How do we get out of this mess? We know it won’t be easy, and we know that there is a tangible chance that we will default. As a top House Republican staffer told National Review’s Robert Costa the other day, “It’s the House of indecision. We don’t have the votes for a big deal, small deal, or short-term deal.” I will get to one possible way out, but first I need to vent. To begin, this is entirely an engineered crisis perpetrated by House Republicans with Senate allies, hatched, as we now know, by outside individuals and groups including Ed Meese, Heritage Action, and the Koch brothers. We know that John Boehner really did not want a shutdown, and that he had agreed to a clean continuing resolution after Senate Democrats capitulated in entirety to his party’s demands on appropriations—meaning a continuation of the sequester and the much lower overall spending numbers of the Ryan budget (including higher spending for defense.)
But Ted Cruz and Boehner’s own radical House faction pushed the speaker to renege on that deal and instead demand the defunding of Obamacare as a condition for keeping the government open. Boehner did not ask that some portions of the government—including the World War II Memorial, death benefits for families of servicemen and women, NIH cancer trials—be kept open. He and his allies made clear that his demands applied to all government covered by appropriations. Trying to wriggle out of this untenable situation, Boehner tried to mollify his radicals by suggesting instead that their demands be tied to the debt ceiling—and we ended up with the worst of both worlds.
I have had some sympathy for Boehner, who is being buffeted by forces in his party beyond his control, with any attempt at leadership thwarted by a lack of followership. But my sympathy for him disappeared after his utterly disingenuous press conference Tuesday. The speaker talked about how all he wanted was to have a conversation and negotiation over spending issues, and that the failure to do so was un-American—this from the same speaker who, since the Senate adopted a budget several months ago, has steadfastly refused to appoint conferees to negotiate over the budget, after years of insisting that was all he wanted. The speaker suggested in his press conference that a clean CR, as proposed by President Obama, would mean total capitulation by Republicans—capitulation to the numbers he demanded!
Boehner also suggested that threats over the debt ceiling were routine. False. Before 2011, as Tom Mann and I point out in It’s Even Worse Than It Looks, the use of the debt ceiling as a political tool was limited to narrow issues directly related to budget priorities. The rank and regular hypocrisy surrounding votes on the debt ceiling—engaged in by Senator Barack Obama—by which a president’s partisans defended the need to protect the full faith and credit of the U.S., and his adversaries talked about the need for fiscal discipline (before reversing roles when the other party took over the White House), was seen by all as a kind of game. Nobody in a position of influence truly wanted a default, and party leaders always kept some votes in reserve in case the threat became real.
The idea of threatening default in a real way—demanding outlandish concessions with a loaded gun to the country’s head—only emerged in 2011. We escaped default when Mitch McConnell swooped in at the last minute to craft a deal—but the future became clear soon thereafter when a candid McConnell told The Washington Post about the future of the debt ceiling, “What we did learn is this: It’s a hostage that’s worth ransoming.” This year the hostage drama is more frightening. McConnell is AWOL this time. And the fantasy believed by many prominent GOPers about the consequences of default make it easier for them to push to the brink and over into the abyss. It may have come as no surprise when Rep. Ted Yoho, a veterinarian, said that a default would be great because “it would bring stability to the world markets.” But when Tom Coburn, who should know better, says that there is no debt ceiling and that if we fail to raise the debt ceiling “we’ll continue to pay our interest, we’ll continue to redeem bonds, and we’ll issue new bonds to replace those,” it tells us that there are way too many lawmakers in a bubble of unreality. In contrast, there’s this from Bloomberg News: “Among the dozens of money managers, economists, bankers, traders, and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.”
Enough venting. The bottom line here is that we need some kind of agreement that will reopen the government and stop a downward spiral that uses default as a genuine and frightening political weapon. Realistically, qua Negotiation 101, it must provide the president, the speaker, and the Senate majority leader with the ability to declare victory or at least to avoid the perception of utter defeat. The two houses, two parties, and the president will still have to deal with one another on myriad issues for the next 40 months.
Negotiation now requires a cooling-off period—a clean extension of the debt ceiling, and a temporary CR. Then a reopening of the government for the year, with the understanding that a new commission will be established to discuss big long-term debt issues, is feasible.
But any concession by the president that is tied to a short-term CR or a short-term extension of the debt ceiling would be disastrous. Basic functions of government and the full faith and credit of the U.S. would become regular instruments of extortion in the future, resulting in periodic displays of American dysfunction and incompetence to the world, with serious economic consequences. But a concession on a different agenda—to take the debt ceiling permanently off the table as a hostage—is well worth it. What Obama needs to offer now is a proposal to make permanent 2011’s onetime “McConnell Rule.” Under that procedure, devised by the minority leader, the president could unilaterally raise the debt limit and Congress could have the option of blocking it by way of a resolution of disapproval. The president, in turn, could veto the resolution of disapproval; a vote of two-thirds of both houses would be required to override the veto.
In return for that action, if the president agreed to remove the tax on medical devices (and replace it with another source of revenue to help fund Obamacare), or agreed to some additional malpractice reform—neither action hitting at any essential core parts of the health care law—it would be a win-win. If, in addition, Boehner simply accepted yes for an answer on reopening the government, attaining the Ryan budget numbers, we could all move past this embarrassing crisis. At that point, maybe we could craft a process that manages the budget process in a less destructive way.