Less than 24 hours after their resounding victory in the midterm elections, Republicans vowed to join forces with President Obama to jumpstart the moribund U.S. economy. Speaking at a press conference, Obama called the results "humbling" and repeatedly promised to work with newly empowered members of the GOP. Whether pledges of bipartisan cooperation translate into deeds remains to be seen.
One of the key tests for the new Congress next year will be whether the federal government will be able to raise the debt ceiling, the maximum amount that Washington can borrow to fund its operations. In February, Congress passed legislation to raise the level of red ink from $12.394 trillion to $14.294 trillion. Not a single Republican voted for it. Estimates show the U.S. will need to raise its threshold yet again early next year. Tea Party stalwart Rand Paul, who was elected yesterday as the Republican Senator from Kentucky, told ABC News that he would not rule out filibustering the debt-ceiling bill, adding "I don't think adding debt is a good idea."
The question for observers is not whether the debt ceiling will pass, but what Paul and other newly elected members backed by the Tea Party will want in exchange for going along with it. In this game of high-stakes political poker, which has gone on for years, the Republicans hold all the cards.
"If the government can't borrow any money, it can't meet its commitments," such as bonds, Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities think tank, said in an interview. "It can lead default on the debt which would obviously be an economic disaster."
Testing the Waters
The debt ceiling is one of many issues that will test what passes for bipartisan harmony in a bitterly divided Congress that is under increasing pressure to revive the moribund U.S. economy. Business groups, such as the National Association of Manufacturers (NAM), have been skeptical of the Obama agenda and have poured millions of dollars into the campaigns of Republicans.
Speaking to reporters on a conference call, NAM head John Engler argued that the administration could boost jobs by spending on infrastructure, enacting free-trade deals and cutting bureaucratic red tape at agencies such as the Environmental Protection Agency, which creates uncertainty for businesses.
"We are optimistic about working with the new Congress and look forward to the changes in policy that lay ahead," says Engler, a former governor of Michigan, who said he would be shocked if taxes rose. "This was an economic election, which is why the rebuff was so harsh."
Richard Trumka, the president of the national labor unions federation, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), offered the same assessment in a separate conference call, saying voters were clearly angry at the status quo. The Democratic blowout would have been worse without the work of union members, he says, adding that they were hurt by a huge influx of special-interest money.
"We were a firewall," he says. "President Obama inherited two wars and an economy teetering on the edge."
The AFL-CIO argued that a survey it did yesterday shows that the election was not an endorsement of the GOP. Interestingly, Marco Rubio, the successful Tea Party Senate candidate from Florida, said the same thing. Trumka vowed that the union would campaign against candidates that worked against the interests of working people.
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