Now that the fiscal cliff has been averted delayed, we move on to the debt ceiling. Critics are correct in noting that there is no principled reason not to raise the debt ceiling, since it is nothing more than the sum of past spending and taxing decisions. One can hardly blame the credit card bill for the patterns of spending that created it. Nonetheless, the House GOP skillfully used the debt ceiling in 2011 to extract the agreement that led to the fiscal cliff (and we all know how well that worked out for the GOP).
In the wake of the fiscal cliff, President Obama struck a hard position regarding the debt ceiling. As he proclaimed:
“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, Let me repeat: We can’t not pay bills that we’ve already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic — far worse than the impact of a fiscal cliff.”
Of course, the President will bargain. As George Sargent notes in todays Plum Line:
The idea appears to be that the White House and Democrats will only engage in conversations over the sequester, tax reform, and spending cuts, and simply won’t confer any legitimacy on GOP threats not to raise the debt ceiling. But it’s unclear to me how this will work in practical terms. Unless Obama is prepared to go into default — or to pull some other ace out of his back pocket, such as the 14th amendment or “platinum coin” options — he will inevitably be negotiating over the debt ceiling. And he doesn’t appear prepared to do any of those things.
One can doubt that the President would be willing to go into default, so he will bargain (or more correctly, he will proclaim, campaign, disengage, and send in Biden). But is there any reason to take the House GOP seriously at this point regarding its willingness to stand its ground? Given its recent track record, does the President have any reason to believe that the House won’t blink?
I remain skeptical.