October 14, 2013

Politico reports that Senate Democratic leaders have offered Republicans a budget compromise:

Senate Majority Leader Harry Reid has privately offered Senate Minority  Leader Mitch McConnell a deal that would reopen the government until mid-to-late  December while extending the U.S. debt ceiling until next year, according to several sources familiar with the talks.

The proposal would set up a framework for larger budget negotiations with the House over the automatic sequestration spending cuts and other major deficit issues, the sources said. Moreover, Senate Democrats are open to delaying  Obamacare’s medical device tax and a requirement that those receiving Obamacare  subsidies be subject to income verification — but they would have to get  something from Republicans in return, sources said. [...]

Under Reid’s proposal, the debt ceiling would be extended for six to nine  months, and the government would be funded at $986 billion until some point in  December. Doing so would punt the fight over whether to lock in 2014  sequestration levels at $967 billion until December. And by extending the debt  ceiling until the middle of next year, it would put the issue in the center of  the heated 2014 midterm elections.

A Senate Democratic aide confirms to me that this is roughly accurate, but adds some important additional points. For one thing, the aide tells me, Dems will demand a genuine concession in exchange for a medical device tax delay, such as the closing of loopholes on the rich and corporations. Democrats don’t expect Republicans to agree to any real concession, so they don’t expect the medical device tax to be part of the final deal.

Second, and arguably more important, is Dem thinking on the debt limit.

According to the Democratic aide, Dems are likely to demand a debt limit extension into early summer — nine months, rather than six – with the idea being that the closer to the 2014 elections we get, the harder it will be for Republicans to stage another debt ceiling hostage crisis.

Democrats don’t want such a crisis. They would prefer that Republicans simply agree to extend the debt limit cleanly. But by pushing this so deep into the 2014 election season, they are giving themselves a kind of insurance policy that guarantees that if Republicans do stage another debt limit crisis, Republicans will pay a serious political price for it.

On the one hand, you’d think that this arrangement simply guarantees that the debt limit will hang over the next talks, meaning it will give Republicans leverage. I wrote about that fear earlier today. But Democrats don’t see it in quite these terms. They believe Republicans will have capitulated on the debt limit twice in a row — this time, and earlier this year — and that the political fallout from the current crisis has been so bad for Republicans that party establishment types will be eager to avoid the same thing happening again deeper into 2014.

It’s true that those who will try to force another debt ceiling crisis are Tea Party conservatives who don’t much care about the overall political health of the GOP. But as this Democratic aide explains to me, this is precisely the point: More pressure from the right for yet another debt limit crisis close to the election will be even worse for the GOP, because it could again divide the party and potentially force 2014 GOP candidates (particularly those involved in primaries) to adopt an extreme position, damaging them for general elections.

“The effect of this fight has been to destroy the Republican brand and put their 2014 candidates behind the eight ball,” the aide tells me. “We are not trying to bait them into another fight. We’d rather put it past the election. But it’s really up to them. If they want to recommit political suicide a few months before an election, that’s going to be their choice. We’re going to make sure that if this happens it has real consequences for them.”

And so, Dems are hoping that Republican leaders will have even more of an incentive next time to squash any demands from the right for another default hostage crisis. In this scenario, Dems effective neutralize the debt limit over the long term, in exchange for accepting sequester level spending into December (only one month longer than under a “clean CR,” which Dems were already prepared to accept). If that worked, it wouldn’t be a bad outcome. Or, if the debt limit isn’t neutralized and Republicans do stage another hostage crisis, the GOP again would devolve into chaos, again underscoring the party’s addiction to destructive, intransigent, crisis-to-crisis governing with only months before Election Day 2014.

That’s the idea, anyway.

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UPDATE: It should be noted that even if the debt limit extension only ends up being, say, six months, into the spring, the same basic dynamic will apply — another default hostage crisis would be occurring far closer to the 2014 elections than now. The same applies if the deal extends the debt limit through February, as is now being reported.

Greg Sargent writes The Plum Line blog, a reported opinion blog with a liberal slant -- what you might call “opinionated reporting” from the left.