One dimension of the debt-ceiling debate that hasn't gotten enough attention is how split Republicans are on the idea. While the working assumption in Washington is that the GOP will try to hold the debt-ceiling hostage in return for some (heretofore unspecified) spending cuts, quite a few influential Republicans are begging and pleading with the party to find another strategy, warning that it's a hostage Republicans can't shoot and that the two possible outcomes are 1) an embarrassing cave or 2) an economic disaster that the public blames on the GOP. A partial list:
Newt Gingrich: "They’ve got to find, in the House, a totally new strategy. Everybody’s now talking about, ‘Oh, here comes the debt ceiling.’ I think that’s, frankly, a dead loser. Because in the end, you know it’s gonna happen. The whole national financial system is going to come in to Washington and on television, and say: ‘Oh my God, this will be a gigantic heart attack, the entire economy of the world will collapse. You guys will be held responsible.’ And they’ll cave.”
Rep. Scott Rigell (R-Va.): “Say, ‘Okay, let’s just walk through that.’ What we’re basically saying, then, is that we’re going to balance the federal budget not over time, but in a moment; in a day. So the next morning, what are we going to pay? Do you think we ought to pay the troops? Most people would say, ‘Oh, gosh, absolutely.’ Well, what about those receiving Medicare? ‘Well yeah, that needs to — we need to do that. They’re dependent on that.’ What about Social Security? ‘Well certainly, we earned that. We paid into that.’ And you just go down the line. Most folks, if you really walk through it, it’s not a good scenario.”
Sen. Susan Collins (R-Maine) "Senator Collins recognizes that the debt ceiling is going to have to be raised because the U.S. cannot default on its obligations to pay for spending that has already occurred.”
Glenn Hubbard, top economic adviser to both George W. Bush and Mitt Romney: “The debt ceiling must be raised — not doing so is irresponsible.”
Michael Gerson, The Washington Post: “Congressional Republicans are left with less influence than some apparently think. The debt ceiling is a form of leverage they can’t responsibly use.”
Philip Klein, the Washington Examiner: “I believe that spending needs to be cut, but I also believe that the debt ceiling eventually has to be raised to accommodate spending that has already been passed by Congress. As a conservative, I fear Republicans overplaying their hand, delaying a debt limit increase so long that financial markets begin to panic. As a result, small government ideology will be associated in the public mind with economic chaos and conservatism will be seen as incompatible with governance.”
Tony Fratto, assistant secretary for public affairs in George W. Bush's Treasury Department: “I don't know if I can make it any more clear: There is no rational alternative to raising the debt ceiling & preferably early.”
Tim Phillips, president of Americans for Prosperity: “We’re saying calibrate your message. Focus on overspending instead of long-term debt. Focusing on [the debt ceiling] makes the messaging more difficult.”
Ross Douthat, the New York Times: “The fantasy of leveraging the debt ceiling to 'force' the White House to dramatically cut entitlements, if actually pursued rather than just entertained, would quickly put the Republican Party on the path to losing the more modest leverage that it currently enjoys.”
Pete Wehner, former Bush administration staffer: “The second danger facing Republicans is they once again engage in brinksmanship with the president — that they elevate the debt ceiling debate and (unwisely) threaten to allow the United States to default right up until the moment when they cave (which they would be forced to do). My counsel to them would therefore be to take the threat of default off the table sooner rather than later.”
Even some putative supporters of using the debt ceiling as leverage sound like they're actually trying to warn Republicans away from it:
The Wall Street Journal Editorial Board: “Mr. Obama will say Republicans are risking national default and recession, most of Wall Street will echo him, and the Treasury will maneuver to apply maximum political pressure — for example, by claiming it can't pay Social Security benefits. We'll support efforts to cut spending and reform entitlements, but the political result will be far worse if Republicans start this fight only to cave in the end. You can't take a hostage you aren't prepared to shoot. Do the two GOP leaders have a better strategy today than they did in 2011, and do they have the backbench support to execute it?”
House Speaker John Boehner (R-Ohio): “The debt bill is ‘one point of leverage,’ Mr. Boehner says, but he also hedges, noting that it is ‘not the ultimate leverage.’ ... Republican willingness to support the sequester, Mr. Boehner says, is ‘as much leverage as we're going to get.’ ”
In 2011, Republicans didn't want to see a government shutdown, and they struck a deal with the Obama administration averting one. Later that year, they eventually negotiated their way out of a debt-ceiling breach. In 2012, they folded in time to avoid going over the fiscal cliff. Republicans really don't want to be blamed for causing an economic disaster. That's truer today than it was a year ago, as they lost the last election and don't have a very good argument for why their policy preferences should triumph.
The idea that Republicans will hold firm on the debt ceiling never made much sense to me. After all, they folded on the fiscal cliff. The debt ceiling would be far worse, and they would receive all the blame. The danger of the debt ceiling, in my view, is less that Republicans make a decision to breach than that they make a last-minute miscalculation or miscount the votes — think Boehner's Plan B debacle — and a breach happens accidentally.