Raising the Debt Ceiling Is Paying Our Bills

Rep. Andy Barr (R-KY) is confused:

President Barack Obama says we need to pay our bills. I agree. But raising our debt limit without reform is not paying our bills. It is asking China, bond holders and other creditors to pay our bills.

The president says we need to avert a default. I agree. But raising our debt limit without any reform is not averting default. It is merely postponing default. Instead of simply opening up a new credit card in our childrens’ name because we’ve maxed out all of our own, we must take responsibility and stop business as usual in Washington. We owe it to our children and grandchildren to end the spending spree and start making the tough choices that will finally force the government to live within its means.

Here’s how U.S. fiscal policy works: The federal government takes in a certain amount of money and spends a certain amount of money each year. Congress passed laws that dictate what people have to pay to the government and how much the government will spend. In the U.S., the federal government almost always spends more than it takes in. It makes up the difference by taking on debt, but the debt ceiling prevents us from taking on more debt. It doesn’t change how much we’re spending or taking in. When Congress refuses to pay the debt ceiling, it stops us from making up that gap. The amount we owe doesn’t change. We just aren’t paying our bills.

The part about China is particularly bad. Rep. Barr really thinks that raising the debt limit is us asking China to pay our bills? China’s decision to purchase Treasuries has nothing to do with helping the U.S. out. China makes its own fiscal policy decisions that it thinks is best for itself, not the United States.

Finally, raising the debt ceiling without reforms does nothing to our odds of a future default. In fact, the only reason there is a chance the U.S. breaches the debt limit in the future (and I don’t think there is one) is the Tea Party’s willingness to do so. In a sane world, Congress would abolish the debt ceiling and there would be zero chance of a U.S. default, but sadly we don’t live in a sane world. Raising the debt ceiling now only increases the odds of a future default in that it makes Tea Party Republicans even more anxious to commit economic suicide.

Were Mainstream Conservatives To Blame for the Shutdown?

The post-mortem of the McConnell-Reid deal to open the government and avoid a default has focused a lot on who is to blame on the Republican side. Many have laid the blame at Speaker Boehner’s feet – something I have pushed back against a number of times. House Republicans blame Senate Republicans. Senate Republicans blame Ted Cruz and Co. The Tea Party blames the establishment. The Washington Post’s Jonathan Bernstein has narrowed it down more, specifically focusing on mainstream House Republicans:

There’s plenty of blame to go around for the shutdown and debt-limit fiasco, but any account which focuses mainly on Boehner is probably letting both the moderates and the mainstream conservatives — in other words, most House Republicans — off far too easy.

Bernstein has named this group the ‘Fraidy Cat Conference:

These 175, too, are mostly paranoid about renomination, even if they want reporters to know that they’re not actually nuts. They’re the ones who drive what Boehner does. They’re the ones who have to bear the brunt of the responsibility for this shutdown. They’re the ones who are the ‘fraidy cat conference — so paranoid about renomination, and more broadly about allowing any distance to appear between themselves and the “conservatives” who they probably honestly have contempt for, that they’re willing to run their party right into a ditch.

The problem with this argument is that the ‘fraidy cat conference is right to be afraid. They have seen the power of the Tea Party and how tough primaries can be. They’re right to be paranoid about renomination.

This gets to a larger problem with diagnosing who is to blame for the shutdown. It’s important to look at the incentive structure for all of the actors involved.

Mainstream conservatives – the ‘fraidy cats – have an incentive to put as little distance as possible between themselves and the right wingers. Many are part of the “hope yes/vote no” conference that is glad the shutdown is over with and a clean CR passed, but couldn’t vote for the legislation themselves for fear of conservative blowback. I imagine that for many, this was an easy decision. Stick with the Tea Party through and through.

Like Boehner, these members had the power to end the shutdown anytime they wanted. Like Boehner, they had both individual and group incentives to keep the shutdown going until the 11th hour. Supporting the shutdown reduced the chances that these mainstream conservatives would face a primary challenge while also keeping the party unified. This point cannot be repeated enough: the GOP cannot allow a civil war to break out between the establishment and the Tea Party. It must do everything in its power to avoid that.

