroll-tax cut really should expire — Republicans cannot have it both ways on entitlements. Finally, the sequester should take effect so that the administration can figure out whether it wants to sacrifice discretionary spending for entitlement spending. Whatever the mix, the important point is that the House should pass a bill and leave town. Go campaign. Explain to the country what is at stake.
The American public needs to know that what matters in this confrontation is the right of Americans to control their own government and to preserve the power of the purse through their elected representatives in Congress. It is their money. In reality, what the country is facing right now is a constitutional cliff. Compared to that cliff, whatever other cliff may be at stake in this lame-duck session of Congress is a distant, and secondary, problem.
Warren L. Dean Jr. practices law in Washington, D.C. and is an adjunct professor of law at Georgetown University Law Center.