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.

Boehner Succeeds in Switching Demands

Ezra Klein picks up on an important point in this morning’s Wonkbook:

Two issues led to the shutdown. One was defunding or delaying Obamacare. The other, as Sen. Ted Cruz put it, was “making D.C. listen.”

What’s been remarkable — and largely unnoticed — is that Republicans have abandoned both those demands.

What’s odder about the shutdown, though, is that Republicans have also abandoned their core policy demand. They’ve largely stopped talking about Obamacare. They’re begging simply for negotiations. Their latest plan, in fact, is for another budget commission:

The GOP’s play, announced by Cantor at the meeting, is to push for a bicameral commission that brought comparisons to the “supercommittee” from the 2011 Budget Control Act.

In a Wall Street Journal op-ed, Paul Ryan articulates the emerging strategy. “To break the deadlock, both sides should agree to common-sense reforms of the country’s entitlement programs and tax code,” he writes. The word “Obamacare” never appears in the piece. Nor does any other reference to the president’s health-care law.

The Republican Party initially justified this shutdown and these tactics to itself by arguing that it was channeling the will of the people and justified by the dangers of Obamacare. But they’ve lost pubic opinion and realized Obamacare isn’t up for negotiation. But the loss of their original rationale for the shutdown hasn’t led them to reopen the government.

It shouldn’t surprise anyone that Boehner and Republican leaders first started by demanding the president defund or delay Obamacare. Speaker Boehner could not betray the Tea Party and split his party in half by bringing up a clean CR. Even if he had brought up a clean CR that also repealed the medical device tax, the Tea Party still would’ve been infuriated. It would’ve split the Republican party in half. This has clearly been the case all along and Boehner’s strategy has always been to slowly ratchet down GOP demands over time so that the Tea Party believes he fought for them. First it was defund Obamacare. Then it was delay Obamacare. After that it was delay the individual mandate. As Klein points out, GOP demands now have nothing to do with Obamacare.

Boehner knew all along Senate Democrats and Obama weren’t going to change the law. It was a non-starter. But he had to at least show his conservative members that he fought for them. Allowing a government shutdown to happen and drag out for a couple of weeks is a good way of showing them that.

His next step was to quietly switch demands from something unattainable to something possible. This was the toughest part as the Tea Party would revolt if it became clear he was giving up on their goal of stopping Obamacare. As Klein notes, this switch happened “largely unnoticed.” That’s a big victory for Boehner.

Now he still has to return to his party with some concession from the president. It doesn’t have to be much, but he can’t have chosen two major fiscal fights and return with nothing. He also must show that he fought as hard as he could – that means waiting until the last minute to make a deal. This is Boehner’s strategy in every one of these fights and it has succeeded repeatedly. In my first article defending Boehner, I wrote that his strategy is the following:

  1. Lie to his caucus, allow them to “take control” and make it seem as if disaster will strike
  2. Use that desperation to subtly change the conversation to the upcoming disaster and extract concessions from Democrats
  3. Go back to his caucus, say he got everything he could and convince them to vote to avoid the crisis at the last minute
  4. Keep his speakership by allowing himself to seem weak and extract some concessions
  5. Lather, rinse, repeat

Allowing the conservatives members to “take control” required shutting down the government this time. But the rest is unfolding exactly as I wrote. He lied to his caucus about stopping Obamacare, allowed them to “take control” and is now using that desperation to extract any type of concession from Democrats in return for opening up the government and raising the debt ceiling. He’ll then go back to his members, say he got everything he could and we’ll avoid a default. The Tea Party will be angry, but not quite angry enough to challenge his speakership. Lather, rinse, repeat. The hardest part was switching his party’s demands from stopping Obamacare to a fiscal concession. Now that he’s done that, the rest isn’t too difficult. It’ll just take until the 11th hour to play out.

The Government Shutdown and Debt Limit Fights Are Merged

President Obama reiterated today that he will not negotiate over the debt limit. This has been his stance for the past couple of years after the disaster that was the 2011 negotiations. Using the debt limit as extortion is not acceptable. It’s not how our government works and Obama cannot give in to Republican hostage-taking. The problem is that Obama may not have a choice.

We are currently in day eight of the government shutdown and Treasury will breach the debt ceiling sometime in the next two weeks or so. The only way for Obama to demonstrate that he really means it when he says that he won’t negotiate over the debt ceiling is by forcing Speaker John Boehner (R-OH) and House Republicans to raise the debt limit with zero concessions. And guess what? Boehner would reluctantly bring such a bill to the floor at the last minute, because he understands how catastrophic a default would be. Obama knows Boehner understands this and will wait him out if necessary.

The problem comes with the government shutdown. If the two parties come to an agreement before the debt ceiling deadline, that agreement would very likely include a debt ceiling increase. Boehner knows that even if tosses it in there without receiving any concessions, he can still turn around and tell his members that he broke Obama’s pledge not to negotiate. At the same time, Obama can’t reject that.

If the two parties don’t come to an agreement over the government shutdown by the deadline, it will force Boehner to surrender and raise the debt limit without concessions. This would be embarrassing for the speaker and would infuriate his conservative members. He would also lose significant leverage in the government shutdown negotiations. From his comments today, the speaker understands all of this as well.

That’s why I’m confident that a deal will be reached by October 17, the approximate date that the government won’t be able to pay all of its bills. It will take until the 11th hour so that Boehner can return to his conservative members and say he got everything he could out of the president. Both sides will also ramp up the rhetoric and partisan attacks as the time goes by in order to gain leverage in the standoff. Boehner is still hoping that Obama is bluffing, although he knows that is highly unlikely. Obama is still hoping that Boehner will cave and raise the debt ceiling with a clean CR, also highly unlikely to happen. Yet, neither side is going to let go of those hopes and that will force these fights to continue until the last minute.

But they will come to an agreement. It will include a new CR with a debt limit increase and some minor concessions (a new non-binding supercommittee, repeal of the medical device tax, etc.) to placate the Tea Party. Unfortunately, that means Boehner can return to his members and tell them that Obama negotiated over the debt limit. When we hit the debt ceiling in the future, we’re going to go through this entire process again and conservatives will claim that Obama negotiated in 2011 and in 2013. It won’t be true, but it won’t matter. Hopefully then there won’t be a government shutdown fight to muddy the waters. Unfortunately, right now there is.