Chutzpah!

The nearest English translation of the Yiddish word, “Chutzpah”, is unmitigated gall. The translation does not do justice to the Yiddish expression. It is usually accompanied by histrionics suggesting disgust, dismay and derogatory views of the action taken by the person at whom the word is thrust. There is an old joke. A teenager murders both his parents and throws himself on the mercy of the court, pleading that he is an orphan. Now that’s chutzpah!

This morning, I use the word to describe the actions of the Republican leadership of the House of Representatives. Just a few weeks ago, Congress approved the increased US government S1.1 trillion budget for 2014. Let me make it clear: the Republicans in both the House and Senate supported the measure.

My blog of January 19^th set out the important changes to the tax structure. I wrote: “It ought to follow that the US government spending limit will be raised without condition because the Republicans have agreed new spending initiatives.”

According to most polls, the blame for the government closure last year was fixed on the Republican Party, or to be more accurate, its right wing. Therefore, it ought to be reasonable to conclude that the US debt limit, which must be approved by Congress, would be raised to meet the expenditures that Congress has voted for.

Let me elaborate. This is not a situation where the White House has power. The Constitution gives power to the legislative branch: “To lay and collect taxes,…to pay the debts…of the United States and to borrow money on the credit of the United States.” All the administration can do is use its power to persuade Congress and the public at large that the debt ceiling should be raised, so that the government can borrow sufficient funds to pay its debts as they fall due. The decision to do so rests with Congress.

What the government currently faces is a cash flow problem. Anyone who has run a business or a home knows that you need ready cash or borrowing facilities to pay bills when they arise. If you don’t pay, there are consequences, including removal of supply of goods and services, not to mention litigation. In the case of a government, failure to pay debts will damage its credit rating and make future borrowing more expensive, as well as bring its reputation into disrepute.

It is not easy to regulate a government’s cash flow. Its revenue arises from borrowing and taxation. Tax money comes in at irregular times and in sums which it cannot predict with absolute accuracy. As the work force and business profits rise and fall, the tax revenue changes. Therefore, it is possible for the government to have sufficient funds one day, followed by a default position the next day, and back in the black the following day, unless it has borrowing facilities to rely on.

In the case of the US, the Treasury has warned that it could start to face payment problems at the end of February. House Majority Leader Eric Cantor (R-VA 7) has scheduled time this week for “possible consideration of the legislation related to the debt limit.” Some House Republicans have said that “possible conditions are under discussion,” including the elimination of military pension cuts, which I would remind you, were agreed by the Republicans in December last year, i.e. just six weeks ago. So, the Republicans might agree to allow the government to pay its debts if the government agrees to increase its spending on military pensions! I thought the Republicans were opposed to increases in government spending.

There are only seven legislative days left before the government might have to default or close down. Surely, the taxpayers haven’t voted for this kind of grandstanding. Congress has already approved the expenditure which the administration has to make next month. It really has to stop politicising the debt ceiling issue and do the job it is meant to do.

If Congress fails to legislate on the debt ceiling, causing the government to shut down again, I trust the voters remember this next November. In the meantime, I hope I have persuaded you that the actions of the House Republicans come within the definition of chutzpah!