Here’s why getting to a deal on the debt ceiling is so complicated.
President Obama’s main goal is to get through this fight with the government still running and his support from the political center intact, even if this means substantial concessions to Republicans.
House Republican leaders want to get by without inciting a revolt among right-wing Tea Partyers, which means they’re having trouble accepting Obama’s concessions.
And the Senate — well, the Senate resembles the Balkans without a peacekeeping force. Poor Harry Reid. The Democratic leader’s caucus sprawls from ardent progressives to moderates from conservative states absolutely petrified of casting votes that might endanger their seats in 2012. Senate Republican leader Mitch McConnell senses that a GOP majority is just around the corner, and he wouldn’t mind dragging this struggle out.
The House Democrats would seem to be fodder in all this dysfunction. Everyone knows that Speaker John Boehner will need Democratic votes to get a deal passed because some of his conservatives will vote against anything that doesn’t reduce our federal establishment to the size of the government of Belize. The most progressive half of the House Democratic caucus will probably oppose the final deal as a sellout.
That could give the middle-of-the-road half of the House Democratic contingent the swing votes. Paradoxically, this creates an opportunity for those holding the weakest hand at the table. Democratic leaders Nancy Pelosi and Steny Hoyer have a chance to (1) stiffen Obama’s spine, at least a bit; and (2) tell Boehner that if he wants Democratic votes, he’ll have to concede something. He can’t keep the Tea Party at bay and have a deal moderate enough to win Democrats at the same time.
Although Obama spoke Tuesday of reaching a “big” deal on the deficit, he’s not looking to solve the whole problem before the debt-ceiling deadline of Aug. 2. What he’s looking for is somewhere around $2.5 trillion in reductions over a decade. This would allow Congress to pass a large enough debt-ceiling increase to get us through the next election. That’s when the voters will be asked to settle the fundamental issues, especially whether we need to raise taxes on the wealthy.
Getting $1.5 trillion of those cuts is not exactly easy, but it’s doable, given that there are reductions on which Obama and the Republicans agree. The math also helps: $1.2 trillion in cuts saves you another $300 billion in interest costs. The rest is harder, especially on two sets of issues: any cuts in Medicare and Medicaid, even if they are aimed at providers and not beneficiaries; and all attempts to increase revenue — a dreaded word conservative Republicans will always translate into “taxes.”
Democrats are skittish about touching health-care spending, and advocates of the poor worry, with good reason, that Medicaid reductions could leave many needy people without insurance.
But there could be some clever ways around the tax problem. If Republicans grant Obama his wish for another year of his payroll tax holiday to boost the economy, that $120 billion in tax relief could be subtracted from $120 billion in long-term revenue increases to suggest no net tax hike. Congress will inevitably extend a fix of the alternative minimum tax (AMT) to save middle-class taxpayers (and voters) some money; the AMT fix could be another “tax cut” offsetting other revenue increases.
But all this assumes that Boehner could sell this approach to his caucus. His problem is that even a “compromise” that tilts hard in the Republicans’ direction will be branded as capitulation by hard-core conservatives who believe controlling one chamber of Congress should be enough to get them everything they want.
It’s a peculiar view of democracy, and it’s also the black hole in this negotiation. If Boehner can’t assemble a majority with Republicans, he will have to negotiate with House Democrats, who will have trouble voting for a package that doesn’t include some revenue. But concessions to Democrats will further alienate conservatives in Boehner’s own party.
Boehner could thus either court a rebellion against his leadership or push the country toward default on its debt.
I’d actually feel bad for Boehner — an old-fashioned sort who’d normally reach for a deal — if he and his party had not shamelessly stoked the Tea Party to win power. The GOP is now reaping the whirlwind, and Boehner may be forced to choose between his country and his job.