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Troubled by Debt Limit Despite Reassurances

For all its imperfections, TARP will go down as a great success, at little or no cost to taxpayers. But it was deeply unpopular, and one can argue that former lawmakers such as Sen. Bob Bennett (R-Utah) and Rep. Bob Inglis (R-S.C.) lost their renominations and their seats in significant part because they supported their president and party leaders and voted for TARP.

The lesson here is twofold: No longer do establishment figures, whether in or out of politics, hold sway or have credibility with rank-and-file populist lawmakers. And many lawmakers who still might believe those establishment figures fear that if they act on that belief they will suffer the fate of Bennett, Inglis and others.

Fourth is the negotiating stance of Republican leaders, up to and including Boehner and Senate Minority Leader Mitch McConnell (Ky.). By repeatedly and publicly taking taxes off the table, saying that they will be happy to negotiate with the president and Democrats, so long as they just accede to the GOP wish list, they are making it harder to reach a deal that can stick. Of course, some of this is posturing for negotiations.

President Ronald Reagan was especially masterful at taking firm, hard-line stances repeatedly as his opponents moved toward him and then cutting a deal that made concessions at the end, and getting a better deal. But Reagan was almost always willing to compromise as he did repeatedly on tax increases almost yearly from 1982 on and Reagan had the credibility with his followers to make his concessions stick.

Especially after the CR deal showed that it was more flash and less substance, Boehner has known that he will face a bigger challenge on the debt limit. That may be one reason he turned the negotiations over to House Majority Leader Eric Cantor (R-Va.), who starts with more traction with the tea party/Republican Study Committee hard-liners in the GOP Conference.

But Cantor has now thrown the negotiating grenade back to Boehner; if after all these public statements, a deal includes some revenues, and especially includes a trigger mechanism that encompasses spending and taxes, which is the only kind that really works, can Boehner sell it to his rabble-rousing troops? Will he be willing to cut such a deal if it means revolt inside the Conference?

The markets have largely shrugged off the possibility that we will in fact breach the debt limit formally, if only for a day or week. Most of the pros agree. They are probably right. But I am still nervous.

Norman Ornstein is a resident scholar at the American Enterprise Institute.

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