The Republican Party Flinches Again On Debt Limit

Bill Scher

According to the Washington Post and Politico, GOP leaders are laying the groundwork to refuse any debt limit increase this year, reneging on debt payments mandated by Congress, shredding the full faith and credit of the American government, thereby plunging the global economy into the abyss, unless Washington … does some sort of unspecified revenue-neutral corporate tax reform at a future date.

Go ahead. Read that again if you wish. Try to make sense of it. You can’t.

There was at least superficial, if deeply flawed, logic regarading past Republican threats to take the debt limit hostage. If you think America is on the verge of becoming Greece, then it makes some sense for Republicans to say: we’re already on the verge of a debt crisis, so there’s no risk in threatening to expedite that crisis by pressuring Congress and the President to support budget cuts that would avert the crisis.

But to take the debt limit hostage and risk the stability of the global economy to demand something that wouldn’t cut the debt, isn’t otherwise urgently needed and isn’t being pushed by the public … is ludicrous.

New York magazine’s Jonathan Chait mocked Republicans for giving up their prior demand to cut Social Security and Medicare and replacing it with something revenue-neutral: “If obtaining retirement cuts went from so urgent it was worth threatening to nuke the world economy over to ‘meh,’ the next step is to figure out the next thing to nuke the world economy over … So House Republicans are prepared to refuse to raise the debt ceiling unless Democrats agree to let them cut tax rates without increasing revenue. Their extraordinary threat, first presented as a way to force a reduction in the deficit, is now being wielded to prevent a reduction in the deficit.”

Chait deems this strategy the “gotta nuke something” philosophy of Nelson from “The Simpsons.” The Washington Post’s Jonathan Bernstein characterizes it as “extortion for extortion’s sake” because they don’t have any actual fleshed out policy ideas to pursue.

It’s unbelievable. By which I mean, I don’t believe it.

As the Washington Post originally noted, Republicans don’t want to go to mat over Social Security and Medicare because “some Republicans fear that embracing them would be political suicide.”

Chastened Republicans have been afraid of political suicide all year, prompting them to repeatedly back down from their knee-jerk threats.

In January, they flinched at the edge of the “fiscal cliff,” accepting tax increases on the top 2% for the first time since 1990. Why? Because gridlock would mean taking the blame for automatic tax increases on every taxpayer, including middle-class voters.

In February, they flinched at attaching any conditions to increasing the debt limit. Why? Because gridlock would mean taking the blame for a global economic meltdown that would condemn the party to the historical dust bin alongside the Whigs.

Granted, Republicans held the line on sequester. But as bad as the sequester is, its impact is far more diffuse and uneven than what the cliff and the debt limit would have unleashed. Sequester was the low-hanging fruit of obstruction.

But there is no reason to think Republicans are suddenly more eager to play debt limit chicken than they were three months ago. The fact that they have buried their Social Security and Medicare threat is further proof.

The switch to tax reform is most likely a desperate attempt to save face with the Tea Party right while tacitly admitting there is no alternative to raising the debt limit.

Politico reports that the not-yet-final Republican debt limit proposal would work as follows: “Legislation would authorize something like a three-month bump in the debt limit while simultaneously giving the same amount of time for the House to act on its tax-reform plan. When the House passes something, the debt limit would bet increased again, and when the Senate moves its own tax-reform product, Congress would authorize another bump in the debt ceiling. A larger increase in the borrowing limit could come if President Barack Obama signs the legislation…”

In other words, there would be three increases to the debt limit without the two parties having to agree on anything!

As the current debt limit is not expected to be reached until this fall, that timeline could well get them past the midterm elections.

This is a clear ratcheting down of the debt limit threat. Yet Republicans want to sell this to their detached-from-reality base as playing hardball.

But Politico suggests this won’t fly: “…Chris Chocola, the president of Club for Growth, said he’s concerned that the GOP has given up leverage by publicly saying that they won’t let the nation plunge into default. ‘That’s Obama and Democrats’ expectation: that they aren’t willing to breach it, so they don’t have to worry about it,’ he said.”

Republican leaders have not only previously said as much, they showed their cards in February.

You can take your yellow ribbons off the oak tree. There will be no hostages.

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