After the New Year’s Day deal on the fiscal cliff, conservatives salivated over the prospect of a debt ceiling duel with President Obama. On Jan. 2, I argued they were crazy to think they had the same kind of leverage that Obama did with the expiration of the Bush tax cuts:
In the coming battle, the Republican position is effectively going to be “Give us the cuts that we all would rather avoid—or we shut down the government.”
Does that smack of a winning political argument to you?
This gradually became conventional wisdom, on both left and right. By agreeing to a three-month debt-ceiling hike in exchange for a face-saving demand that the Senate pass a budget resolution, the House Republican leadership wisely conceded this reality. The assumption behind the three-month interval is that, later this spring, lawmakers will have worked out a deal with the White House on the delayed budget sequestration cuts and the “continuing resolution” under which the government is currently being funded.
I think the coincidence of these budgetary ingredients actually increases the chances of accommodation. Call it the Cuisinart of Compromise: place the CR and the sequester into the same machine, cut a deal, after which you raise the debt limit for two or more years. As I noted earlier this month, the reemergence of the sequester means that those cuts can be re-framed as “fresh” ones, rather than delayed ones. The problem is, the cuts were designed to inflict maximum pain across the budget. Both sides have incentives to either soften them or space them out differently so as to reduce the negative shock of the cuts. But the White House believes those $1.2 trillion in cuts over 10 years would stabilize our debt-to-GDP ratio—so it’s very likely they’ll be enacted in some form or fashion.
As for additional elements of a deal: Obama is a little bit pregnant, if you will, after having publicly embraced the “Chained CPI” Social Security reform on “Meet the Press.” And Republicans are similarly gravid after having floated the idea of raising new revenue via reducing tax expenditures. It’s a deal that’s half-made already. But with “grand bargain” talks suspended—likely for the rest of Obama’s presidency—any such deal will have to be made in the open, through the “regular order” of House and Senate business. This is a good thing—for Congress and the country. House GOP leaders will give their caucus a chance to vote on optimal-seeming tax and entitlement reforms; before now, “grand bargain” talks were held in secret, and the hardliners never got a chance to symbolically voice a preference for red meat. And when it becomes clear that it’s DOA, the 25 or 50 fiscal conservative hardliners might let at least modest compromises proceed.
At the news of a temporary debt-ceiling thaw, Business Insider’s Joe Weisenthal declared that we’re thisclose to “exiting the age of crisis.”
Of course I hope he’s right.
Optimistically, I think he is right.