On Wednesday night, the Republican presidential candidates will gather in Colorado for their first debate focused wholly on the economy.
This spectacle will unfold with only six days to go until the Republican-controlled Congress must raise the debt limit on November 3rd. There appears to be at least a possibility that it might not, which could plunge the United States into default, an outcome that even some conservative economists have warned could lead to economic catastrophe.
This juxtaposition — Republican candidates debating the economy, even as some of them are urging a course of action that could lead to default and economic disaster — could prove unexpectedly jarring. That’s because, as CNN reports, a budget deal that would raise the debt limit is nearing completion among senior Congressional officials:
Bipartisan budget talks to avert a potential fiscal calamity picked up steam Monday, as leaders in both parties sought to cut an accord to avoid a debt default by early November.
Several sources familiar with the discussions said that the House was looking at moving a debt limit increase through the 2016 elections, taking the issue off the table for this Congress. As part of the fiscal package, lawmakers would consider a budget deal that would raise budget caps and include corresponding cuts to offset the higher spending, sources said.
Politico reports that “parallel talks” on raising the debt limit are unfolding, but that a debt limit hike would be “separate” from the budget deal. A House source emails me these details:
The emerging agreement would be for two years and achieves parity in the sequester relief between defense and non-defense investments. The sequester package would also address the Medicare Part B issue, protecting millions of seniors from significant increases to their premiums and deductibles. Additionally, attached to this package will be a CLEAN suspension of the debt limit until March 2017.
The Medicare Part B issue referred to there is a problem that Congressional officials have been trying to solve that could end up hitting millions of seniors with a premium hike because of a glitch involving Social Security cost-of-living calculations.
The debt ceiling hike would in effect be a “clean” one, since it would not be directly conditional on anything (allowing Democrats to claim Republicans caved) but it would also be part and parcel of broader talks in which both sides made some concessions (perhaps allowing Republicans to claim they did use the debt limit as leverage somehow).
If this all comes together, John Boehner really may be looking to clear the decks for his successor — who is likely to be Paul Ryan — before decamping to K Street, sparing him no shortage of headaches and getting a lot of stuff off the table through the 2016 elections.
The House source cautions that things are very much up in the air. But the point is that the efforts to reach a deal on a debt limit hike and funding the government may well be hitting crunch time right when the GOP presidential candidates are participating in a high profile debate over their economic agendas. The source says a deal may be announced as early as tonight, which would mean the work of winning over rank and file Republicans and Democrats would unfold over the next few days.
And some of the GOP candidates may feel required — or may see an opportunity — to rile up conservative base voters by blasting the deal as a sellout, because it extracted insufficient concessions from Democrats in exchange for raising the debt ceiling and funding the government. Conservatives, of course, are demanding that GOP leaders hold firm and win a whole grab bag of goodies in exchange for averting default and keeping the government functional.
Presidential candidate Ted Cruz is already laying down a hard marker, urging GOP leaders not to capitulate by agreeing to a “clean” debt limit hike. Donald Trump has said that GOP leaders should use the debt limit as a “negotiating tool” to force spending cuts. John Kasich has been evasive on whether there should be conditions for a hike. Marco Rubio voted against a debt limit hike in 2013, explicitly because it didn’t force spending cuts. I’m unaware of anything Jeb Bush has said on the topic. Meanwhile, at the most recent GOP debate, several of the GOP candidates called on GOP leaders to use the battle over government funding to force Dem concessions, such as the defunding of Planned Parenthood.
Whenever we’ve faced these crises in the past, polls have tended to show that majorities want the crises averted and reject efforts to attach conditions to it. This time around polls are suggesting the same. Yet at the coming debate, at least some of the Republican candidates may be advocating for the maximally confrontational approach, despite all the economic damage that could entail.
Of course, candidates advocating for that approach will claim that it is really Democrats who would really be causing default and/or the government shutdown, as some of them are already trying to do. But you’d think that CNBC debate moderators — who include the excellent John Harwood — would be able to press Republicans effectively on the debt limit in particular, hopefully revealing the true nature of their position, which is that GOP leaders should insist on unilateral concessions in exchange for averting massive economic damage to the country. More broadly, the candidates will be pressed to defend more fiscal brinkmanship in the context of a debate over the economy, even as Congressional leaders are trying to reach a bipartisan deal that might put the recovery on more solid footing.