No Deal in Debt Debacle
Maybe it’s always darkest before the deal. Maybe the United States won’t default on its debt, and maybe at some point there will even be a “grand bargain” to shrink the long-term debt. But can the country and its leaders ever recover from these months of messy, scary brinksmanship?
It’s hard to believe any kind of deal, no matter how big, will be enough to restore full faith in our political system. Americans simply shouldn’t be put through the wringer like this, nor should foreign leaders and investors be wondering if we’re really going to threaten the global economy over whether to kill certain energy tax breaks or change the way Social Security benefits are calculated.
Thomas Mann, a senior fellow at the Brookings Institution, has observed Congress for 40 years and co-authored a 2006 book that called it “the broken branch” of government. “This is the worst I’ve ever seen as far as brinksmanship. By far. Nothing comes close,” he told me. “It coincides with one of our major political parties being pulled sharply to the right. The saner heads among conservatives just can’t prevail now. I just don’t know how we’re getting out of this.”
Various players keep setting deadlines that keep getting blown. House Speaker John Boehner said late last week that he wanted a deal, or at least a framework, before Asian markets opened Sunday evening. But Sunday came and went with no deal or framework. Next deadline: Monday night. That’s when Treasury Secretary Tim Geithner says the process needs to start moving. Boehner and Senate Majority Leader Harry Reid are racing to develop their own plans and push them through their chambers by week’s end or sooner.
No assessment of the state of play lasts more than a few hours, but there were some hints on both sides Sunday evening of where things may be headed, even some hints of—there’s that dreaded word—compromise. The White House doubled down on its demand for a debt-ceiling increase large enough to allow the country to meet its financial obligations until the beginning of 2013. President Obama reiterated his support for the long-term extension and White House chief of staff Bill Daley warned on NBC’s Meet the Press that Obama would veto anything less.
Reid is working on what he called a bipartisan plan that includes the longer timeline and, at $2.7 trillion in projected savings, more than meets GOP demands for a dollar in cuts for each dollar the debt ceiling is raised. It does not close tax loopholes or otherwise raise revenues, a key component of the “balanced” approach Obama and Democrats have long sought. But neither does the measure include cutbacks in Social Security or Medicare, which are GOP priorities, a Democratic aide says.
On the Republican side, Boehner said he was coming up with his own plan—which Reid has already called a non-starter—and issued a challenge of sorts to his members. The only way to “stop Obama” is to unite behind a debt measure that can make it through the Democratic-controlled Senate, he said on a conference call. In a word, compromise. “It’s gonna require us to stand together as a team. It’s gonna require some of you to make some sacrifices,” he told them, according to a source familiar with Boehner’s remarks.
Daley and Geithner repeated on one talk show after another that Americans should not have to endure another round of nerve-wracking negotiations that put the country’s credit rating, interest rates and entire economy at risk. But the GOP line is that Obama’s demand for a long-term extension is craven. “I know the president is worried about his next reelection, but my God, shouldn’t we be worried about the country?” Boehner said on Fox News Sunday.
House Majority Whip Eric Cantor reportedly told House Republicans later on the conference call that Obama’s resistance to the short extension was “purely political and indefensible.” That in turn sparked a flurry of tweets from White House communications director Dan Pfeiffer about past Cantor and Boehner statements disparaging short-term debt limit extensions as gimmicks. “It is my preference that we do this thing one time,” Cantor said last month.
The sharp rhetoric may be necessary for leaders on both sides to stay in the good graces of their respective parties. That would make all of the posturing more like Kabuki theater and less like trench warfare. For those watching from the outside, though, it’s kind of scary not knowing which version it is.
The lack of a deal did not precipitate dramatic dips in Asian markets on opening, as some had anticipated, and it’s still possible politicians at home won’t suffer dramatic dips in their fortunes. If something like the Reid plan passes, Republicans would be able to argue that they forced Democrats to make huge spending cuts and kept them from raising taxes. And since Medicare and Social Security cuts wouldn’t be part of a grand bargain, Democrats would be able to say they protected the two programs. They’d also have a clean line of attack on the campaign trail against Republicans who voted for the controversial Paul Ryan plan to transform Medicare into a voucher program.
There have been so many miscalculations by so many players in this drama. Why on earth didn’t Obama get a debt-limit extension as part of the deal he made with Republicans last December, when they were mostly interested in extending the Bush-era tax cuts for the wealthy? And how about Ryan, chairman of the House Budget Committee, saying six months ago at the National Press Club that his party won’t accept a “naked” debt limit without spending cuts, but also that “obviously we can’t default.” “How is that a winning strategy?” moderator Paul Gigot asked at the time.
Twitter is often the best place to go these days for pithy expressions of popular sentiment. This one from satirist PourMeCoffee pretty much summed it up for me: “Sunday Show Spoiler Alert: People who broke Washington think Washington is broken.” The real deadline is just a week away. They know what they have to do.