Would Democrats Support a Six-Month Clean CR?

It seems like we are slowly inching towards a compromise between Senate Democrats and Senate Republicans. Majority Leader Harry Reid (D-NV) has issued a new offer that includes a nine-month debt ceiling hike, a six-week clean continuing resolution, a delay of the medical device tax, greater income verification for Obamacare subsidies, a formal budget process and a yet-to-be-decided Republican concession. It’s unclear what that concession will be. But if you take the Democrat’s position that they will not negotiate over the debt ceiling or a clean CR, here’s what the deal looks like from their perspective:

Republicans get:                                                           Democrats Get:

  • Delay of medical device tax                                        •  Unknown Concession
  • Greater income verification
  • Formal budget process

The clean CR and debt ceiling increase are not part of the deal as they were never negotiated upon (although Republicans can return to their constituents and say they broke Obama’s promise not to negotiate on the debt ceiling, even if it isn’t actually true). John Boehner will break the Hastert Rule and allow something like this to pass, because he knows we can’t default. That’s how Democrats envision the final deal, at the moment.

But Republicans are upset. They think that Democrats are moving the goal posts on them by demanding a six-week, instead of a six-month, CR. Here’s Sen. Lindsey Graham:

You can blame us, we’ve overplayed our hand, that’s for damn sure. But their response, where the president and [Senate Majority Leader Harry Reid] basically shutting everybody out, and when you try to negotiate, they keep changing the terms of the deal … it’s very frustrating.

So, what terms of the deal does Graham think Democrats changed? He doesn’t specify, but I think this all comes down to what Democrats thought they meant when they said they wanted a clean CR. They meant a CR that lasted six-weeks, or at least they are saying that’s what they meant. Republicans think Democrats meant that they would support a clean CR for any period of time. This is how Reid’s offer looks to them:

Republicans get:                                                           Democrats Get:

  • Delay of medical device tax                                       •  Six-week clean CR
  • Greater income verification                                        •  Unknown Concession
  • Formal budget process

This is the main sticking point right now. Republicans see the six-month CR as something Democrats said they would agree to by itself. Thus, the six-week continuing resolution is a concession for them. Meanwhile, Democrats see the opposite. The six-month clean CR would be a concession. When Democrats originally were calling for Republicans to open government, they didn’t say for how long. The House continually passed bills for six-week CRs that had absurd conditions on them. Democrats may have assumed that any CR would last for six weeks – but they never said so publicly (at least that I can find). Instead, they hammered the Republicans by telling them to pass a clean CR and reopen government, without any time horizon on those demands. Republicans want that clean CR to last six-months to lock in sequestration for longer. Democrats, of course, don’t.

There’s an easy way to figure out what Democrats would accept: Boehner could bring up a clean six-month CR in the House. Would Senate Democrats reject it? If so, it would contradict everything they have said about wanting Republicans to pass a clean CR. If they passed it, it would lock-in the cuts, a current goal of Senate Minority Leader Mitch McConnell. Unfortunately for him, Boehner won’t bring such a bill to the floor due to the internal political dynamics of House Republicans.

Instead, McConnell has limited power to achieve a six-month CR. Americans overwhelmingly blame Republicans for the shutdown and the October 17 debt ceiling deadline is a few days away. He must make a deal and has limited leverage to do so. Meanwhile, Harry Reid truly believes that a six-month CR is not what Democrats meant when they said they’d support a clean CR. If he agreed to a deal with a six-month CR instead of a six-week one, this is how it would look to him and Senate Democrats:

Republicans get:                                                           Democrats Get:

  • Six-month clean CR                                                      •  Unknown Concession
  • Delay of medical device tax
  • Greater income verification
  • Formal budget process

That’s not acceptable to them. That’s the impasse we’re at now. It has nothing to do with Obamacare. Instead, it’s all about how long the clean CR should be and what Democrats meant when they said they wanted a clean CR. And the only person who can force Democrats to answer that question has his hands tied by extremists in his caucus. All as the clock slowly ticks towards a self-inflicted financial crisis.

We’re Not Going to Breach the Debt Ceiling

Here’s all you need to know about the debt ceiling:

  1. John Boehner knows how horrible it would be to breach the debt limit.
  2. John Boehner has the power to stop us from breaching it.
  3. John Boehner will not allow us to breach the debt ceiling.

