Will Democrats Cave in Order to Avoid Revisiting the Debt Ceiling Before 2012? – UPDATED

[Note: See Update Below]

I did not wake up this morning expecting to be impressed by the clever political maneuvering of John Boehner.  If I correctly interpret the events of the past few days, however, then count me impressed.  I suspect that Boehner might have cornered Democrats, so they will have to make major concessions to Republican demands on the debt-ceiling issue.  Boehner and Republicans might be on the verge getting at least most of what they want.  And the solution, here in the eleventh hour, is surprisingly simple.

First, a recap.  When the President intervened in the debt-ceiling negotiations he did so in the hopes of achieving a legacy-burnishing grand compromise, and the one point on which he insisted most strongly was that any solution should raise the debt ceiling high enough that it would not have to be revisited until after the 2012 elections.  So the President purportedly (although we’ve never seen a plan, and have only learned about these things through self-serving leaks) sought a plan that would cut government expenditures (cuts are often promised and rarely enforced), including some marginal cuts in entitlements (which Republicans say far fall short of what is needed), in exchange for increased tax revenues (which are always enforced) and a debt-limit increase sufficiently large to last through 2012.  For obvious reasons, Obama did not want to find himself defending tax-and-spend liberalism at the same time that he would be trying to convince voters that he’s not a tax-and-spend liberal.

According to reports, about a week ago, President Obama and Speaker Boehner had agreed in outline to a package that included $800B in “additional revenue” by broadening the tax base and eliminating certain tax deductions.  The President took heat from his base, and asked for an additional $400B in taxes.  Boehner and Cantor said no, and this came to a head last Friday.  Boehner concluded that he could not deal with the White House (he later said that it was like negotiating with a bowl of Jello), and this prompted what Hugh Hewitt called “the most irresponsible presidential press conference in memory.”  Says Hugh: “The president threatened seniors with a cut off of Social Security, predicted a market panic on Monday morning, and then descended into the worst sort of demagoguery even as he denounced politics.”

Now we come to the intriguing part.  The President had said on Friday that he would consider “any plans” lawmakers sent him, but “the only bottom line I have is that we have to extend this debt ceiling through the next election, into 2013.”  The claim is that this would take “politics” out of the equation — which is laughable.  Renegotiating the debt/deficit issue right before the election would, to be sure, include a healthy dose of “politics,” but so does negotiating the issue now.  Also, the kind of “politics” implied in addressing the debt/deficit right before the 2012 election might also be called “accountability.”  Our representatives would feel even more pressure to do what their constituents want — and that’s a bad thing?  It’s only a bad thing if the public isn’t with you.

In any case, after Boehner accused the President of being more concerned with reelection than the economic health of the country, and started speaking on Saturday and Sunday morning of a two-stage solution, raising the debt-ceiling now and tackling serious deficit-reduction later.  House Republicans apparently began crafting the two-tiered approach last week, and it must have helped Boehner have the comfort to walk away from the White House.  At first glance, Boehner’s proposal appears similar to Mitch McConnell’s, which also included a hike in the debt-ceiling without significant changes to spending or taxation.  In Boehner’s proposal, however, it’s Congress and not the President who determines the extent of the debt-ceiling hike.  Republicans would propose a smaller debt-ceiling hike, which would have to be revisited before 2012.

This apparently put the fear of God into the Democrats, who are suddenly willing to cave to major Republican demands.  As the Washington Times reports:

Senate Majority Leader Harry Reid said he is working on a plan to raise the debt limit by $2.7 trillion, coupled with an equal reduction in projected future spending. In a concession to Republicans, he said that plan would not include tax increases, but that the new debt level would last through the 2012 elections.

This would exchange several Republican demands (matching the debt-hike with spending cuts dollar-for-dollar, and no tax increases) for a single Democratic demand (making sure the issue does not resurface before the 2012 elections).  This was Obama’s, remember, “only bottom line.”

So Obama and the Democrats were faced with (1) either rejecting a two-tiered proposal and plunging the economy into chaos for transparently political reasons, or (2) accepting the proposal and revisiting the issue in the heat of the 2012 election cycle.  Both of these options have to be extremely unappetizing.  If you think the American public would forgive the Democrats for rejecting a tax-ceiling hike and damaging our economy for some faux-principled “let’s keep politics out of it” aversion to revisiting the issue before 2012, I think you’re sorely mistaken.  Presumably this is why Reid is now proposing to give Republicans what they want in exchange for a large enough debt-ceiling hike to get them past 2012.

