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Josh Marshall rightly extrapolates from the utterly insane and terrifying comments of Ted Yoho (R-Airstrip One) that we should all be very, very afraid. He’s not wrong, exactly (I just said he was “rightly,” after all) but I don’t think we’re going to default on the national debt. Here’s why:
40-50%: Debt limit compromise on process. Not enough, methinks, has been made of this report from Greg Sargent:
The principle articulated internally is simple. Never mind delaying or defunding Obamacare — there will be no policy concessions in exchange for a debt limit that would damage Dem priorities. Republicans must refocus on legitimate legislative means, i.e., the legislative process’ normal give and take. In exchange for the debt limit hike, there will be no medical device tax repeal. No Keystone pipeline. Obama administration officials are open to the possibility of face saving moves by Republicans being part of the endgame, but only ones involving process — not policy concessions — such as the McConnell provision, a device floated last year that would have largely transferred debt limit authority to the president.
This strikes me as being both politically and policy-wise the best solution. The Democrats and the President maintain that they did not offer policy concessions for ransom, the Republicans get to claim that they won something, and the potential of future debt ceiling crises is permanently defused in a wholly-legitimized manner. The main goal the President is trying to accomplish (and that the whole world should be behind) is that a faction of Congress cannot threaten massive catastrophe in exchange for unilateral policy concessions, and even a completely clean debt ceiling hike doesn’t wholly remove that possibility from the table in the future, though it would make it far less likely.
20-30%: Clean debt ceiling hike, AKA, the GOP caves. Who knows what lives in the addled mind of John Boehner? Of which GOPers are truly mad and which are eyeing the emergency exits on the crazy train? Certainly, though, it seems that if the Senate were to pass a clean hike soon, the pressure on the House to do the same on Oct 16-17 would be enormous, and it seems that wouldn’t be a too-unlikely scenario. This is certainly what the President wants, and it would hopefully defuse future crises of this nature, but of course, nothing is guaranteed.
20-30%: The financial crisis is substituted with a wholly political one. In this scenario, the President would emerge when the first payment is due beyond what is in Treasury’s coffers and above the legal borrowing limit and, legal memo in hand, declare the debt ceiling unconstitutional and order his administration to proceed as if it did not exist. (I don’t think the platinum coin, awesome though it is, has a snowball’s chance in hell of happening). What would happen then is – the government and debt markets proceed as normal, forever. The GOP would epically flip out, the House would pass a bill/resolution ordering the POTUS to respect the debt ceiling, but a) it wouldn’t pass the Senate and b) the POTUS/WH would simply lump that in with “unconstitutional threats to the credit of the US” and move along. The House would then impeach the President on a purely party-line basis, the Senate would acquit, and there it would lie. Certainly nothing would move forward in Congress through the rest of Obama’s second term, but it’s not like anything would anyway! Whether the POTUS’s decision was correct legally would be debated, but morally, pragmatically, and governance-ally the consensus would be sympathetic to him. This would have the effect of burying the debt ceiling as an issue forever, since it’s unlikely that the GOP would believe so strongly in this that, in 2017, a President Christie/Jindal/Cruz/Paul/Palin/whomever would take the oath of office and immediately order a cessation of payments on the national debt. It would also have the odd effect of making any US default ever, for any reason, untenable legally, and thus prevent the US from any kind of Argentina/Greece kind of debt restructuring/selective defaulting down the line, meaning an actual US debt crisis (as opposed to the political crisis nominally centered around the issue of the national debt) would have to be resolved through a combination of austerity and inflation.
…and that’s it. I truly do not believe that Obama and his administration has any incentive to elect to actually catastrophically default over taking the legal out above, and I think they would elect for that knowing full well it would result in impeachment.
But of course, they can’t say they’re going to do that, or even hint that they would, because that would eliminate all incentive for the GOP to cooperate in advancing either of the two other scenarios above. The GOP would love to paint Obama as a lawless debt-addicted tyrant and has been all-but-openly itching for a reason to impeach him since Jan 20 2009, so Obama in fact has to act like Option C is off the table even if he’s completely convinced that it’s the only alternative.
It’s going to be an interesting couple of weeks, folks.
Hopefully this, my first substantive post, will add some clarity to my perspective on things.
As the President prepares to make a big statement on the issue of the national debt this evening, it’s worth taking a look back to review where we’ve come on this issue. I want to put aside a lot of the more substantive issues here and focus specifically on the politics of where we are.
