Big, fat Greek fiscal crisis likely to fuel Washington debt wars

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The big, fat Greek fiscal crisis might seem like a far-away problem. The birthplace of democracy teeters on the edge of a financial collapse which holds the potential to fracture the European Union and shred its common currency.

But while most Americans aren't lending Greece's troubles much attention, it's only a matter of time before the meltdown fuels a new debt debate in Washington.

The Treasury Department announced a few days ago that the federal debt is frozen at $18.112 trillion. The debt has stalled at that threshold since mid-March, just $25 million below the debt ceiling of $18.113 trillion. Congress had suspended the debt cap in February 2014 through mid-March of this year, and it was determined that Treasury Secretary Jack Lew would simply declare a "debt issuance suspension period" after federal obligations exceeded that mark this past March, which he did.

So that doesn't mean the U.S. isn't racking up additional debt. It's just that Congress switched off the speedometer that gauges national debt. But that's a short-term fix.

The expectation is that Congress will have to either re-suspend or raise the debt restriction in October or November.

Congress and President Obama entered an epic saga over raising the debt limit in the summer of 2011. The national debt resonated as a campaign issue in the 2010 midterm elections. Tea Party loyalists bent on cutting spending descended on Washington as a rebuke to Obama's first two years.

A similar battle could play out this autumn. And the fight over Greece's debt will inevitably be linked to America's fiscal woes.

But fixing the problem in Washington won't be easy.

The only way Congress forged an agreement to raise the debt limit in 2011 was by agreeing on $1.2 trillion in spending cuts. Either a so-called "supercommittee" of bicameral, bipartisan lawmakers was going to hash out a plan to make the cuts -- or an indiscriminate system of across-the-board reductions would do that for them. The supercommittee failed. Soon afterwards, automatic spending cuts, known as sequestration, set in.

Sequestration marks one of the few instances in recent years where lawmakers have actually curbed spending. But now there's a bipartisan call to extinguish the sequester. Part of the reason is that members of Congress from both sides fret that the federal government is skimping on the programs it really needs. Sequestration hems in lawmakers.

On its face, it may seem as though the sequester is a success -- serving as one of the few factors to regulate congressional spending. That's true. But it's a failure when it comes to bringing down the national debt.

Here's why: there are two types of federal spending, "mandatory" and "discretionary." The federal government spends a little over $3 trillion each year. "Mandatory" spending composes two-thirds of that spending, and pertains to funds spent without any annual direction or appropriation from Capitol Hill. Entitlement programs such as Medicare, Medicaid and Social Security -- plus interest on the debt -- make up mandatory spending. Those are the biggest drivers of the debt. Certainly Congress could step in and start to reduce those programs if it wanted to curb overall federal spending. But cuts to popular entitlement programs could be political suicide.

Meantime, Congress still controls "discretionary" spending, or the remaining one-third of the budget. That amounts to a little over $1 trillion. Congress decides how much money it will cough up for various programs and departments. But here's the rub: sequestration only slashes funding on the discretionary side of the ledger. It never touches mandatory spending, the section of federal outlays where some cuts could actually make a difference.

And now we're back to Greece and what the fiscal experience in Athens portends for Washington. Greece allots about 56 percent of its yearly spending on social programs like entitlements. The U.S. already exceeds that, with mandatory spending clocking it at 66 percent of overall expenditures.

Debt is the common denominator between the U.S. and Greece. Most Americans might not understand the broader implications of a Greek debt meltdown. It's just all Greek to us now. But if Congress and future presidents don't get a handle on the debt, it could be all American in a few years.

Capitol Attitude is a weekly column written by members of the Fox News Capitol Hill team. Their articles take you inside the halls of Congress, and cover the spectrum of policy issues being introduced, debated and voted on there.