The First War of the Next Congress: The Debt Ceiling

The day after a historic Republican victory, President Obama and soon-to-be House Majority Leader John Boehner both expressed an interest in bipartisan solutions to America's economic woes. But in a conversation with Mike Franc, vice president of Government Relations at the Heritage Foundation, a different picture emerged. Intractable differences over spending and taxes. A huge opening battle over raising the debt ceiling. A bevy of symbolic House votes (think Obamacare repeal) designed to please the red base and go nowhere in the Senate.

Divided government: it's going to be ...  interesting! Here is our edited transcript.

What message did voters send on Tuesday?

Let me summarize in a sound bite: It's about the size, scope and competence of government. They want to shrink the size, narrow the scope, and increase the competence.

The competence part is where the independents are coming out. I studied the polls. These voters are right of center, but not dramatically so. They want government to do things conservatives would blanch at, but they have limited tolerance for trying something that doesn't work over and over again, like spending [to stimulate].

How can Republicans seize that mantle of smaller government and greater competence?

The GOP needs to do something that

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demonstrates measurable success in cutting spending. At minimum, it must prevent an increase in taxes -- for anybody. In general, they'll want to put a break to administrative activities. Block the appropriation process. Clamp down on implementation of Obamacare, and EPA rule making. Perhaps the Department of Labor deserves some scrutiny.

Obamacare is the headliner, but how would you defund it? The popular insurance regulations rely on the mandate. The mandate relies on funding. You kill the funding, and you kill the popular regulations.

They have to tackle the day to day process that goes on inside HHS and Treasury and other agencies to implement various parts of the new law as it comes on line in the next few years. You want to repeal Obamacare, one month at a time, not letting funds be appropriated. Republicans have won both the House and many state legislatures. Work with the states setting up these exchanges, and stop the funding.

Will Republicans support the deficit commission's recommendations?

Not if it has tax increases in it.

It seems to me that the House won't vote for a plan with tax increases, and the Democratic Senate won't go for a plan without tax increases. Is this thing doomed?

We'll have to see what the mix is. But tax increases are a non-starter among 99.8 percent of Republicans.

So take me through the first days of a new Republican House. What kind of bills should we expect?

Let's say the Lame Duck Congress punts a lot of big issues for the Congress, like the debt limit. Can you imagine Boehner and Cantor meeting with the freshman representatives in the House and saying, "First, we have to increase the debt ceiling [so that the U.S. can borrow more money to spend]"? The pitchforks will come out and torches will be lit!

But Republicans can't afford to freeze the debt ceiling. They're too scalded from the last government shut down [in 1995]. So they'll get the House to pass a lot of small things. You can repeal Obamacare with a sentence, and let it sit in the Senate. You can stop all funding for NPR, and then it goes to the Senate. You do this every day, get a bevy of proposals limiting government action. Or you say, we have to pass a debt ceiling increase, but we're attaching $100 billion in spending cuts to the bill.

Ed: On Wednesday, Sen. Mitch McConnell said raising the debt ceiling "will not be without some strings attached if it happens."

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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