Steve Benen persuasively argues that the Republicans now believe that they cannot get anything worth having out of threatening the full faith and credit of the United States again, and they will give us a clean bill on the debt ceiling. The White House always believed this to be the case and never wavered publicly or privately, despite sometimes strong progressive skepticism. I believed them, which is why I thought the platinum coin argument was undermining their position rather than strengthening it. Once the coin was off the table, the GOP folded its tent in short order.
The problem is not solved, however. The Republicans plan on offering a series of short-term debt-ceiling hikes. Benen is probably correct in saying this:
There’s apparently growing GOP support for a clean, short-term extension of the debt ceiling — which, as we discussed yesterday, doesn’t seem to make any sense at all — which would presumably set the stage for additional talks. This will play out soon enough, but at a certain level its impact is limited. Once everyone in Washington — Democrats and Republicans, the White House and Congress — realizes that GOP leaders aren’t prepared to allow a default on our obligations, the game is effectively over.
My hope is that the credit-rating agencies see things the same way that Benen does, because there is a risk of a downgrade if the debt ceiling threat isn’t resolved and we continue to bump against it over and over. Remember, our credit rating is based on the confidence people have that we won’t default. Leaving that in doubt in any way is risky and reckless.
In any case, the fight will move over to the debate over how to fix the sequestration. The risk there is a government shutdown. I am fairly certain that the Democrats would welcome nothing more, as any hope of winning back the House depends on a major shift in public opinion against the Republican Party, and nothing could do that more effectively than intransigence so extreme that it shuts down the government.
One of the difficulties for Speaker Boehner is that he would very much like to pass a fix for the sequester that he can use to go to conference with the Senate. If the Senate doesn’t pass its own fix, Boehner can point the blame on them. If the Senate does pass a fix and they can’t agree to a compromise in conference, then Boehner can argue that the House passed a fix and spread the blame for the shutdown.
That seems simple, but passing a fix means actually laying out what cuts he wants. And the cuts the Republicans are calling for are deeply, deeply unpopular. For this reason, Boehner fiercely resisted offering any detailed plan for cuts throughout all his negotiations with the president on the fiscal cliff. But he’ll have to do it now, or he’ll really look incompetent and he won’t have any way to shift blame when the government closes its doors. Yet, laying out the cuts for all to see could be the most unpopular thing of all.
If I were him, I’d retire.
The shutdown would be the result of not passing a new Continuing Resolution right not the sequestration?
I thought the sequestration was automatic.
technically, yes. They can keep delaying the sequestration.
And the sequester “battle” will soon be over as well.
The idea that the republicans, having ignominiously folded after talking rivers of smack about the debt ceiling, will then turn around and raise hell about the sequester is laughable. Although the same trollbaiters will play the same act, with ever decreasing returns.
Cantor made it official. Clean 3-month extension, in return for nothing. GOP rolled again.
Nobody could have predicted that the debt ceiling would be raised without the White House agreeing to cuts in Social Security and Medicare benefits.
In baseball, the rule is ‘three strikes and your out.’
Remember the Iraq War Pundits? Remember how they kept insisting that they weren’t wrong, dammit? And how the people who so vigorously echoed their predictions continued to treat them as very important, insightful voices who needed to be taken seriously, even after the evidence that they were completely wrong became insurmountable?
Why am I reminded of this by this news about the clean debt ceiling increase? Oh, no reason.
that’s okay news, can we push for longer because doing this every 3 months seems pointless?
It’s not pointless, it’s counterproductive for the Republicans. As long as the debt ceiling hangs over everybody’s head, the plutocrats keep getting reminded a substantial fraction of Republicans will throw the whole country, including them, under the bus. Simultaneous the Tea Partiers get frustrated by every vote to increase the deficit. For us, it’s actually a political benefit.
Exactly right.
Remember, oh two weeks ago, when Obama was an idiot who negotiated away all his leverage, and allowed the Republicans to use the debt ceiling to demand concessions?
