Obama Speech: US debt crisis déjà vu, all over again. By Nathaniel Sheppard Jr

NATHANIEL SHEPPARD Jr., Al Arabiya

During his White House appeal for public support in his game of chicken with Republicans over the budget ceiling
Monday night, President Obama said: “It is a dangerous game we’ve never played before, and we can’t afford to play it now.” That was not exactly true. We have been there before. Democrats and Republicans played that dangerous game over the budget in 1995 and again in 1996 with horrifying consequences. At the end of the 1995 fiscal year, then president Bill Clinton, a Democrat, and the Republican–controlled Congress had not passed a budget. When Congress did pass a budget, Mr. Clinton vetoed it.

Republicans wanted deep cuts in the budget to slow government spending but the resulting drop in revenue would undermine Clinton administration plans for Medicare, public health, the environment and education. Both sides had differing estimates of economic growth.

Newt Gingrich, then the Speaker of the House and now a candidate president in the upcoming election, threatened not to raise the debt ceiling. The ensuing battle led to two government shutdowns, in 1995 and 1996. Non-essential government workers were put on furlough and non-essential services suspended for six days in 1995 and for 21 days in 1996.

A report issued by the Congressional Research Service last year said the shutdowns also restricted health care and welfare services to veterans, halted disease surveillance at the Centers for Disease Control and Prevention and cleanup at more than 600 toxic waste sites, closed hundreds of national parks, froze new clinical research at the National Institutes of Health, cost the tourist and airline industries millions of dollars and tied up close to $4 billion in federal contracts.

President Obama may have been partially right in that this time, a large chunk of the world economy could be at risk if the doomsday scenario of economists is right about the impact of a US default on its debts, should the two sides not reach an accord by the deadline 8 days from now..

That Republicans and Democrats fight like cats and dogs over the budget is a given. What is new here is the Republican break with a tradition going back to 1997 of grousing about hikes in the debt ceiling but doing the responsible thing in passing them then continuing the fight over budget cuts. On the eve of an election year, though, Republicans have a different idea they believe can become a big political win—approve a hike in the debt ceiling only if it is tied to hefty cuts in government spending.

The Obama administration does not oppose cuts in spending but would go after them differently. Republicans are rolling the dice that the fear of a meltdown or near meltdown on Mr. Obama’ watch, yet another financial crisis for the president, will make him blink. So far he has not and instead made an 11th hour effort to enroll the public on his side.

This is guerilla theatre, bare knuckles politics at its bloodiest, a fight for a perceived political pot of gold, sheer folly and madness. We the people believe that default on our Treasury obligations is simply beyond of the realm of the senses, that the fur will stop flying in the final reel, that an agreement will be reached and both sides will be all smiles and glad handing– until the next time.

After all, the 14th Amendment to the Constitution says “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned,” and the 1935 Supreme Court decision in Perry v. United that under Section 4, nullifying a United States government debt “went beyond the congressional power.”

If Congress does not make funds available to honor the nation’s $14.1 trillion debt–$4.45 trillion owed to foreign governments–would that not have the same impact as nullifying the debt and undermining the full faith and credit of United States obligations?

The president was absolutely right when he said “People are fed up with a town where compromise has become a dirty word.” The question is, who which side will convince the public that the other is at fault.

Perhaps there should be a pox on both sides’ houses?

(Nathaniel Sheppard Jr. is a veteran national and foreign correspondent who worked at The Chicago Tribune and The New York Times. He can be reached at: natsheppard@gmail.com)