Many view the White House meeting today as a sign that the debt ceiling debate is reaching critical mass – especially as Treasury continues to demogogue the August 2 deadline it has set for the exhaustion of U.S. borrowing authority. However, it is important to note that default does not even pose a remote threat at this point; the United States takes in ten times in revenue what it needs to service its debt, and can stil afford to pay out major entitelment obligations as well. What's more, Treasury's posturing on deafult belies the fact that it gets to make the call on whether or not the government pays its debts. If it refuses to do so, the consequential default is no one's fault but Treasury's own.
It's unclear what, if anything, will emerge of substance today from the White House meeting. It is unlikely the President would be willing to dive into the negotations without there already being at least some resolution on a deal. It is rumored the Biden-led talks found about a trillion dollars in spending cuts that were agreeable to both sides of the aisle.
One thing, however, is evident: no deal can be reached until Democrats admit their fixation on taxes distracts from the real issue: government spending. Republicans have made clear a deal that includes a tax hike cannot pass the House, and until Democrats come to terms with their spending addiction, a final compromise is not possible. What's more, revenue discussions focus on revenues resulting in tens, maybe hundreds, of billions of dollars. This is a negligent debate to be having when the government's spending problem rests in a matter of trillions – a signal that the Democrat posturing on tax hikes is a way to delay the debate, not solve it.
As the government exhausts its almost $15 trillion in borrowing authority, all eyes will be on whether Democrats are finally willing to have an "adult conversation" about fixing the problem of government spending. As the lead Democrat in the negotations, it is President Obama's responsibility to get his congressional allies to grow up and get serious about the country's explosive debt. Your move, Mr. President.