How The Debt Impasse Will End

Big doings today that set the stage for the last minute compromise that I have been predicting for several weeks now. As expected, the House passed a revised version of Speaker Boehner’s bill by a 218-210 vote to raise the debt ceiling to $14.3 trillion, but only after Boehner sweetened the pot to include language that a balanced budget amendment be passed by the House and Senate before a second increase in the debt would be allowed next year. Even with this provision, Boehner still lost 22 Republicans – most of them Tea Party caucus members and/or fiscal conservatives.  The measure received no support from Democrats in the House.

Shortly after House passage, the Senate – again as expected – moved quickly to table consideration of the House bill, 59-41, again on a largely party line vote. Six Republicans joined all the Senate Democrats in voting to table the House bill: Sens. Jim DeMint (S.C.), Lindsey Graham (S.C.), Orrin Hatch (Utah), Mike Lee (Utah), Rand Paul (Ky.), and David Vitter (La.).  One should not make the mistake of assuming that these Republicans will now support Reid’s version of the debt extension – they will not.  By tabling consideration of the House bill for now the Senate leaves open the possibility of taking it up later, but amending it by substituting a version of Reid’s bill which, if it passes the Senate, would then be sent to the House. The strategy here is to send the House a bill with almost no time left before the August 2 default deadline, leaving the House with two choices: sign on to the Senate  bill or be blamed for default.

Meanwhile, in a sign that Reid recognizes that his own debt limit bill in its current form lacks filibuster-proof support, the Majority Leader refused to take Minority Leader Mitch McConnell’s suggestion to immediately move to a vote on Reid’s bill  (more precisely, a move to invoke cloture which would prevent a Republican filibuster).  Reid’s refusal indicates that – at this juncture – he does not have the 60 votes he needs to pass his debt extension.

None of this was surprising, but all of it was necessary in order to demonstrate to the ideological purists in both wings of the party – and their activist supporters – that the only way to resolve this debt crisis will require compromise. (Now if we can only drive a stake through the heart of this 14th amendment nonsense!) Neither side is going to win this debate, and neither side gains from a default.

So, how will the debt impasse be resolved?  First, one more round in the vote carousel needs to play out.  Reid will need to revise his bill in order to attract at least 7 Senate Republicans to reach the 60-vote filibuster proof total.  If Democrats can do that, they would then send the “bipartisan” proposal back to the House with very little time for Boehner to respond.  That would put pressure on the Republicans to either accept the Reid bill or potentially take the blame for inducing a national default after Aug. 2.

Anticipating this, Boehner will take up the current Reid bill tomorrow in expedited fashion – technically, under “suspension of rules”.  In essence, that means the final and only vote on Reid’s measure is to suspend normal House rules and to pass Reid’s bill – but by a 2/3 majority vote.  The vote is purely symbolic, but it does signal that even if Reid’s bill somehow passes the Senate in its current form, it is dead in the House.

So, what is the endgame?  It will likely end – for this round – like this.  Democrats’ primary concern is to prevent a two-step process- they are holding out for an extension of the debt ceiling that is high enough to take us beyond the 2012 election.  What can Republicans extract for agreeing to this?  I can think of two things: a straight vote on a balanced budget amendment and deeper spending cuts with no revenue offsets.  And that is almost surely how this current budget impasse will be resolved.  Although Obama has stated that he won’t agree to a short-term debt ceiling extension, he will almost certainly be willing to compromise on this point in order to give both sides another few days to finalize an agreement.  So, I expect Republicans to concede on the two-step process in return for getting steeper spending cuts and no revenue offsets, and an up-or-down vote on a balanced budget amendment. If they are close to an agreement of this type, Obama will surely agree to a short-term extension of the debt ceiling.

The fallback option – which I expect Tea Partiers in the House to reject – is a version of the McConnell plan to allow Obama to raise the debt limit subject to a 2/3 override vote in both chambers of Congress – a ceiling that would in effect give Obama a blank check.  Unless this is paired with significant concessions to the House Tea Partiers, such as a clean balanced budget vote, I don’t  see this going anywhere.

That’s how I see the endgame playing out.  Before we get there, however, both sides – egged on by party activists like Krugman and Limbaugh – will undoubtedly ratchet up the rhetoric.  That will surely dominate media coverage, but don’t be deceived – negotiations for a bipartisan compromise are ongoing and will result in a compromise that will prevent a debt default.

More in the morning, and keep those comments coming….

3 comments

  1. Although a sad commentary on where we are as a people and a government its nice to have these assurances.

    What is less so – I first wrote outrageous but then thought it was impolite – is your equating Krugman and Limbaugh as party activists. The former, distinguished Professor of Economics and International Affairs at Princeton, Nobel prize winner and NYT columnist since 1999 is a deeply engaged liberal who is appalled at the irresponsibility and wrong-headedness of the current policy process. That this cuts both ways politically is illustrated by his acid comments about President Obama, most recently on July 29.

    As for Limbaugh he left Southeast Missouri State University after two semesters and one summer. According to his mother, “he flunked everything”, and “he just didn’t seem interested in anything except radio.” He has been projecting, and subjecting people to his right-wing monologues, since graduating from the ranks of local disk jockeys.

    Enough said.

  2. George,

    You are right , of course, that in important respects Krugman and Limbaugh are poles apart (and I don’t just mean ideologically). What I was reacting to, however, was a recent Krugman column sent to me in which he lambasted anyone (and I think this was probably a veiled shot at his fellow columnist Tom Friedman) who espoused a “centrist” or “moderate” viewpoint in the current debt debate, or, for that matter, in the larger economic policy debate between Democrats and Republicans. To Krugman, there is no middle ground – there is only the intellectual high ground (his viewpoint) and the wrong ground (everyone else’s viewpoint). Now, he may be right, but in terms of his willingness to accept alternative arguments, he’s not much different from Limbaugh. And it is that strength of certitude – exhibited by the purists on both sides – that makes resolving the debt impasse so difficult. Because, in the end, both sides have to give. Obama recognizes this, but Krugman will never accept it – and neither will Limbaugh.

  3. Of course. But you equated them as ‘party activists’.

    Another distinction. Krugman is a highly regarded, passionate teacher interested in sharing his conclusions, not a political actor in this drama. He’s the Cassandra. Friedman chooses to preach compromise, which makes pragmatic sense in the present extreme mess. But people do first need to know what is being compromised – since many Americans, innocent onlookers in this vicious theological dispute, will pay heavily for all this in the end.

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