Obama's Options If He Won't Negotiate with Debt-Limit Hostage-Takers

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President Obama said at his press conference Monday that he wouldn't negotiate "ransom" with hostage-taking terrorists, which is how he is construing the House Republicans who are threatening to block raising the debt ceiling. Governments refuse to negotiate with hostage-takers all the time, but they usually have a backup plan, like the Navy SEAL snipers who took out Somali pirates, beyond firmly asking the hostage-takers to turn over the hostages in a series of public appearnces.

Congress "will not collect a ransom in exchange for not crashing the economy," Obama said in the last press conference of his first term, referring to Republican threats not to raise the debt ceiling unless the White House accepts large spending cuts. "What I will not do is have that negotiation with a gun at the head of the American people," Obama said. Obama has had a few jokey metaphorical versions of that kind of Plan B to deal with a breached debt ceiling — minting a $1 trillion coin, declaring the debt limit unconstitutional — but he's ruled all those options out. What's left to do if we actually hit the debt limit? Let's game out a few options.

Action: House Republicans pass an increase in the debt limit with cuts to entitlements -- an "unbalanced approach," in Obama's terminology, that he's vowed to reject. At The Wall Street Journal, Karl Rove floated doing this by limiting future growth of spending. Talking Points Memo's Brian Beutler fears the House will do this and then "skip town claiming they’ve done their job."

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Reaction: The Senate then has to choose between rejecting the House-passed bill -- and causing global economic crisis -- or voting for whatever entitlement cuts are in the bill.

Potential blowback: If the Senate votes down the bill, we don't pay our debts, and there is economic calamity. If the Senate does pass the bill, then Republicans will have been able to extract a major victory on entitlements despite losing the White House, the Senate, and the popular vote for the House in the 2012 elections.

Action: The Senate amends the House bill and strips all the spending cuts, The Washington Post's Greg Sargent explains. 

Reaction: Boehner breaks his promise to not bring any bill to the House floor that doesn't have the support of a majority of Republicans. As happened during the fiscal cliff, a majority of Democrats and some Republicans vote to pass the clean debt limit hike.

Potential blowback: Boehner vows to use the date sequestration kicks in to force big spending cuts.

Action: There is no bill conservative enough to pass with just Republican votes. Rove clearly worries that his plan won't be enough for some conservative lawmakers, warning that "voting against a GOP plan because it’s not perfect would just be aiding and abetting Mr. Obama." The House proposal falls apart, much like Boehner's Plan B to extend the Bush tax cuts to income under $1 million. 

Reaction: As with the fiscal cliff, Democrats go on TV and talk about how the House GOP can't get it's stuff together. With Democrats, the House passes some sort of compromise measure -- maybe the clean debt limit increase bill noted above.

Potential blowback: A compromise measure could possibly extend the debt ceiling by only a few months, something Republicans have floated. And again, Boehner vows to use the date sequestration kicks in to force big spending cuts. 

Action: House Republicans refuse to raise the debt limit and shut down the government.

Reaction: Obama uses one of his absurdist barely-legal options to pay U.S. debt obligations -- minting a $1 trillion platinum coin and depositing it in the Federal Reserve, declaring the debt ceiling unconstitutional based on the 14th Amendment, issuing federal scrip until Congress gets past the crisis.

Potential problems: Obama has ruled out the 14th Amendment option as well as the $1 trillion coin. He says there's no "Plan B."

Action: Obama holds a lot of press conferences, each employing a variety of homespun metaphors to shame the GOP into raising the debt limit. On Monday, Obama compared passing spending bills and then not raising the debt ceiling to dining and ditching.

Reaction: After some bad press on the East Coast reminiscent of the treatment Newt Gingrich got during the 1996-1997 government shutdown, Republicans miraculously come to see things from Obama's perspective. They abandon their convictions that spending must be severely restrained immediately, and pass a debt ceiling with no strings attached. 

Potential problems: It seems unlikely that a few press conferences is all it takes. Grover Norquist sure doesn't want it to happen. He tweeted Monday, "Obama now: pass the debt ceiling and we'll talk. In movies: bad guy says, 'put down the gun and we'll talk.' Then jumps the disarmed hero."

This article is from the archive of our partner The Wire.