The Ultimate DC Insider’s 3 Big Tips For a Debt Deal
Policy + Politics

The Ultimate DC Insider’s 3 Big Tips For a Debt Deal


Few Washington insiders have ever had the depth and breadth of experience as Leon Panetta, who on Monday shared his thoughts for getting out of the current budget and the debt ceiling morass

Panetta, 75, served in the Obama administration as Defense secretary and CIA director. He completed stints as chief of staff and budget director for President Clinton. The Californian spent 16 years in Congress, including a four-year stretch as chairman of the House Budget Committee. Panetta even worked in the Nixon administration, only to later switch parties and become a Democrat.


With the government shutdown about to enter its third week and the debt limit maxing out on Thursday, Panetta acknowledged how dire the situation looks.

“Clearly, this town has been governing by crisis after crisis,” he said at a breakfast hosted by The Wall Street Journal. “It almost requires a crisis to confront the challenges facing this country,” but adding that this kind of catharsis would come at the cost of “losing the trust of the American people.”

Not to scare people too much, but, in this case, a crisis could be translated as a flirtation with a government default that would likely crash markets and the economy, forcing Democrats and Republicans to finally cooperate. Negotiations have continued between the two sides, but in fits and starts.

“I never in my wildest imagination after going through this 17 years ago figured that it would happen again,” he said. “It is not smart politically to do things that hurt the American people.”

Panetta expects a stopgap measure will prevent all of this chaos, with a deal to stave off default and reopen the government for several weeks.

“My sense is that it’s going to be on a short timeline,” he said. “But that’s the price to be able to pass anything in both the Senate and the House.”

Panetta also offered three big ideas about how to settle the perpetual budget fight once and for all:

* Both Sides Need to Be Engaged – President Obama and House Speaker John Boehner (R-OH) have a strained relationship, one defined by repeated showdowns instead of their round of golf way back in 2011.

“There are not the personal relationships that are so important to our ability to govern,” Panetta said.

Panetta praised Obama as “extremely bright,” “extremely able,” and as someone who understands the issues and asks the right questions. He then added, “This is a town where it’s not enough to feel you have the right answers.” But in a federal government with gerrymandered congressional districts, tight legislative majorities, and endless fundraising, the needed level of engagement never emerged.

The former cabinet officer—and a veteran of the government shutdown in 2005 and 2006—said both sides share the blame for never having developed a working relationship.


“It takes two or more to tango,” Panetta said, “depending on what kind of tango you’re involved in.” 

* Everything Must Be Negotiable – Republicans have refused to allow any budget talks that involve additional tax hikes. That has to stop, said Panetta, since it’s impossible to work out a compromise if certain items are not even allowed to be part of the conversation.

Panetta stressed that taxes must be part of negotiations to trim the deficit over the long haul through reforms to entitlement programs such as Social Security, Medicare and Medicaid. 

“If they aren’t willing to put everything on the table, we’re really going to have a breakdown in terms of governing in America,” Panetta said.

More importantly, the conversation should go through a conference committee. After the Senate and House each passed their budgets this spring, House Republicans blocked the formation of a committee, all but setting up this failure.

“I don’t think they want to try to come up with some razzle dazzle super committee, or group of muckety mucks from the outside world, or that kind of thing,” Panetta said. “That hasn’t worked. So they’re going to have to do it under the context of a conference on the budget.”

* Both Sides Must Govern Together – Republicans have shown an unwillingness to help govern with President Obama, choosing, instead, to define themselves by blocking his agenda. Panetta said that the lesson from the last shutdown 17 years ago was that the GOP understood the political value of working with President Clinton.

Panetta stressed that the inability to cooperate could force the country into decline, instead of a renaissance.

“This isn’t the result of a crisis,” he said. “It’s not the result of a war. It’s the result of something tragic that happened in this country. It’s not the result of natural disaster. This is all self-inflicted.”