Presidential candidate and former Speaker of the House Newt Gingrich urged Republican lawmakers yesterday to avoid cutting a deal with Obama over raising the debt ceiling. His argument: a government shutdown (and possible financial crisis) would show they were serious about not raising taxes.
In a policy paper provided to The Associated Press, Gingrich invoked the twin government shutdowns from the 1990s, which many cite as an example of Republican overreach and one of the reasons that Bill Clinton was able to cruise to re-election. “Proving we were serious changed the attitude of the Clinton White House toward working with us,” he insisted. “Being firm led to both a policy and political success”
Gingrich’s shutdowns led the government to cease non-essential work for a few days. The current crisis over the debt ceiling could be much more serious: the Obama administration has warned that if the government’s $14.3 trillion borrowing limit is not raised by Aug. 2, the U.S. will face its first default ever, potentially throwing world financial markets into turmoil. In a speech last week, Treasury Secretary Tim Geithner warned that a default would cause a “dark period” worse than the economic chaos of late 2008/early 2009.
The Senate canceled its July Fourth recess planned for this week, and Obama—after a press conference last week where he slammed Republicans for supporting tax breaks for wealthy interest groups—has now re-invited Republican and Democratic leaders to the White House on Thursday to discuss a deficit reduction deal that would also settle the debt ceiling stand-off
The chief disagreement between the parties remains over taxes. Democrats insist that a deficit-cutting package of deep spending cuts also include higher taxes for the wealthiest Americans and fewer tax breaks for oil companies. The White House is proposing about $400 billion in increased tax revenues, and has recently targeted “tax expenditures,” like tax breaks for the likes of corporate jet users and oil companies.
Gingrich, who was in Iowa for July 4th weekend as he tried to raise the spirits of his flailing presidential campaign, insists that Republicans should not back down and agree to any tax increases. Money can instead be raised by cutting social welfare programs such as Medicaid and food stamps.