Last night, I wrote about the wisdom of Mitch McConnell's sudden and controversial "contingency plan" to raise the debt ceiling--or what amounts to wisdom if you believe, as McConnell apparently does, that Democrats won't accept a plan that doesn't raise revenue. I was caught off guard like everybody else because, as I indicated last night, I believe that they would have. Or at least, I suspected as much.
Here's how I thought things would play out: we'd go through another two weeks of fruitless negotiations as the parties dug in, and then, all of a sudden, the credit markets would realize that the prospect of a U.S. debt default was frighteningly real. The stock market would drop 800 points and we'd be in the midst of another "TARP scenario." At precisely that moment, the pain would become real. Who would blink first? My guess is President Obama.
For all he's done to strike an adult tone and cast himself as a responsible leader, I didn't think Obama would allow the economic damage that would result from an actual default. After all, he'd broken his pledge not to extend the Bush tax cuts because, he said, refusing to do so would hurt the middle class. He'd agreed to $40 billion in cuts to pass the continuing resolution and keep the government running earlier this year. Obama struck me as being serially incapable of ever "shooting his hostage." I'll bet even Sasha and Malia didn't buy his threat to veto any short-term debt-limit deal. So I thought he'd fold first. My best guess? We'd end up with about $2 trilion in "Biden" cuts with possibly a few minor loophole closings (corporate jets?) to mask the outright capitulation.
Oops! Guess not. Now, McConnell is no fool, and maybe he knows something that I don't. (In fact, I assume he knows plenty that I don't.) Perhaps he feared losing his leverage completely in the event of a panic-driven "clean" vote to raise the debt ceiling; maybe he thought independents would turn on Republicans and cost him the Senate majority he longs for. I don't know. But I'm surprised that he moved when he did--and a lot of conservatives are, too.*
*Of course, there's no guarantee that House Republicans will pass his plan, in which case my imagined scenario would still come to pass.
Joshua Green is a former senior editor at The Atlantic.