Fiscal Cliff v2.0
Just a quick post with my thoughts on Treasury Secretary Jack Lew’s announcement today that by mid-October the U.S. will only be able to make payments with the cash it as each day. In other words, we’re hitting the debt ceiling a couple of months early. Kevin Drum posits that this means negotiations over the budget are going to be lumped in with the debt ceiling:
If mid-October really is the drop-dead date, it means that budget negotiations in late September and debt ceiling negotiations in early October pretty much run right into each other. It’s Fiscal Cliff v2.0.
I don’t quite know what this does to John Boehner’s fragile attempts to keep the lunatic wing of his party under control. Nothing good, probably. I’m also not sure what it does to President Obama’s promise not to negotiate over the debt ceiling. If all of this stuff get munged together, then everyone’s going to get mighty hazy mighty fast about what exactly is being negotiated.
The budget negotiations and debt ceiling running into each other will hurt President Obama and Democrats on both those issues. Raising the debt ceiling should be a technicality that no American would consider holding hostage. We know that House Republicans don’t believe that though. We also know that most Americans don’t follow politics closely and asking them to differentiate between Obama’s willingness to negotiate over the budget, but refusal to do so over the debt ceiling is difficult. Most aren’t going to understand the difference. and will expect Democrats and Republicans to compromise since there are two issues.
If the two were separate, Democrats could bargain with Republicans over the budget and come to a deal (or a continuing resolution). Then, a few months later, they could refuse to negotiate over the debt ceiling and explain to the public that this isn’t debatable. We don’t debate paying our bills. The two issues running into each other just muddies the water. That will allow Republicans to escape some blame on both topics and give the GOP more leverage in negotiations. It may even force the President to bargain over the debt ceiling (or do so subtly). Either way, Republican elites should be pleased with this outcome. It may make their party a bit harder to control during the process, as Drum points out, but the increased leverage they have over the President is a worthwhile tradeoff. As for Democrats, there’s nothing good about this at all. Get excited for Fiscal Cliff v2.0.