Barack Obama, who likes to talk about “folks,” was at his folksy best during his press conference yesterday. Several times, he used analogies to household living in an attempt to illustrate the folly of the Republican push for negotiations to end the partial government shutdown and raise the debt ceiling.
He led of his remarks with this:
Think about it this way, the American people do not get to demand a ransom for doing their jobs. You don’t get a chance to call your bank and say I’m not going to pay my mortgage this month unless you throw in a new car and an Xbox. If you’re in negotiations around buying somebody’s house, you don’t get to say, well, let’s talk about the price I’m going to pay, and if you don’t give the price then I’m going to burn down your house. That’s not how negotiations work.
That’s not how it happens in business. That’s not how it happens in private life.
Later, there was more of the same:
Imagine, in your private life, if you decided that I’m not going to pay my mortgage for a month or two. First of all, you’re not saving money by not paying your mortgage. You’re just a deadbeat. And you can anticipate that will hurt your credit, which means that in addition to the debt collectors calling, you’re going to have trouble borrowing in the future.
And if you are able to borrow in the future, you’re going to have to borrow at a higher rate.
Well, what’s true for individuals is also true for nations, even the most powerful nation on earth. And if we are — are creating an atmosphere in which people are not sure whether or not we pay our bills on time, then that will have a severe long-term impact on our economy and on America’s standard of living.
So again, just to boil this down to personal examples — if you’ve got a mortgage, a car note and a student loan that you have to pay, and you say, well, I’m going to make sure I pay my mortgage, but I’m not going to pay my student loan or my car note, that’s still going to have an impact on your credit. Everybody’s still going to look at that and say, you know what? I’m not sure this person is that trustworthy. And at minimum, presumably, they’re going to charge a higher interest rate. That’s what would happen to you if you made those decisions; well, the same is true for the federal government.
Usually, of course, it’s Republicans who argue that no household or business would operate like the federal government, which piles debt on top of debt. So it was odd to hear President Obama invoking the old verities of responsible household finance.
What made it even odder was that the position Obama was pitching yesterday — he won’t negotiate with Republicans until they agree to raise the debt ceiling — is completely inconsistent with ordinary household and business practice.
As Steve noted this morning, a bank would not extend additional credit to a family or a business that already owed enormous debt without insisting on terms that ensure responsible financial practices going forward. Yet, Obama’s position is: extend my line of credit and then — only then — will I talk to you about ideas for living more within my means.
Obama’s position is untenable — or rather would be if it didn’t tend to merge in the public mind with his much more tenable position on the partial government shutdown.
Obama is on higher ground with respect to the shutdown. It is perfectly sensible — as just noted — to condition the extension of additional credit on steps to put one’s financial house in order. By contrast, it is radical to condition the continued full operation of the federal government on the effective repeal or alteration of a single piece of legislation.
This is why I believe Republicans erred in bringing on a battle over a partial government shutdown instead of waiting a few weeks to fight on the higher ground of the debt ceiling.