Tag Debt Ceiling Negotiations

A Few Republicans Are Crazy But Consistent

Danny Vinik 1 Comment

When I read National Review reporter Jonathan Strong’s piece this morning that some House Republicans weren’t happy with their first offer to President Obama in return for raising the debt ceiling, I was shocked. The offer is basically everything House Republicans could ever want and they weren’t happy with it?! But as I’ve thought it over, it actually makes a bit of sense. From Strong’s article:

“It definitely has a lot of goodies in it – things that arguably would grow the economy and arguably would generate revenue. But still you have to address the spending problem,” said Representative Mo Brooks of Alabama.

“The reason that we have to raise the debt ceiling is because we have deficits. The reason that we have deficits is because we spend a whole lot more money than we bring in in revenue. And this debt-ceiling package does not fix the underlying cause of the problem, which are the deficits,” he added.

Other House Republicans expressed similar sentiments. This is actually consistent with what House Republicans have been screaming about for years: more spending cuts in return for raising the debt ceiling. Now, our deficits are falling fast and the long-term debt has decreased significantly so it’s absurd to be cutting spending more. But this makes more logical sense then the christmas tree list of demands in the Republicans first offer.

The ironic thing is (and always has been) that by having the U.S. risk default, it actually drives up our borrowing cost and increases our debt. If we were to breach the debt ceiling, it would likely increase our long-term interest payments by nearly a trillion dollars. So it makes absolutely no sense to use the debt ceiling as leverage to extract spending cuts or anything else from the president. It’s a crazy, irresponsible tactic. The debt ceiling should be forever abolished.

But at least some House Republicans haven’t lost sight of the fact that their original reason for using the debt ceiling as an extortion device was because of the long-term debt. Business Insider’s Josh Barro wrote today that all of this shows that “the pretense that debt limit fights are about the public debt is over.” For most Republicans, that is certainly the case. But Strong’s article demonstrates that there are some who are still sticking to that principle. They are reckless, rash and stupid for holding the debt ceiling hostage, but unlike the rest of their colleagues, they are also consistent.

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The Debt Ceiling is Terrifying

Danny Vinik 1 Comment

I recently finished reading Robert Draper’s book, Do Not Ask What Good We Do, on the 112th Congress, focusing on the House of Representatives. Here’s a quick excerpt from a meeting with Joe Biden and Eric Cantor during the 2011 debt ceiling fight:

“Well, we’re giving you the vote on the debt ceiling,” said Cantor. “You may not think it’s a big deal. But you’ve got to understand, I’ve got a lot of guys who think that not raising the debt ceiling wouldn’t be such a bad thing – that in fact it’s just what we need.”

The Democrats weren’t sure what to say

Cantor added, somewhat abashedly: “We’re working hard to educate our guys.”

Here’s another passage about the debt ceiling:

Still, the disconnect between what Boehner himself had termed fiscal “Armageddon” and the bullheadedness of the tea partiers unnerved members like Jo Ann Emerson. She sidled up to one of the freshman one day and said, “I need you to explain why you don’t think there’s anything wrong with us defaulting on the debt. I can’t have this conversation with my constituents because I’ll yell at them and they’ll yell at me. So you tell me.”

The freshman’s reply bewildered Emerson. “We’ve spent way too much money,” he told her. “If this is price we pay, so be it.”

Emerson wanted to reply: You asshole! Do you really not understand what could happen?

Some House Republicans are entirely satisfied with defaulting on our debts. Now in January, the 113th Congress begins which is a bit more liberal than the previous one. But that leaves Boehner, presuming he keeps his Speakership, with three basic options:

1. Bring up a vote to raise the debt ceiling no-strings-attached. This would earn near unanimous support from Democrats and the Speaker could lose almost all of his party and still have the bill pass. It would also provoke massive blowback from the Right and jeopardize his power in the party.

2. Bring up a vote to raise the debt ceiling with very conservative strings-attached. This would earn very little support from Democrats and the Speaker would have to ensure that every Republican voted in favor of the bill. To that, it would have to be a very conservative bill. That means it will be DOA in the Senate. Boehner would, however, solidify his Speakership.

3. Bring up a vote to raise the debt ceiling with moderate strings-attached. This could earn moderate support from Democrats and the Speaker could lose some of his party and still have the bill pass. The bill would also likely pass the Senate. However, this would also provoke massive blowback from the Right.

The President has taken the stance that he will not negotiate over the debt ceiling. Obama does not want to create a precedent for the minority party to use the debt ceiling as a hostage to enact concessions from the majority. I believe he will stick by this.

That’s going to make this very scary though. It means that either Boehner choose Option 1 above and risks his Speakership or puts together a bill (possibly with the help of Nancy Pelosi or Harry Reid) that raises the debt-ceiling with moderate strings-attached. He’ll risk huge criticism from his base and still have to keep much of his caucus in line while working with Pelosi and Reid. At the same time, the President will refuse to even take his calls.

Otherwise, we default.

It helps that Boehner will likely keep his Speakership when the House votes on January 3rd. But he still has to whip votes for any bill and that’s very difficult to do with the current makeup of House Republicans, as seen by the failure of his Plan B. And this time, there’s no cheap tricks such as a Super Committee and Sequester to get a deal. It’s a very scary proposition.