Converging Fiscal Policy Dilemmas

Conservative Republicans want to force a final showdown over Obamacare, which coincides with another vote on the federal debt ceiling and unraveling inequities caused by across-the-board spending cuts ordered by sequestration.When Congress returns after its August recess, another financial crisis looms as conservative Republicans threaten to shut down the federal government unless Obamacare is defunded.

Shutting down the federal government is probably never a good things, but it may be especially bad timing this fall in light of new leaks showing privacy abuses by the National Security Agency and smoldering trouble in the Middle East as Egypt tips back to a dictatorships. Even Greece is making noises it needs another bailout, which in the past has put a damper on international economic recovery.

Egged on by groups such as the Heritage Foundation and former House GOP rabble-rouser Jim DeMint, conservative Republicans are demanding a final political showdown on the Affordable Care Act. They say they are willing to risk a government shutdown and the economic and political consequences to block the signature achievement of President Obama in his first term. Many are out on the political hustings encouraging voters to pressure their representatives to sign the defund-Obamacare petition.

Cooler heads in the GOP call this a fool's errand, noting the idea has virtually no chance to pass in the Democratically controlled Senate and even less likelihood to be signed into law by the author and defender of Obamacare. These Republicans worry their party could once again become a national political pariah, as happened when House Speaker Newt Gingrich staged a similar maneuver in 1995.

House Republican Leader Eric Cantor, normally a cheerleader for his rambunctious neocon members, views the effort as a "doomed cause." GOP Senator Richard Burr of North Carolina calls it "the dumbest idea I've ever heard."

But the waters are thicker now than they may have been in 1995. Then as now, Congress faces another vote to extend the federal debt ceiling. But the threat of defaulting on federal debt poses danger to the still-tentative U.S. economic rebound. The debt ceiling increase required is substantially lower now than in 2011 because of the economic recovery.

Complicating the budget picture even more are across-the-board spending cuts mandated by sequestration, the hangman's noose politicians saw as so ominous it would force a grand bargain budget deal. Only it didn't. While the cuts haven't reverberated as deeply as Obama officials predicted, they have had and will continue to have an effect. For example, fewer children will be able to participate in Head Start pre-school programs because of funding reductions. The Defense Department also has warned it may need to start reducing armed forces, making it harder to respond to trouble spots around the world.

And there seem to be trouble spots everywhere in the world. The ouster of Mohammed Morsi as president of Egypt by that country's military has sparked deadly street encounters and led to a 7 p.m. curfew in a country accustomed to coming to life at night, when the air is cooler. Much debate in Washington centers on whether to continue or suspend $1.5 billion in largely military aid to Egypt. The problem is the Egyptian generals don't seem to care, at least not enough to let the decision affect their actions.

Syria remains tied up in a bloody civil war and there is unrest in Libya and Tunisia, where the Arab Spring blossomed. Israel and the Palestinians are back at the table, thanks to efforts by Secretary of State John Kerry, but they are still hung up over new Israeli settlements. Iran has a new, seemingly more moderate president, which may or may not signal an opportunity to open talks about Iran's nuclear ambitions.

Closer to home, congressional disgruntlement has grown over federal data collection by the NSA. Obama has promised more transparency measures, but that may not be enough to stem discontent that is bending toward imposing more restrictions on federal snooping, especially after new revelations from Edward Snowden, now ensconced in a Moscow apartment, showing thousands of alleged privacy violations by NSA.

Concern over snooping doesn't stop there. American banks and businesses have asked for federal help to prevent sophisticated and potentially foreign-government-backed hackers from penetrating their data centers and stealing their secrets. Most fingers point to the Chinese, which is its own can of political and policy worms for the United States.

With all that going on, the question looms of whether it is the right moment to halt government in its tracks to block a national health insurance law that is still moving with fits and starts toward full implementation.

A lot to discuss. Naturally, negotiations haven't started. No one seems to have a game plan, or even an exit plan. But it's still August, at least for another 9 days.