Wednesday, May 16, 2012

Boehner Wants Another Debt Ceiling Showdown


The Washington PostWednesday, May 16, 2012
Ezra Klein's Wonkbook

"We shouldn’t dread the debt limit,"said Speaker John Boehner at the Peter G. Peterson Fiscal Summit. "We should welcome it. It’s an action-forcing event in a town that has become infamous for inaction."

These comments have been the occasion for much wailing and gnashing of teeth, as if anyone, anywhere, believed that the Republicans' 2011 debt-ceiling antics were some sort of one-off. But Boehner was clear on Tuesday. "I will again insist on my simple principle of cuts and reforms greater than the debt limit increase," he said.

Of course he will. For one thing, it worked well for him in 2011. Republicans got more than $900 billion in immediate spending cuts, as well as $1.2 trillion in triggered spending cuts -- though they don't much like the $500 billion or so of those cuts scheduled to fall on the Pentagon. They also drove President Obama's approval ratings beneath 40 percent. And while I'm not one who thinks Republicans intentionally tank the economy to undermine Obama, there's little doubt that the effect of the debt-ceiling debacle was to set back the recovery, brightening Republican prospects and darkening Democratic ones. The fact is that it's easier to be sanguine about economic showdowns when you're not the ones in charge.

For another, it's Boehner's only option in 2012. The Democrats, for once, have nothing but fiscal leverage. They've got the expiration of the Bush tax cuts, which all Republicans would hate and many Democrats would welcome. They've got the aforementioned spending trigger, which Republicans really have begun to fear for its cuts to defense spending. They can do nothing -- or, more likely, offer Republicans a deal they can't accept -- and the resulting paralysis will swing fiscal policy far, far, far to the left. Threatening to default on the national debt is Boehner's only piece of counter-leverage.

So of course Boehner will try and use the debt ceiling as leverage again. And again. And again. It's pretty clear that, at this point, there's no going back to the time when debt-ceiling increases came smoothly. If I were the market, I'd take the fact that the leader of one of the two parties has publicly said that he "welcomes" debt-ceiling showdowns as evidence that the United States is almost certain to default on its debt -- if only temporarily -- within the next decade or so.

The question is what, aside from complain, Democrats and the business community will do to stop him. Somehow, the debt ceiling needs to be taken off the table once and for all, either because Republicans forced a default in a way that they were blamed for the consequences and scared into never doing it again or because the president successfully pulled off one of the more creative maneuvers suggested during last year's showdown (Bill Clinton, for instance,argued that Obama should invoke the Fourteenth Amendment -- which says "the validity of the public debt of the United States ... shall not be questioned" -- to raise the debt ceiling unilaterally).

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