I’m scared of the debt ceiling. You should be, too.

August 28, 2013

The savvy, sophisticated thing to say in Washington, D.C., is that the next debt limit fight is just Kabuki theater: Republicans folded last time. They'll fold this time, too.

And perhaps that's right.


Give peace a chance! (Kevin LaMarque/Reuters)

But perhaps it isn't. The central fact of the next debt-ceiling fight is that the two parties' positions are mutually exclusive. Republicans say they will raise the debt ceiling only in return for significant budget concessions. The Obama administration says it won't offer anything in return for raising the debt ceiling.

There's only one possible outcome given those two positions: The debt ceiling won't be raised.

Eventually, one or both of those positions will change. No one -- including me -- believes that the debt ceiling will remain right where it is, forever and ever, amen. That would mean a financial crisis of epic proportions.

But here's what scares me: No one can tell me how one or both of those positions will change before we breach the ceiling in mid-October.

The White House swears they're giving basically no thought to the issue. “Let me reiterate what our position is, and it is unequivocal," said press secretary Jay Carney. "We will not negotiate with Republicans in Congress over Congress’ responsibility to pay the bills that Congress has racked up, period."

House Republicans are giving more thought to the debt limit, but mainly because they're trying to get their members excited for a fight in order to persuade them to back off of threats to shut down the government.

"I've made it clear that we're not going to increase the debt limit without cuts and reforms that are greater than the increase in the debt limit," House Speaker John Boehner said Monday during a speech in Idaho. "The president doesn't think this is fair, thinks I'm being difficult to deal with. But I'll say this: It may be unfair, but what I'm trying to do here is to leverage the political process to produce more change than what it would produce if left to its own devices. We're going to have a whale of a fight."

On this, Boehner has party unity. House Majority Leader Eric Cantor told Reuters that the debt limit is a “leverage point” to force White House concessions over Obamacare.

We've hit the debt limit twice since Boehner gaveled the Republican-led House into session in 2011. The first time was a disaster, and quite nearly became a catastrophe. The way out was $1 trillion in discretionary spending cuts paired with sequestration. But now that those cuts are law and sequestration is in place, that deal is off the table.

The second time came right after Obama's reelection, and Republicans unexpectedly, but smartly, reached the so-called Williamsburg Accord, under which they agreed to raise the debt limit in return for Senate Democrats producing a budget and House leadership promising to produce a budget that balanced in 10 years. That is to say, they agreed to raise the debt ceiling in return for nothing.

How does the Williamsburg Accord look now? Well, Republicans got their budgets. But the National Review reports that "in the view of some conservative groups, the Williamsburg Accord has been a mixed bag, and [House budget chief Paul] Ryan in particular is in danger of losing his sheen because of his role, even if few observers realize it."

Sanguinity over October's debt limit line requires the presumption of another Williamsburg Accord. But that agreement was a shock at the time. It was made possible because 1) House Republicans didn't think they could beat Obama mere months after he won reelection, 2) House Republicans were weirdly obsessed with Senate Democrats producing a budget, 3) House conservatives were highly enthusiastic about balancing the budget in 10 years, and 4) Boehner was able to convince them that sequestration was just around the corner, and since sequestration was composed entirely of spending cuts, letting it go into effect would give Republicans more leverage going forward.

And for all that, the Williamsburg Accord didn't even raise the debt ceiling for a full year!

It's hard to see the cards that Boehner (or Cantor or Ryan) will play to persuade House Republicans to agree to a second Williamsburg Accord. But the White House isn't going to fold over the debt ceiling, either.

The closest thing to a plausible case I've heard is some kind of negotiation that Democrats portray as a deal to fund the government and replace sequestration and that Republicans portray as a deal to raise the debt ceiling. But for that to work, the two sides actually need to agree to something. The Obama administration isn't going to delay the health care law for a year or accept heavy new cuts without tax increases. Republicans aren't likely to accept tax increases. So, what's the case for believing they can reach a deal, exactly?

The Democrats' quiet hope is that House Republicans will overplay their hand and, as terror mounts over the debt ceiling, Senate Republicans will cut a meaningful deal with Obama and the House will let the package pass by waiving the Hastert rule. That's possible, of course, but hardly likely. House Republicans don't like getting jammed by the Senate, and powerful conservative groups have been policing Hastert rule violations much more aggressively of late.

And then there's the possibility of simple miscalculation. Remember when Boehner's "Plan B" failed on the floor of the House? When the farm bill failed on the floor of the House? When the Transportation, Housing and Urban Development appropriations bill failed on the floor of the House? The odds of Boehner and Cantor thinking they can pass something and simply being wrong about that are not zero.

And that's the problem. None of the safe outcomes are likely. None of them even look particularly plausible, at least right now. And that's scary. If you're not at least a bit worried about the debt ceiling, you're not paying close enough attention.

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Sarah Kliff · August 28, 2013