Unfortunately, as Ed Morrisey points out, a two-tiered approach that delays resolution on changes to entitlements and taxation would extend the economic uncertainty that’s keeping a lot of capital on the sidelines.  Businesses would be unable to price changes to the tax structure or the consequences of changes to entitlements into their business plans.  However, if the reports on Reid’s proposal are accurate, the threat of a two-tier solution may just be enough to get Republicans most of what they want.

John Boehner: genius?

Update: It may be the case that a two-tiered solution from Boehner was not just a threat, but was actually successfully agreed upon and delivered to President Obama.  Jennifer Rubin reports (also: now with confirmation from Byron York) that a bipartisan deal was essentially reached, with Senators Reid and McConnell and Speaker Boehner all agreed, until Reid took it to the White House.  The White House, according to an aide, rejected the deal, and Reid withdrew from the process.  If this is true, then Rubin is certainly right that Obama’s actions are highly irresponsible and “playing with fire.”

This supports my view that Obama and the Democrats are eager above all things to avoid re-legislating this issue before 2012, and that this was why Reid began developing a solution that essentially gives Republicans what they want in exchange for a debt-ceiling hike sizable enough to get beyond 2012.

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  • Not sure outmaneuvering this administration is an act of political genius. Somehow, the White House couldn’t redirect the message from the inside baseball issue of reintroducing the debt ceiling.

  • I have a lot to say in response to this, but for now let me just say that to quote Hugh Hewitt about how awful the press conference was and give not even a quote of something from the press conference you disagree with is weak. You seem to be saying that just because Hugh Hewitt said it, it must be a legitimate point. To make such a charge with no evidence from the press conference is disappointing. Furthermore, it surprises me that you do not even seem to deem it necessary to respond to the obvious counternarrative–that Boehner did in fact “leave Obama at the altar” for the second time because the Cantor-led Tea Party caucus rebelled at a plan that was aleady a signficant victory for Republicans, leading Obama to justifiably say that the Republicans have to decide if they can say yes to anything.

    In addition, it would seem that your overall point would be that Boehner has played a marvelous political game, and yet you criticize the president’s press conference for in effect saying that he was playing politics with the issue.

    • That’s not how he was using the quote. He was using it in the “he said it better than I ever could” sense. Neither is he criticizing Obama for playing politics with the issue. Its a given in politics that people are playing politics.

      Obama frequently claims the moral high ground, and there is nothing wrong with calling out the hypocrisy. Obama is playing politics. He’s trying very hard. He’s losing because he is incapable. Get mad all you want. That’s what it is.

  • It is telling that the “interesting part” to you is not that the $400 billion in taxes was enough to cause Boehner/Cantor to nix the deal. You jump over that as if it is a minor point in the story. First, I am not sure that the number or the chronology is true, but second, even if you are right, isn’t it the least bit interesting, perhaps worthy of comment or contemplation, that a deal with such clear victories for Republicans could be jettisoned because of marginal tax increases on the wealthiest? I know that it does not fit with the thrust of your narrative, which seems to be that the president is doing an awful job in this whole negotiation and it is therefore justifiable, perhaps admirable, that he is being politically spun and defeated by Boehner. But it is a weakness in the article that you do not even engage the fact that we could have had a significant budget deal, a deal that was by any measure more a Republican victory than a Democrat one, a deal that would have put the economy on more solid footing, but it was blown up because it went against Republican orthodoxy on taxes.

    • “it went against Republican orthodoxy on taxes”

      Correct. The Republicans blew up a deal because it went against what Republicans stand for. Republicans were elected, in part, because they oppose taxes. What is your beef, here, other than you disagree with the aims of the Republican party?

      • My beef is that Timothy is trying to say that how Obama handled the negotitations is what made them fail.

  • I have a blog up in response to Tim’s blog.


  • I have a new blog up looking at the resistance to Boehner’s plan among Tea Party Republicans and making the case that that shows Obama had no chance of gaining any agreement from Boehner.