In Debt Debacle, Someone Will Have to Blink
After months of posturing, promising and threatening, the endgame on raising the debt ceiling and shrinking the deficit is approaching. But after talking during the past few days with a variety of participants and observers, I can find no consensus on exactly what the final result will be.
Some argue that the proposals offered by Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) are so close that a compromise is utterly obvious.
But that assumes that House Republicans are willing to swallow their Speaker’s plan, an uncertain conclusion based on the reaction that it has received from some of his own Conference’s conservatives. The White House has threatened to veto Boehner’s plan, and Reid has said it stands no chance in the Senate.
Others believe that Boehner ultimately will have to cobble together a bipartisan majority in the House with just enough pragmatic Republicans and panicky Democrats to win a slim majority.
But raising the debt ceiling with the backing of Democrats while most conservative Republicans sit on the sidelines would mean the end of Boehner’s Speakership and would be an invitation for a civil war within the Republican Party.
Conservatives would close their checkbooks to the Republican campaign committees, and GOP primaries against many of the House Republicans who voted for a compromise would spring up faster than crabgrass.
Still, others suggest that something akin to the proposal put forward by the Senate’s “gang of six” will be the basis for a deal.
After November, many of us noted that Boehner would have a difficult time keeping his troops in line and that while he understands the importance of compromise in the legislative process, many of his freshman Members don’t.
During the past few weeks, Boehner has been trying to walk a very fine line — leading his Members toward an acceptable compromise without violating their pledge to change how business is done in Washington, D.C. The closer we all get to the debt ceiling deadline, the more difficult that is for the Speaker. The devil is always in the details, of course.
Ideology certainly is a considerable factor in House Republicans’ unwillingness to back off their demands. But possibly even more important is that so many grass-roots conservatives and House Republicans deeply distrust the nation’s political leaders and opinion-makers.
They saw President George H.W. Bush promise “no new taxes” in 1988 and then negotiate a budget deal with Congressional Democrats in 1990 that included raising taxes.
A few years later, as many of them told me during the last campaign, they witnessed the Republican class of 1994, which had come into office demanding smaller government and lower taxes, loading appropriations bills with earmarks and more spending.
After the 2000 election, with Republicans controlling the White House, these conservatives surely had reason to hope for smaller government. Instead, they found their political leaders pushing for a costly new entitlement, a prescription drug benefit and “federalizing” education through the No Child Left Behind Act.
More recently, only days after an April budget deal reduced federal spending by a projected $38 billion, the Congressional Budget Office declared that the actual savings for the current fiscal year would be closer to $352 million.
And on Tuesday, after weeks of warning of a financial meltdown on Aug. 2, the Washington Post reported that three large financial institutions, UBS, Barclays and Wells Fargo, now believe that the government won’t “run out of money to pay all bills” before Aug. 8, or possibly until the end of the month.
Is it any wonder that House Republicans are cynical about promises to cut spending and address the nation’s long-term economic health through entitlement reform?
So what do House Republicans want and need right now?
“We need to be able to tell voters that we’ve fixed the debt problem, that we won’t need to continue to raise the debt ceiling again and again in the future,” one GOP operative said, setting the bar extremely high.
Meanwhile, President Barack Obama looks terribly weak and irrelevant, a mere bit player as the all-important third act opens.
While he calls for shared sacrifice and higher taxes on the wealthy, Reid offers a plan that cuts spending but raises no taxes.
Less than three weeks ago, the president vowed to veto a short-term extension of the debt limit to give negotiators more time to construct a deal. But now, it’s clear that politically he could not afford to do so.
“In the end,” one GOP strategist told me recently, “somebody is going to have to blink.” It’s still unclear whether it will be Boehner, Reid or Obama. But I wouldn’t yet count on it being House tea party conservatives.
Stuart Rothenberg is editor of the Rothenberg Political Report.