SHOCKER: It Was All A Bluff

Looks like the House is moving forward with their own bill this morning. Here are the details, from Robert Costa:

  • Continuing Resolution until 1/15
  • Debt Ceiling increase until 2/7
  • Vitter Amendment for members and cabinet members
  • Two-year medical device tax delay
  • Income verification
  • Ban on the use of extraordinary measures

That’s it. Nothing that really undermines Obamacare and no risk of heading over the debt limit. It’s still unclear if this can pass the House. It will likely get little, if any, Democratic support and many House conservatives are not going to be happy. In addition there isn’t anything that Senate Democrats will like so I’m sure they will reject it. I imagine Boehner may still have to break the Hastert Rule in the end with a bill somewhere in between what currently exists in the Senate and this one.

But look at how far the House has come! Boehner was never going to allow us to default. That’s abundantly clear now. In addition, he watered down the Vitter Amendment at the last second because he knew all along how awful it would be for congressional aides. It’s what everyone has been clamoring about for weeks. The House GOP finally admitted it at the last second. As for income verification, this is already part of the law and a number of conservatives have already rejected it as meaningless. A ban on extraordinary measures is a minor concession (and something I support).

That’s what House leadership is now PROPOSING. That’s their offer for opening the government and raising the debt ceiling. In addition, it seems that House Republicans are relatively unified behind this plan (Robert Costa reporting that there won’t be a revolt). We’ll see if that holds true in the end, but it’s important to realize how far the House GOP has come in their demands. They said all along they were willing to breach the debt ceiling if Obamacare wasn’t stopped. Instead, they’re accepting a corporate tax delay, a benefit cut for members, enforcing a part of Obamacare that already exists and a ban on a technical method to extend the debt ceiling. It confirms they were bluffing the entire time.


Did the Government Shutdown Stop Us From Defaulting?

Ezra Klein thinks so:

But whatever the endgame, the fight now is over a government shutdown. That’s bad. But it’s not nearly as bad as a fight over the debt ceiling. It’s evidence of how far into dysfunction American politics has fallen that this can or should be said, but thank God for the government shutdown. It might just have saved the country.

Hmm I’m not so convinced.

Here’s what the odds of a default would’ve been without a government shutdown: 0%.
And here’s what they are with a government shutdown: 0%.

I’ve held this view for a while. Under no circumstance would Boehner allow us to breach the debt ceiling. It helps his negotiating position to try to convince journalists that he is crazy enough to breach it, but when push comes to shove, Boehner understands the catastrophic consequences of a default. He also understands that he single-handedly has the power to stop us from defaulting. History would not look on him kindly if he had that power and chose not to exercise it.

That doesn’t mean the government shutdown didn’t help him out. On the contrary, Klein is exactly right that it gave the Tea Party a chance to vent their anger. Thus, it gave Boehner political cover. He can choose to fight on the government shutdown instead of the debt ceiling. But don’t think that means that the government shutdown actually helped prevent a default. Boehner was always going to raise the debt ceiling.

Path Set for Ultimate Battle Between Boehner and the Tea Party

There’s an interesting dynamic developing in the Republican party over John Boehner’s proposal for a six-week debt ceiling increase. The Tea Party has hesitantly accepted the idea, arguing that it would separate out the debt ceiling and government shutdown fights. They want to use the government shutdown to stop Obamacare and the debt ceiling to enact entitlement reform. For them, keeping the two crises separate is vital and the short-term deal accomplishes that. Here’s how Sen. Ted Cruz described it on KYFO radio:

My understanding is that this is being driven by House conservatives who are quite reasonably saying listen, let’s focus on Obamacare, on winning the fight on Obamacare, on helping remedy the enormous harms Obamacare is inflicting on millions of Americans, and let’s push the debt ceiling a little further down the road so that it doesn’t distract us from the fight we’re right in the middle of now.

What’s amazing is that Boehner and Republican leadership want the short-term extension for precisely the opposite reason that Cruz and Co. want it. Boehner wants to make a larger deal that includes a continuing resolution and longer debt ceiling increase in return for concessions from the president. President Obama says he won’t negotiate until Republicans reopen the government and raise the debt ceiling, but if Boehner offers a deal with few concessions (repealing the medical device tax or a promise to focus on tax reform, for instance), the president will likely accept it. Boehner, thus, needs time to craft an agreement and rally support for such a deal. That’s why he’s proposed this short-term extension. From Robert Costa yesterday:

But the quiet acceptance of a short-term extension among rank-and-file Republicans gives Speaker John Boehner, who heads to the White House later today, a chance to avert default and eventually craft a larger fiscal bargain. “We’re telling folks, help us here, and we’ll work together moving forward,” says a veteran House Republican. “We know this isn’t perfect, but we’re not living in fantasyland, thinking we can get everything we want before the deadline.”

Rep. Cathy McMorris Rogers, #4 in the House Republican leadership, further emphasized that the six-week deal would give Republican leaders time to “continue this conversation.

This is going to set up a major battle between Boehner and the Tea Party in the next couple of weeks. I argued yesterday that Boehner’s pivot from demanding a stop to Obamacare to demanding a fiscal concession was a major victory for the speaker. I seem to have spoken to early. This short-term deal gives Boehner much-needed time, but when the Tea Party realizes that he’s using it to craft a larger deal on both the budget and debt ceiling, they are going to be livid. How Boehner then attempts to calm them and pass whatever deal he comes to is his next challenge.