A few moments ago, Treasury Secretary Timothy Geithner released a letter to congressional leaders explaining the extraordinary measures he'll take to keep the United States from defaulting on its debt. Even amid the world-shaking news of Osama bin Laden's death, the work of government goes on. The fast-approaching May 16th debt limit, and the need to raise it to avoid economic calamity, are a prime illustration of this--the problem is impervious to SEAL Team 6 heroics and trending Twitter topics, even if the rest of us are not.
For now, I'll leave aside the big-picture speculation about how much Obama's success will influence his reelection chances, except to say that I instinctively agree with those who argue "less than you might think." What I was trying to get a sense of today was what effect bin Laden's death would have on Congress right now--and since there is one issue blotting out all others at the moment, what my question really boiled down to was, What effect will bin Laden's death have on the debt-ceiling fight?
It will shock no one to learn that Republicans and Democrats don't quite agree on the answer, although both were sensitive enough to Obama's call for unity last night not to squabble on the record. Summing up the Republican feelings: the news doesn't change their position one iota. Republican leadership is not expected to change its schedule for this week, and may send out a letter in the coming days specifying what it would like in exchange for raising the debt ceiling. One aide granted that if the vote were held today, it would be tough for his party. But he was confident that any presidential glow from bin Laden's death will fade before the actual vote is held.
Not surprisingly, Democrats had a different view. None I spoke with sounded brash or triumphant, but most thought that the news was helpful, mostly because it lifted Obama's stature and makes threats to default look petty and political at a time when most Americans are coming together in celebration. "Without completely politicizing it, this is going to require both sides to elevate the debate because resorting to games and threats on any major issue now will look worse," a Democratic senate aide told me. "It won't stop the debate, but it will temper the debate."
That rings true to me, and I think that any tempering of the debate helps Democrats and also Republican congressional leaders (who dread a default and a backlash, but can't say so publicly). Ultimately, this makes it more likely that sanity prevails and a deal is struck with only a modicum of drama. But on the other hand, I take the Republicans' point that as time goes by and bin Laden's death fades in the public mind, Washington will return to the status quo ante. On that point, the news from Treasury this afternoon, while positive on its face--due to "stronger than expected tax receipts" Geithner now says that the U.S. can probably make it until August 2nd before defaulting on its debt, about three weeks longer than previously believed--is actually a bit more ominous. If things really have returned to "normal" by early August then the likelihood of default won't have been diminished by bin Laden's death but only delayed.