Not so much, as it turns out.
I disagree. It’s playing their game, it just delays when we can start focusing on moving the country forward.
So, we’ll extend for 3 months and all we’ll talk about is the debt ceiling for 3 more months and then they’ll extend it for a few more months and the cycle repeats. All we do is keep fighting, meanwhile the country falls apart around us.
that the sequester is the best deal they’ll get out of this House? The House is going to require serious entitlement cuts and less defense department cuts, whereas the sequester keeps entitlements intact and allows for the first serious defense department cuts in a generation. It does gut science spending and other progressive spending priorities, but that may be better than what we’d get if negotiations are re-opened.
There’s a chance that the House would agree to eliminate, delay, or reduce, the domestic-side cuts in exchange for eliminating, delaying, or reducing the military-side cuts.
reduction then. Would that really fly?
I don’t know.
The Republicans are faced with having to choose defense cuts, tax increases, or increasing the deficit.
I do not know what they will ultimately do, but I bet it’s going to be fun to watch!
I’d be shocked if we got a deal better than the sequester. Hopefully the Republicans will get locked into a cycle of repeated delays on that too, as a major renegotiation is going to be hard while the defense contractors will scream bloody murder at the sequester going through. I expect the sequester to get kicked back too so the Republicans will make their stand on the continuing resolution, which is actually their best leverage point.
If they play for small cuts on the continuing resolution I think they’ll beat Obama, who will be hard-pressed, both politically and temperamentally, to reject a continuing resolution with 30 billion or so/year in cuts. If they overplay their had, though, I think the political backlash will stop them and we’ll stay status quo.
If we don’t cut a substantial debt reduction deal, we will have our credit downgraded.
On what basis? If we have no further deficit reductions, our debt/GDP stabilizes at its current ratio, which is actually on the low side of the major economies. Even if the sequester is eliminated it increases only a few percent and remains low compared to other major economies.
Besides that, it doesn’t really matter. A monetarily sovereign nation with slow growth will necessarily have interest rates near 0. Japan has more than twice our debt, and has been downgraded several times, yet it’s still paying interest rates only slightly above 0.
The last time someone downgraded our credit, government borrowing only got cheaper.
According to Talking Points Memo
If the senate does not pass a budget nobody in the congress gets paid
Sounds like a win win to me
I do not believe Wall St. will be happy with a short term debt ceiling deal. It make no sense. For Obama it just continues the GOP lie that raising the debt ceiling allows him to increase our debt and that he is bankrupting the country.
I cannot believe this is a real proposal from the GOP. Monday Obama will have the bully pulpit and they risk his response to their BS in front of the world?
Why wouldn’t Obama take this deal?
Let the GOP punch themselves in the face every three months. He keeps winning these showdowns.
No budget, no pay, eh. That means they can string out the appropriations bills til next December. And fight over each one.
Much more sensible for legislative pay to end on September 30 if the appropriation bills aren’t passed.
The capitulation by the Republicans on the Debt Ceiling shows that critics of Obama’s handling of the situation in the summer of 2011 were right. Back then, many on the left were furious that he would enter into any negotiations at all, and madder still that Obama was willing to cut entitlements and get limited tax revenues as part of a Grand Bargain.
Obama supporters defended him by saying that he was in a tight spot, Republicans wouldn’t cave, etc. That analysis was wrong.
I hope that going forward, there will be a greater acceptance of critiques from the left whenever Obama takes a weak stance when confronting Republicans.
The situation has completely change since that fight in 2011 and it’s likely what the President did in 2011 allowed for what we are experiencing now with the Republicans.
I think you are making large leaps for your conclusions.
More like, starting with his conclusion and working backwards.
2011 isn’t 2013.
It is only possible for Obama to do this now, and be confident that the Republicans will cave, because of the political environment he helped to created with his tactics in the summer of 2011 and December 2012.