Vice President Joe Biden has been negotiating with leading congressional Republicans for weeks in an attempt to reach a deal on deficit reduction so that Congress will vote to raise the debt ceiling. The discussions have been taking place behind closed doors, so I had been holding out hope that these talks were going somewhere—anywhere. And I thought they were: the vice president, along with Republicans, suggested that significant agreement existed on a range of spending cuts. The process of give-and-take and compromise was slowly working towards an agreement. Democrats would give up more than they hoped, the Republicans would get less, and both sides would be able to claim victory. It’s just what we could expect our elected representatives to deliver: a solution, however imperfect, to a problem.
On Thursday the 23rd, it was over. Not resolved; just over. House Majority Leader Eric Cantor (R-VA) and Senate Minority Whip Jon Kyl (R-AZ) walked out of the talks, claiming that Democrats have to give up on the notion that Congress will agree to an increase in tax revenues, and that President Obama needs to join in on the talks.
I understand where the Republican leadership is coming from when they oppose revenue increases: not only do they oppose them based on principles, but they also know that their caucus will go into conniptions if they are told to vote for a plan that smacks of a tax increase. But that still doesn’t explain why they walked out of the talks.
The potential damage to Republicans in significant. The simple math of the situation dictates that both Republicans and Democrats will have to both be involved in order to pass an increase in the debt ceiling, but I would argue that Republicans have a greater role. They are responsible for passage in the House: some Democrats will vote for the increase, but any majority will require a significant number of Republicans. In the Senate, Republicans are in the minority but can deny Democrats a vote on the issue if they filibuster. Democrats by themselves are seven seats short of cloture. In other words, Republican leadership (particularly Speaker Boehner (R-OH) and Senate Minority Leader McConnell (R-KY)) are the linchpin of any agreement. With them on board, the debt ceiling will be raised. With them opposing a deal, the ceiling will stay where it is, and the United States will default on its debt. A plurality of Americans seem to feel the same way, judging by the results of a poll which suggest that more people would blame Republicans for a lack of an increase than would blame the Obama administration (and presumably Democrats more broadly).
To summarize, a failure to raise the debt ceiling will in all likelihood lead to a default (which will lead to chaos). Republicans will potentially suffer huge consequences if voters continue to blame them for not raising the ceiling to avoid economic “Armageddon.” The Speaker and Senate Minority Leader, mindful of that, sent their Number Twos to meet with the vice president. Then those Number Twos walked out.
It’s unlikely that Boehner, McConnell, and Co. don’t have a plan. But what that plan could be is subject to several restrictions; it’s constrained (at least somewhat) by their previous public statements. For instance, they have said that they are willing to raise the debt ceiling provided that there are sufficient (read: large) cuts. Their plan, then, must include trillions of dollars in cuts in return for an increase. They also are restrained by time: from the time of posting, Congress has 33 days to receive, formulate, debate, and pass the increase in the debt ceiling and potentially trillions of dollars in cuts (or at least the outlines of the cuts). It also has to be a plan that it is conceivable that Democrats would accept. If their plan is in violation of basic principles of all Democrats, then it won’t pass the Senate, and the plan would be a waste of time.
Within these limits, Republicans have left themselves several options. One is to not raise the debt ceiling no matter what. Some people in Congress have floated the possibility of continuing to pay bondholders and making cuts in other places as necessary. While this idea is tantalizing to some who oppose any sort of government spending, it is impossible in practice. Among the immediate questions that would arise: who gets the money? How would we decide? Would we be in violation of the law? Would people trust the government to make the “right” decision? (No one knows, no one knows, yes, and no). If we do not increase the debt ceiling, we will default. We cannot leave the ceiling where it is and continue to pretend that the problem can be resolved.
An often-discussed option is to close tax loopholes—rates would remain the same, but the federal government would increase its tax revenue. While many signatories of Grover Norquist’s Taxpayer Protection Pledge see closing loopholes as a violation of that pledge, other members of Congress see it as an option—perhaps the only realistic one. In his Wednesday press conference, President Obama stated in no uncertain terms that there would be an increase in tax revenue as a part of any bill. While not ruling out some alternative to closing loopholes, he also did not offer any suggestions to what an alternative could possibly be.
President Obama also said that he thought Republicans would ultimately be more inclined to pass a bill with revenue increases than to allow the government to default on its debt obligations. It certainly seems like the only viable option; no other country has passed an austerity package that consists only of cuts. (For further discussion of the Taxpayer Protection Pledge, check out this blog post.)
Republicans could save face with this strategy. They could say that they were against raising revenues, but they cared enough about the country and avoiding default that they still voted for it. They could say that it is only a temporary strategy, and that once they have one of their own installed in the White House, they will roll back the revenue increases. They could simply say that they never specifically said that they wouldn’t increase revenues. The Democrats will disagree (naturally). Both sides will claim victory and blame the others for everything that they didn’t get. But the ceiling will have been raised, and the American way of doing things will have lived on.
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