The reason that Boehner and the mainstream conservatives are incentivized towards making extreme demands and shutting down the government is because the Tea Party sets those incentives. The far-right members are the ones willing to jump ship from the Republican Party and commit political suicide. In doing so, they would take the Republican Party down with them. That gives them the power to set the framework of the House Republican strategy. If the Tea Party wants to fight, then Boehner and mainstream conservatives must listen. They have every incentive to do so. These are rational decisions.

The Tea Party is being irrational. They chose a strategy guaranteed to fail, forced their fellow Republicans to use those futile tactics, and caused needless suffering and economic harm. Their incentives are shaped not by outside forces, but by themselves. Yet, they decided on this radical plan to shut down the government if the president did not make drastic alterations to his greatest legislative achievement. It was bound to fail and blow up in their face. Yet, the Tea Party irrationally chose to take this route anyways.

Ultimately, they are the ones to blame.

“Go Out There and Win an Election”

Those were the words President Obama directed towards the Republican Party today as he further emphasized that this was the end of debt-ceiling hostage-taking. If the Republican Party doesn’t like the president or his policies, it should take its message to the American people and win elections. It’s a simple argument and it also applies to moderate Republicans. If they want to take back their party, win elections. Defeat Tea Party candidates in primaries.

Liberals are hopeful that this complete and utter defeat of the Republican Party in the debt-ceiling battle will lead to a change of GOP strategy. The theory goes that the Tea Party will see that its extreme tactics don’t work and will look for more practical methods to fight the president. This is highly unlikely to happen.

Boehner did an excellent job keeping his members unified, but grassroots organizations around the country have had about enough. Molly Ball has a great story today about how many conservative activists are ready to leave the GOP and want to primary every Republican who voted for the bill. Their belief is that Republican tactics didn’t fail, their leadership did. For the moment, there’s a gap between the opinions of these activists and the Tea Party members in Congress. These congressmen had nothing, but positive things to say about the speaker yesterday while Eric Erickson, Rush Limbaugh and other notable conservatives weren’t so kind. That gap will disappear soon enough as those congressmen look to stay on the good side of Erickson and Co.

Many reform conservatives were appalled with the Tea Party’s tactics. Ross Douthat hopes this was a learning exercise for the party so that it won’t “pull this kind of stunt again.” David Frum is ready for the Tea Party to exit altogether. He’s not alone in that opinion.

But Boehner and Republican leaders know that as much as they want to do that, they can’t. Whether they like it or not, the Republican Party needs the Tea Party as much as they need the moderates. They are listening to the Tea Party and not the moderates, because the Tea Party has no problem declaring war on the establishment and jumping ship. That may be electoral suicide, but the right wing doesn’t fear those consequences. The moderates do. It’s the same reason the hard-liners didn’t fear the political consequences of a futile government shutdown or the economic consequences of breaching the debt ceiling. It’s a game of chicken between the moderates and radicals. Whoever is willing to ditch the party and cause electoral defeat for both has control. Right now, that’s the Tea Party.

That’s why Boehner can’t simply cast aside his conservative members. It’s why he must do everything in his power to keep them happy and listen to them.

The way moderates take back the party is not through a civil war, but by defeating them in elections. As these extreme tactics fail, the moderate Republicans will earn more support from the marginal Tea Party voter. Slowly, they will win back their trust. This won’t be an overnight change. It will take at least the 2014 election cycle, probably longer and there’s nothing either party can do to speed it along. It’s deeply frustrating for Democrats to look across the aisle and see a party held captive by a small fraction of extreme members. For Republicans, it’s even more frustrating to be the ones held captive by those members. But casting aside those members in a nasty civil war will be political suicide for both the establishment and the Tea Party. The best thing moderate Republicans can do is win elections.