The US debt ceiling battle: A House divided. By Nathaniel Sheppard Jr.

The US debt ceiling battle has become so acrimonious that it even has bitterly divided Republican members of the House of Representatives against themselves.

Old line Republicans have been trying to reach a compromise with Democrats that would allow them to support raising the nation’s debt ceiling and avoid possible catastrophe on August 2, when money runs out to pay the nation’s domestic and international creditors.

They have been hampered in doing so not only by strong disagreements with Democrats on fiscal policy but also by unwavering demands for structural reforms by an ultra conservative freshman wing of their own party known as the tea baggers.

As a result, there is now a bitter divide within Republican ranks between an Old Guard that understands the need to compromise and a freshman class of House members willing to push the economy over the cliff on principle. The tea baggers insist, for example, that to be acceptable, a debt ceiling plan would have to include a directive that Congress vote on a balanced budget amendment.

So serious is the divide that Rep. John Boehner and veteran Sen. John McCain issued warnings to ultra conservative party members. Mr. Boehner – Speaker of the House of Representatives – told holdouts in his party: “Get your asses in line.” Senator McCain said Tea Partiers’ insistence on passing a balanced budget amendment was “worse than foolish” and “bizarro.”

“The idea seems to be that if the House GOP (Republicans) refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue and the public will turn en masse against Barack Obama,” Mr. McCain said. “Then Democrats would have no choice but to pass a balanced budget amendment and reform entitlements and the Tea Party Hobbits could return to Middle Earth.”

“This is the kind of crack political thinking that turned Sharron Angle and Christine O’Donnell into GOP Senate nominees,” Mr. McCain said, referring to two failed 2010 Tea Party candidates so extreme that they frightened everybody.

Increases in the nation’s debt ceiling have been almost automatic for decades, allowing indebtedness to rise to dangerous levels. The US debt is $14.1 trillion or $45,068.58 for each of the 311,969,269 men, women and children in America, enough to buy the nation’s 400 biggest companies or, better yet, 58 million homes with a median price of $242,000. The US Gross Domestic Product is $14.8 trillion and annual federal taxes collected a total of $2.16 trillion.

Borrowing to pay for the country’s ravenous appetite for goods, services, military adventures, education, health and entitlement programs was easy because of America’s good faith and credit. We always paid our bills with a smile. Borrow we did. Now, about 40 cents of every dollar available to the government is from borrowed money.

Prodded by the 87 neophyte members, who believe their mandate is to reduce government power and spending at all costs, mainstream Republicans decided to link any new hikes in the debt ceiling to commensurate cuts in the federal budget, structural reforms and no new taxes.

That linkage is at the heart of the months-old stalemate with Democrats that has brought the nation to the brink of insolvency with the potential of a ripple effect worldwide if not resolved by August 2. That is the last day current revenues will cover payments to domestic and international creditors.

Democrats acknowledge that the deficit is out of hand and that cuts are needed but differ vociferously with Republicans on from whence they should come. This is where the element of class comes in.

Both sides have their own ideological sacred cows to protect. For Democrats, it is entitlement programs such as Social Security, Medicare and educational programs that primarily benefit the middle and lower income classes. Republicans want to keep tax cuts enacted during the presidency of George W. Bush and emoluments to big business and conglomerates through tax loopholes. These primarily benefit the rich.

Republicans would have at entitlement programs, arguing that they eat up the lion’s share of the budget. Democrats would rather increases taxes on the rich, let the Bush tax cuts expire and cut off Big Business’ largess by closing tax loopholes.

Democrats and Republicans know they need to reach an accord within days to head off the drop-dead date but have not been able to do so. Democrats say failure to do so will lead to catastrophic consequences. Republicans say that is just a scare tactic.

The latest plans offered by both parties would raise the debt ceiling but differ in their duration. Republicans offered a two-step plan authored by House Speaker Boehner. It contains $1.2 trillion in spending cuts and calls for a bipartisan congressional committee to trim another $1.8 trillion by the end of November.

Mr. Boehner has had to revamp the proposal to make more cuts after congressional numbers crunchers determined his proposed cuts would fall short of what is needed to equal the proposed debt ceiling hike.

The proposal as submitted Tuesday would raise the debt ceiling by $1 trillion for six months, then require Congress to vote further borrowing authority in the midst of the 2012 presidential campaign, a ploy critics say, to unseat President Barack Obama by pinning him to a worsening economic crisis. The Republican proposal also stipulates a series of spending caps over the next decade and instructs Congress to vote on a balanced budget amendment by the end of 2011.

The Democrat’s plan, authored by Senate Majority Leader Harry Reid, provides for $1.2 trillion in spending cuts, $100 billion in mandatory savings and $1 trillion in savings from ending war spending in Iraq and Afghanistan. It would extend the debt ceiling by $2.7 trillion through 2012.

They say maintaining tax cuts will create desperately needed new jobs although the Bush administration netted only three million jobs during its eight years, a fraction of the 23 million jobs created under President Bill Clinton’s administration before enactment of the tax cuts. Both plans call for a joint congressional committee to look at deficit reduction and propose additional spending cuts.

The tea baggers, united with high profile, ultra-conservative radio, television and newspaper commentators, think tanks and evangelical groups, have kept the fire under the feet of mainstream Republicans not to compromise much. if at all with Democrats. They have threatened to punish, for example, any Republican who compromise with Democrats and support a tax hike, even if indirect. They oppose the Boehner plan.

The Tea Party wing likes nothing that Mr. Obama has done in his presidency and has vowed to make him a one-term president. They see the nation’s sagging economy as a weak spot they can exploit. In that effort, they have resorted to trench warfare in the budget battle even to the point of revolt against the party Old Guard on issues including a balanced budget amendment.

A Democratic majority in the Senate made passage of such a measure impossible, Mr. McCain said. To suggest otherwise, he said, was foolish.

“That is not fair to the American people to hold out and say we won’t agree to raising the debt limit until we pass a balanced budget amendment to the Constitution,” Mr. McCain said on the Senate floor Wednesday. “It’s unfair, it’s bizzaro. And maybe some people who have only been in this body for six or seven months or so really believe that.”

While Republicans and Republicans and Democrats continue their blather, the debt ceiling countdown continues.

(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: [e-mail])