Ban Extraordinary Measures

The past 24 hours have seen a mini-breakthrough in the stalemate over the government shutdown and debt ceiling  with House Republicans looking to pass a six-week debt ceiling hike in return for formal negotiations on the budget and a permanent ban on the Treasury Department’s use of extraordinary measures to extend the debt ceiling. President Obama has already come out against the condition of formal negotiations on the budget so this deal is a non-starter. But Boehner could easily downgrade the “formal negotiations” to a mere resolution seeking Democrats to negotiate, something non-binding and not a substantial concession. In that scenario, would Democrats accept a permanent ban on extraordinary measures? I hope so, not just because it will get us closer to a solution to both crises, but also because it makes policy-sense as well.

A quick recap: We actually hit the debt ceiling of $16.999 trillion in May, but the Treasury Department has been using some strange budgetary gimmicks to extend our borrowing authority. However, those gimmicks, known as extraordinary measures, have a limit and we’ll hit that limit next Thursday. After that, we default. An example of these extraordinary measures including delaying payments for public employee pension funds (more info here). That’s what Republicans want to permanently ban.

This makes a lot of sense. The only thing that using extraordinary measures accomplishes is delaying us from officially breaching the debt limit. But the only time Treasury actually has to use them are when one political party is looking to fight over raising the debt ceiling. Extraordinary measures delays that fight a couple of months. Think about it this way: why is having the debt ceiling fight now better than having it this past May? There never is a good time for these fights (and the debt ceiling should be abolished), but extending them for an undetermined period of time is pointless.

Since Republicans have not put forward an official proposal, Democrats haven’t commented on the idea of banning extraordinary measures. Wonkblog’s Neil Irwin offers one possible reason for White House opposition:

Such a step would give this and future administrations less leeway to influence when the debt ceiling becomes a binding constraint, so it won’t be shocking if the Obama administration opposes the idea.

One of the dirty secrets of the Treasury’s cash management function is that very few people on earth understand how it really works, and almost all of those people work for the Treasury. So Republicans on Capitol Hill have felt that they don’t have reliable information on when exactly they really, really need to raise the debt ceiling and when Jack Lew & Co. have more tools in their bag of cash management tricks.

That’s all true, but that doesn’t seem like a good reason to keep extraordinary measures. The minority party should never use the debt ceiling as a hostage, but if they are, it’s better for everyone that they have reliable information on when they need to raise the debt ceiling. If House Republicans want to wait until the last second to strike a deal, they really need to know when that last second is. Otherwise, there is a (small) risk we accidentally default. That’s a risk we don’t need to take.

In addition, it’s much easier for journalists and politicians to explain to the public when we hit the debt limit, instead of when Treasury can no longer use extraordinary measures to stop us from breaching it. It’s an unnecessary complication that confuses the public and simply delays a nasty fight with no real benefits. Let’s get rid of it.

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.

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.