“There is a price for everything.”
Now Democrats have come back with their answer: They are insisting that the debt ceiling be resolved as part of the fiscal cliff talks. Earlier today, Dick Durbin spelled out the Dem position:
“The President isn’t going to sign off on any agreement that doesn’t include some certainty as to budgets, appropriations, dealing with our debt ceiling...We’re not going to find ourselves at some big party celebrating in February and then turn around in March and have another doomsday scenario with the debt ceiling. We’ve got to get this done as one big package.”
This mirrors what I reported earlier today: White House officials privately assured officials with leading unions and progressive groups that they are not prepared to abide a separate fight over the debt ceiling, and want it dealt with now.
It’s worth pausing to appreciate how different the political dynamic is now than it was in 2011, when Republicans had all the leverage in the debt ceiling talks. Last year, Obama desperately needed a debt ceiling deal. Dems had sustained huge losses in an election that seemed partly like a referendum on Dem spending. Heading into reelection, anything that would have made the economy worse — such as debt ceiling failure — would have been absolutely disastrous for the president.
Things are very different now. Obama is in a far stronger position politically, and Republicans are in a weaker one. Obama just decisively won an election that pitted his demand for a greater contribution by the rich towards deficit reduction and his opposition to gutting the core mission of social programs against the GOP’s demand for more austerity. The GOP strategy of total obstructionism has been repudiated. Polls show the GOP brand is in trouble and that the public is poised to blame Republicans if the fiscal cliff talks fail.
In 2011 Republicans could demand concessions on spending in exchange for cooperation on the debt ceiling from a reasonably strong position. Now, if Democrats do force the issue and insist that the debt ceiling get resolved as part of the fiscal talks, what “price” will Republicans ask for? Will they really try to hold the debt ceiling hostage, and threaten to tank the economy, while demanding...low tax rates on the rich? That’s not a terribly strong position. Republicans will also insist on ever deeper spending cuts, but Congressional Democrats are so angry about the last debt ceiling battle that they are not going to be in any mood to give a good deal of ground in response to another round of demands. As David Dayen notes, we should always allow for the possibility that Dems will prove willing to give away too much in these talks. But still, when it comes down to it, Republicans just don’t have the leverage this time.
No, it isn’t 2011 anymore.