As I have written many times over the last few weeks, the showdown on the debt ceiling is rather phony. President Obama likely could not get a “clean” debt ceiling bill the Senate (Democrats don’t want the vote any more than Republicans) The White House press secretary was obliviously nervous about even articulating any debt ceiling amount or time period. (The gist: Just extend it. Whatever.) The jig is nearly up.
For weeks now Republicans, as I have learned from multiple conversations with House and Senate aides, have been meeting among themselves to discuss options, having recognized that the threat of bumping up against the debt ceiling is not realistic and hence not useful. Certainly the Left Wing and Right Wing blogs are talking doom and gloom, but for the GOP elected officials who matter, they are long past the notion that the GOP wins in the “we don’t pay our bills” fight. Keith Hennessey, whom I have linked to many times, reflects the sort of thinking that is rippling through GOP insiders’ meetings.
Yuval Levin catches up some who’ve been dreaming of a debt crisis, explaining one option: “Republicans begin the debt-ceiling debate by moving to legally redefine the debt ceiling itself. Under this new definition, once the ceiling is hit, the Treasury could continue to borrow only for ongoing debt service — that is, paying interest on the debt and rolling over existing debt — but not for any other federal spending, which would have to be funded by available revenue until the debt ceiling was raised. This would formally separate paying the nation’s debt from blindly continuing to spend money we don’t have — the two things the president is desperately trying to confound and muddle in his debt-ceiling rhetoric.”
In fact the only one wanting to make default and entitlement spending reform one and the same is the president — plus his liberal minions in the media.
The Republicans at their retreat today began talking openly about a short-term extension on the debt ceiling, again to de-link entitlement reform and the debt ceiling ever so briefly.
The spokesman for Rep. Paul Ryan (R-Wis.) told me, “Discussions are ongoing. Government must pay its bills today — just as it must pay its bills tomorrow. To do that, as Chairman Ryan made clear earlier today, Congress and the president must cut spending and budget responsibly.” To read between the lines: We are not going to default, but we are going to do our best to force the president to confront entitlement reform.
Ryan, according to those in the room, is not advocating a specific plan, but rather trying to be the constructive problem-solver, a solutions-oriented consensus builder. He has the trust of both leadership and rock-ribbed conservatives who see this as the only shot to get entitlement reform. Those familiar with his thinking say he understands all too well that without the Senate and White House the aim here is to get the best deal possible.
Most interesting was Sen. Pat Toomey’s discourse:
Disappointed by the failure of the fiscal cliff deal to address the drivers of future federal deficits, congressional conservatives see a debt limit showdown as their best opportunity to extract concessions on spending from the Obama administration. The problem, however, is that the White House seems to have calculated that this is a political fight it can win. That is, if the debt limit is breached, the president’s allies are convinced that the House majority will be held responsible. And if this does indeed happen, the House majority’s political leverage will likely decrease.
So how should conservatives approach the debt limit fight? That congressional conservatives want dollar-for-dollar spending cuts and no further concessions on revenue is clear, but the question is whether or not there are any acceptable fallback positions.
There is a broad consensus that the existence of a statutory debt limit is itself problematic, yet Congress is by and large reluctant to surrender the power to establish such a debt limit. Conservatives might support a long-term debt limit increase – large enough to allow for five years of deficit spending – in exchange for a structural reform of Medicare along the lines of the competitive bidding proposal championed by the Rivlin-Domenici Debt Reduction Task Force and the closely related Ryan-Wyden proposal.
Toomey had long been an advocate of prioritizing the debt payments so that in a “technical default” we would still pay interest. However, logistical problems and fear that rating companies wouldn’t distinguish betwween a real and technical default have pushed this idea to the side.
The most honest evaluation of the current situation is this: 1) The president wants to link spending cuts to a default so he accuses Republicans of plotting to do this and thereby blow up the economy; 2) Republicans don’t want to get blamed for the default; but 3) the GOP hasn’t settled on an alternate strategy. So stay tuned. They don’t have much time to figure this out.