The first half of the President’s term in office was primarily consumed by a single major legislative item, the Patient Protection and Affordable Care Act (ACA), which after a hard-fought year-long battle was finally voted into law. As scored by the CBO, the bill would reduce the deficit, by a moderate amount in the first ten years following its enactment and by an enormous amount in the decade after. These estimates were challenged by Republicans as well as deemed too conservative by Democrats, but the CBO is a neutral and trusted entity and therefore I think it’s fair to take their estimate of a baseline.
And how does ACA reduce the deficit? Primarily by focusing on health care costs, and a big part of that was reducing Medicare expenditures. Mostly this was targeted as spending identified as wasteful and ineffective, not at actual reductions in benefits, but all the same it added up to a large amount of money not being spend on Medicaire. And how did this play out politically? The administration and Congressional supporters were brutally savaged over these cuts in the midterm elections, where ads like this were common:
And Republican “wonks” like Paul Ryan (R-WI) claimed those cuts were unsustainable and damaging, and therefore would never really be enacted. And it seems in retrospect that those Medicare cuts were a major issue that Republicans were able leverage into their major gains in the 2010 elections.
So now that they have reclaimed the House and have the chance to set the conversation on the budget, are they restoring those cuts as well as protecting Medicare from any further cuts? Far from it – the Republican Budget Chairman, the very same Paul Ryan, released a plan that not only retains every dollar of those cuts but proposes further cuts in Medicare that are far more drastic and draconian. In fact, his proposal amounts to essentially abolishing Medicare and replacing it with a new program that would allot government spending on health care purely on the basis of a fixed cost – exactly the type of rationing Republicans campaigned against.
On the broader issue of the deficit, have the Republicans proven themselves any more credible as negotiating partners? Well, no. Certainly their dogmatic allergy to even the most minor or benign of tax increases is well documented. But even beyond that Republicans have proven that their approach to negotiations consists of repeated hostage taking, first on the tax cuts for the middle class the President wanted to preserve, then on continued funding for FY 2011, and now again as we approach the debate on the debt ceiling. The Republicans seem quite willing to play with fire and risk catastrophic consequences in order to see their priorities enacted, and those priorities don’t seem to be “lowering the deficit” as much as it is doing away with spending items they disfavor, mostly, it seems, social safety net programs, environmental protections, public health regulation, and infrastructure investment.
So forget all the substantive issues – whether we truly face a debt crisis, whether it needs to be addressed in immediate spending cuts, whether debt-fueled spending is necessary to sustain economic recovery, and even whether Paul Ryan’s budget plan is credible or just snake-oil – and look at the politics: the Republicans have repeatedly proven themselves to lack any credibility as partners in governance. If this were tit-for-tat the game would have been abandoned long ago.
During the first two years of his Presidency, the President seemed less focus on engaging in overt politics – the constituent and strategic applying of pressure to powerful actors – in order to avoid polarization of Congress. He avoided criticizing Republicans in strong terms, and even protected some supposedly-moderate Republican Senators by appointing their strongest challengers into his administration. With strong majorities in both houses this strategy seems to have paid off – the President was able to secure landmark legislation such as ARRA, ACA, Dodd-Frank, and a host of other progressive legislation, even as the dysfunctional nature of the Senate left a lot of good bills passed by the House (most notably ACES) untouched.
But the President is now in a very different situation, and has yet to demonstrate that he fully understands this shift and adjusted to it. He will be able to accomplish very little over the next two years in terms of passing good legislation through Congress. But what he can do is successfully engage in politics – he can define the terms of the public debate, use the veto threat, and take strong negotiating positions. This seems uncomfortable for the President, who seems naturally inclined towards compromise and conciliatory behavior. However, this approach may very well backfire against a polarized and radical opposition that seems to have as their primary aim the political destruction of the President.
And so my advice for tonight is this – start a fight. The Democratic Party’s biggest weakness over my lifetime has been their studied unwillingness to pick a fight and stick it out and win it. The Republicans are very successful at winning the framing debate in the elite media, which Democratic officeholders have unfortunately confused with public opinion (a confusion the Obama Campaign notably did not suffer from). But if the President is to not merely be re-elected but to accomplish substantive, positive change, he needs to show that he can engage in a political fight and win. And the natural advantage is on his side – public opinion is not inclined to support Republican proposals, and the President is trusted and well-liked.
There is an iron law of politics – change means movement; movement means friction; friction means heat; heat means controversy. For the last six months the President appears to have been trapped in an unwinnable game of endless compromising with hostage-takers. The way to win this game is not to play. Tonight the President should stake out a strong position, and justify it not with numbers but with principles. And he should make clear that certain things are non-negotiable. For that’s how negotiations are won.