It's All Politics
Debt-Ceiling Fight Comes Down Whether Or Not To Have Election Year Redo
Originally published on Mon July 25, 2011 11:58 am
Who wants a debt-ceiling fight during an election year?
Setting aside all the details, important as they are, about raising revenues and cutting spending, the crux of the fight is now clearly more than anything else about when to have the next debt-ceiling battle after the one now playing out before our eyes.
You can see reasons why it would be advantageous politically, for congressional Republicans to force the next debt ceiling fight to occur during the election year. Among other things, it would help their positioning as the more fiscally responsible party in 2012 to have another debt-ceiling fight raging in tandem with their campaigns.
And the reasons are pretty obvious why President Obama and his Capitol Hill Democratic allies would rather push the next debt-ceiling fight past the November 2012 elections.
Voting to raise the debt ceiling is like paying taxes. Few actually enjoy doing it but you know it's required of you.
It's a tough vote especially because of how it can be used against a lawmaker. That's especially true at a time when Americans have grown relatively allergic to debt.
Of course, neither side is arguing that they're considering the politics of the short-term or long-term debt ceiling question, even as they accuse the other side of viewing the issue mainly through a political lens.
Instead, both sides are couching their stances on a higher plane, with Democrats arguing, that the financial markets and economy generally, would benefit from the stability that would come from pushing the next debt ceiling fight into 2013.
In his statement issued Sunday evening, Sen. Harry Reid, the Senate majority leader and Nevada Democrat, talked of the damage a short term extension into next year, such as that proposed by Republicans, would do to the economy:
Tonight, talks broke down over Republicans' continued insistence on a short-term raise of the debt ceiling, which is something that President Obama, Leader Pelosi and I have been clear we would not support. A short-term extension would not provide the certainty the markets are looking for, and risks many of the same dire economic consequences that would be triggered by default itself. Speaker Boehner's plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the President.
Left unsaid by Reid, of course, is that control of the Senate is in play, with Democrats needing to defend 23 seats compared to 10 seats for the Republicans. Members of Reid's caucus most assuredly don't want to be voting on controversial debt-ceiling legislation.
Since capital markets a notoriously skittish when uncertainty rises, the Democrats' argument for a longer term debt ceiling dovetails rather neatly with the needs of investors seeking predictability in federal fiscal policy.
For his part, House Speaker John Boehner, an Ohio Republican, argued it was necessary to have another debt ceiling debate next year because it was just impossible for the negotiators to arrive at a fully baked in the time left.
On Fox News Sunday, he said:
"I am going to continue to work with my Congressional colleagues in both parties and my House Republican Conference to try todevelop a framework within the 'Cut, Cap and Balance' effort that the House passed this past week. I do believe that such a framework could come together, but it is not in place as we sit here. ... There is going to be a two-stage process. It is not physically possible to do all of this in one step."
As the White House pointed out Monday in a blog post by communications director Dan Pfeiffer, the Republican position had shifted from only a few weeks ago.
Then, Republican lawmakers had warned against a short-term deal now to be followed by another later. They made some of the very same arguments White House officials are making now.
In June, House Majority Leader Cantor "Was Explicit That He Wants A Single Debt Ceiling Vote For This Congress - Not A Series Of Short-Term Extensions." Now House Republicans are arguing that we should adopt multiple short term solutions that would leave that cloud of uncertainty hanging over our economy continually for the next two years, if not longer.
Adding to the sense of crisis, is Obama's threaten to veto any short-term debt-ceiling legislation that reaches his desk.
But, again, with Reid seemingly adamant that he will allow no such legislation to emerge from the Senate, it appears Obama may not have the chance to make good on that threat.
Which raises the question that has been asked during this entire episode of American history in the making: who will blink first? That's followed by the question, if no one blinks, what will a default by the U.S. government feel like?