Obama Can Win the Debt Ceiling Fight
I find it a good policy, every so often, to size up the biggest and most universally agreed upon piece of conventional wisdom on the horizon and ask: really? The conventional wisdom is laughably wrong often enough that it’s not so difficult a trick to come out of such an exercise looking like a savant. The biggest piece of conventional wisdom right now is that the Republicans will have all the leverage in round two, the debt talks, because they can force Obama to make huge cuts. I’m not sure I buy it, and my confidence is only reinforced by seeing that Newt Gingrich thinks the same thing. Gingrich has a fat ego and fatter mouth, but in terms of strategy, the man is not stupid. And since I’m the pundit with the best prediction of 2012 by a margin that “landslide” doesn’t even begin to describe (!), maybe you should heed us.
The conventional wisdom, with which I’m sure you’re familiar, goes like this. Just as they did in 2011, the Republicans can and will demand a dollar in spending cuts for every dollar by which they are asked to raise the debt limit. Just as they did in 2011, they can and will back Barack Obama into a corner, out of which he’ll have no choice but to play ball. Just as they did in 2011, when they drove down Obama’s approval ratings (they drove their own approval ratings down even more, but they didn’t care about that, as long as they singed Obama) and won key substantive concessions, so they will prevail this time as well. That’s the c.w., salted with a heavy dose of liberal anxiety about how that Obama is absolutely certain to sell us out.
It all makes sense. But here’s why I don’t buy it. Obama says he will not negotiate this time, that this will be no replay of 2011. Chuck Schumer, the most important Democratic senator in terms of strategy, just said the same thing, and emphatically, reports Sahil Kapur of TPM: “Anyone who wants to come and negotiate, and say ‘we will raise the debt ceiling only if you do A, B, C’ will not have a negotiating partner. And if then they don’t want to raise the debt ceiling, it’ll be on their shoulders. I would bet that they would not go forward with that.”
So let’s just play that out: that the White House literally and simply does not negotiate the point. The two sides meet, either principals or seconds. They talk domestic budget, they talk Pentagon budget. They talk entitlements. They talk Steve Strasburg’s arm. They talk whatever you please. But when Republicans raise the issue of the debt limit, the Democrats just get up and walk out of the room. Or the Republicans call a meeting. The administration people simply don’t show. No negotiating means just that. No negotiating.
Greg Sargent doesn’t see how the White House can pull that off. But I don’t see why it would be such a problem—provided Obama reframes the issue quickly and aggressively.
Here’s what he needs to do. Right now, the public thinks (to the extent the public has any idea) that the president is asking Congress to raise the limit because of something the president has done … wrong. He overspent or something.
The truth of course is that it’s Congress that has incurred the debts, not the president. The only reason the president appears to be in the position of being the one seeking the increase is that any sitting administration (its Treasury Department) is the one that actually has to pay the bills. That’s a pretty sweet deal for Congress. They run up the bills, and then, when the president asks them for the money to pay off the bills that they incurred, they say no!
Obama, in my memory, never once pointed this out in 2011, but he has already done so this time around: “I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed,” he said on New Year’s night, after the House passed the cliff bill.
He needs to bang this home with an intensity like it’s October in a presidential campaign. First and foremost, he has to get the business world on his side, such that they’re willing at least privately to come down on the Republicans like a ton of bricks. In 2011, these titans had to hedge their positions because most of them were hoping a Republican president would be elected the next year. But Obama is in the captain’s chair for four more years. There’s no political point to such hedging now.
Second, he should use the State of the Union to drive home the absurdity of the situation, and the outrageousness of it. He needs to turn and face the assembled Republicans and say directly to them: “You fooled me once in 2011. I won’t get fooled again. No negotiating means no negotiating.”
Oh, they’ll fume and fulminate, and they’ll natter on about how outraged they are that the president could say such an irresponsible thing. And then you know what they’ll do, when push comes to shove? Here’s what Gingrich thinks: “Everybody’s now talking about, ‘Oh, here comes the debt ceiling.’ I think that’s, frankly, a dead loser. Because in the end, you know, it’s gonna happen. The whole national financial system is going to come in to Washington and on television and say: ‘Oh my God, this will be a gigantic heart attack, the entire economy of the world will collapse. You guys will be held responsible.’ And they’ll cave.”
Now, a moment is going to arrive, a moment of truth, the Gary Cooper-High Noon moment, when Frank Miller and his gang draw their pistols—that is, when the Republicans appear to be completely and irreversibly committed to sending the country into default. That will be a nerve-wracking moment. But if Obama has handled this thing the right way between now and then, let’s call it the Ides of March just for laughs, it could go down exactly like January 1 went down. Senate passes legislation. House balks. Fox News anchors go nutso, warning House Republicans that they’ll be blamed. House caves.
Look at Obama’s approval ratings vs. Congress’ and the Republicans’, and look at public support for Obama’s positions vs. the GOP’s (on entitlements and defense spending, for example), and tell me this isn’t plausible. It most certainly is. And remember: You’re not likely to go broke betting against Washington conventional wisdom.