It really is that simple, All of the talk around the debt limit is about how Boehner can sell a debt limit raise to his members in the best possible way. It has nothing to do whether he will actually raise it. This is even clearer today as Boehner and House Republican leaders have unveiled a new plan to increase the debt ceiling for a short period. There seem to be a couple of conditions on it – there’s no language yet so it’s unclear what exactly those will be. The White House reiterated as well today that it will only accept a clean debt ceiling increase, no conditions attached. Obama has correctly refused to negotiate over the debt ceiling and I’m confident that he will stick to his position.

As I’ve written before, Boehner could likely come to an agreement with Obama and Senate Democrats that raises the debt ceiling and passes a continuing resolution for a very minor concession (an agreement to negotiate on tax reform possibly). Obama will still stand firm in not negotiating over the debt limit, but a deal like that would be too good to pass up. He would basically receive a clean CR and clean debt ceiling raise for no substantial concessions. The problem for Boehner is not convincing Obama to accept such a deal. It’s convincing his caucus. That’s why he has spent the past ten days demanding that the White House negotiate while slowly ramping down his demands. It’s politicking.

The same thing is happening with this six-week debt ceiling increase. If we hit the debt ceiling deadline without an agreement over the government shutdown, Boehner will be forced to raise it without any concessions. That would be an embarrassing defeat and would infuriate the Tea Party. This short-term debt ceiling hike will give him another month and a half to prove to his conservative members that he’s doing everything in his power to fight the president. He has to come to an agreement over the budget while also raising the debt ceiling. This gives him more time to accomplish that.

Of course, he has to sell this six-week increase to his members as well. That’s why he’s including conditions on it. Without those, the Tea Party would be furious as well. But, as Greg Sargent reports, the White House isn’t going to agree to a short-term debt ceiling increase that’s tied to negotiations over the budget. That won’t happen. So, Boehner now has to rally support for a clean six-week raise that gives him more time to make a deal with the White House where he and Republicans get basically nothing. It’s a terrible position for the speaker to be in, but he doesn’t have a choice since he will not allow us to breach the debt ceiling. Boehner’s new plan just reinforces that message.

Wall Street Isn’t Falling For The GOP’s False Debt Ceiling Premise

The Washington Post’s Greg Sargent has a great post today on the inherent contradiction of the Republican Party’s debt ceiling position. On the one hand, Republican leadership has said that the debt ceiling must be raised. The U.S. cannot default. On the other hand, they are demanding concessions from the president for doing something they know they have to do. As Sargent said on Twitter, “if Rs concede debt limit MUST go up to avert econ disaster for all, why are they entitled to something in return for it?” The answer is that they aren’t entitled to something in return. Here’s Sargent:

The second argument made by Republican sympathizers is that, okay, Republicans will raise the debt limit in the end, but they don’t want to, so it’s still a concession on their part. But why don’t they want to raise it, if they know it must happen to avert economic disaster? The only conceivable answer is that staking out a posture of reluctance to raise it gives them leverage to extract concessions.

This gets to the core truth about this debate: As long as it’s an open question whether Republicans are prepared to allow default, the claim that Republicans are threatening to do extensive harm to the country in order to extort concessions from Dems that a radical faction of their party is demanding is 100 percent right.

On the other hand, if it is not an open question that Republicans are prepared to allow default — that in the end, John Boehner will definitely raise the debt limit with support from Democrats when it comes down to it, because he knows it must happen — then why are we even having this discussion at all?

These are very important points. The media is fueling Boehner’s negotiating strategy by buying into the premise that Republicans are actually willing to breach the debt ceiling. It’s unclear how many House Republicans fall into that camp, but we know that Boehner isn’t one of them. As the speaker of the House, he can bring a bill to the floor that will raise the debt ceiling and it will pass with plenty of Democratic support. If Boehner holds true to what he said, there is no story here. The House will raise the debt ceiling. Period. Any talk about concessions or negotiations supports the House Republican’s false premise that we could actually breach the debt ceiling.

While the media may be falling for Boehner’s trick here, Wall Street isn’t. There’s been a lot of reporting on the fact that the bond markets are calm and investors don’t seem particularly worried about a default. That’s because they understand that Boehner will raise the debt ceiling. They read the coverage of the debt ceiling. They see Ezra Klein write that he’s “scared of the debt ceiling” and Jonathan Chait say that the “debt-ceiling showdown is the fight of Obama’s life.” They see congressmen worry that they don’t know how this will end. They see and read all of this.

And they don’t care.

They know there won’t be any negotiations and that Boehner will raise the debt ceiling eventually. There isn’t a freak out in the markets, because there is nothing to freak out about. Unlike the media, the market isn’t buying into this false Republican premise.