A quick thought on the debt ceiling

at 09:56 AM ET, 05/26/2011

You and I have decided to have lunch together today. We both need lunch. We both know we’re going to have lunch. But we don’t agree on where to eat. So you propose Mexican, but I counter with Chinese, and warn that if you refuse, neither of us will get to eat lunch ever again. Deal?

Of course not. But that’s pretty much the GOP’s strategy on the debt-ceiling negotiation. The Republican position on the debt ceiling is “no” to a clean increase and “no” to a bargain that includes both tax increases and spending cuts. The Democratic position is “yes” to a clean increase, but as of yet, it’s not “no” to a bargain that includes spending cuts but resists revenues. That seems to me like something that needs to change.

In general, both parties have the same position on the debt ceiling: It needs to be raised. That’s lunch. The two parties have different positions on deficit reduction: Democrats believe it should include tax increases and Republicans don’t. That’s where lunch should happen. But Republicans are trying to make their position in this negotiation “spending cuts” and the Democratic position “debt ceiling.” Democrats shouldn’t let them. That’s not the right trade.

Like lunch, the debt ceiling, ultimately, is a given. It’s the part both parties agree on. And neither party is, in the long-term, credible when threatening not to raise it (thought they can credibly threaten to freak out the market). So if Republicans want to use the debt ceiling as an opportunity for a further bargain on deficit reduction, then that includes tax increases, as that’s the Democratic position in that negotiation and Republicans need Democratic votes to pass anything. If they want to raise the debt ceiling clean and try to win a governing majority in 2012 on an anti-tax platform, that’s fine, too. But the deal here can’t be something one party wants in return for something both parties need.

 
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