Now that we have let the hostage-takers gain an advantage in the budget reconciliation battle, there is the obvious threat that the other side will take hostages again over the needed raise in the debt ceiling. There is a frontpager today about his on dKos (Boehner makes plans to take more budget hostages), and items all over the blogosphere to the same effect.
Well, any threatened hostage-taking over the debt ceiling needs to be treated quite differently than our side handled budget reconciliation. The consequences of losing this fight would be much worse, and, better yet, this fight offers us a chance for a big win, should the other side make a fight of it.
The only possible response to any hint from the other side that they will only approve a raise in the debt ceiling in exchange for any sort of concessions, needs to be a firm, loud, categorical refusal to even consider negotiating.
We shouldn’t have negotiated over budget reconciliation in the face of even a hint of blackmail, that they would refuse to pass a CR keeping the govt running unless we gave them something in return. But you could at least make a case that it was harder to draw a firm line there because all sorts of people on both sides have a history of blackmail-by-rider over these omnibus budget reconciliation bills. That’s why we often just get by with CRs lately, because there is this swarm of gnat-like riders out there buzzing around any actual appropriations bill, which attracts these things because actual bills carry the force of law once passed, whereas a CR is inherently temporary.
Now, letting the Rs use blackmail, letting them use a refusal to even continue the CR we were getting by with for last year, no doubt made it harder to draw a line even over the different issue of raising the debt ceiling. But it also made it much more necesary to make a stand here. That’s because the consequences of default are infinitely worse than a govt shutdown. That means default is a much more valuable hostage, one we cannot afford to let come to harm, and will therefore have to concede much more to insure its safety. Our side absolutely cannot even start to go along, in any way, with any hint that we will negotiate with them to get them to approve a debt ceiling raise.
We can recover from a shutdown almost instantly, and almost without long-term consequences, because all the decisions are made by us, by US govt actors. The Rs may be crazy and ruthless in pushing their own electoral interests, but at some point, fear of what the electorate will do to them if they behave too badly, imposes some need to act in the best interests of the US.
But default is another matter. A default by us, by the US, would mean at least some increase in the interest rates at which foreign creditors, and domestic private creditors, will lend us money. We get favorable rates because it is barely thinkable the US would default. It could be a more dramatic increase in rates, but even if it isn’t, at least initially, even modest initial increases can play havoc with plans to finance our way through this recession by borrowing, which allows us to carry on without the added recessionary pressures of decreased govt spending and increased taxes on people who actually generate demand (i.e., everybody but the wealthy). This is because any even modest initial increase in the rate at which we can borrow money will tend to snowball. Even modest interest rate increases have a large lever arm on deficit projections, making the US seem an even dodgier credit risk, and further strengthening the hand of the deficit hawks.
That may be the whole point of the exercise from the point of view of the deficit hawks. Their ideas haven’t carried the day completely, yet, because the bond vigilantes haven’t struck, and show no signs of striking. The Armageddon that Simpson et. al. are pushing—this idea that we have to dramatically curb the deficit right now because our creditors will, any day now, decide that our current budgetary policy means that we are bad credit risks whose irresponsible behavior means that they need to start upping the interest rates at which they will lend to us—shows no signs of materializing. But maybe, they could be thinking, it just needs a little help to kick-start the process. Default, even a credible threat of default, might get those bond vigilantes to finally come out of hiding and start upping our interest rates. At that point the deficit hawks have their vindication. If the increase in rates is bad enough, theirs might become the only way left open to us. We will have no choice but that which faces Greece or Ireland.
So not only does their side have a much more effective hostage in default than they did in shutdown, they actually have people on their side for whom default is not a bad outcome at all, but a positive good. It’s not even a game of chicken to these people, in that they don’t see the results of their side not swerving at the last minute as a bad thing. We would have to come up with a very sweet deal for them indeed for such a deal to be more attractive than an outcome that will finally awaken the bond vigilantes.
But, “Wait!”, you say, “Surely even the baggiest of their teahadists cannot be so case-hardened as to to not fear being blamed for these horrific consequences of the US govt defaulting!?”. Unfortunately, we have just had this deal over budget reconciliation that helped establish the idea that both sides would have been equally to blame had they not come to some compromise averting a govt shutdown. Why would they think that they could not succeed in getting both sides blamed equally for failing to compromise to avert a default?
Sure, an actual default would powerfully sour the electorate on both parties no matter how successful they are at getting half the blame cast on us, and would include a negative reaciton to their own party. But they are much less worried about being thrown into that briar patch of distrust in govt and politics than we are. A Republican gets his pitchfork every time another voter concludes that govt is worse than useless, political involvement is a sick joke, and a plague-on-both-your-houses glibertarianism is the only viable political philosophy. They run the game when the people don’t, so the absence of politics is good for them.
And guess what. Even if their side gets more of the blame than ours, and we win the next election, in the aftermath of the default disaster, our side will have to adopt their fiscal policy. Austerity won’t be a choice if we can no longer borrow at reasonable rates in order to avoid it. Throw them into that briar patch of letting our party be in office and take the heat for austerity. They will be just fine with a holiday from holding the majority if that holiday happens when SocSec and Medicare are dismantled. It wouldn’t be a long holiday.
So, no deals over raising the debt ceiling. In fact, if the other side even starts down the road of hinting that they will take the debt ceiling hostage, our side should announce that no House D will be voting for the rise in the ceiling unless it either gets enough R votes to pass without any Ds, or there are riders on the ceiling raise to form a new leadership of the House based on the majority that votes the ceiling rise. Our firm and simple postion should be that raising the debt ceiling to meet the legal obligations of the US is a clear duty of the majority. Those members who refuse to do that duty don’t deserve to direct the House, to set its agenda and decide how bills are presented, dealt with in committee, and packaged. The new majority will be made up solely of those members who vote the needed rise. They should elect a new Speaker, and this moderate-R/D coalition should govern the House for the remainder of this Congress.
Those should have been our terms for the budget reconciliation fight. They need to be our terms if they make a fight over a needed raise to the debt ceiling. Majority has its obvious powers and prerogatives, but it also has its duties.
I think that our system right now has devolved into one in which the presidency has too much power because the legislature has systematically abdicated its powers. It will never goet those powers back until and unless it developes a clear and public conjunction of its immense potential powers with an actuall assumption of responsibility.
We have a faction in this country right now that does not believe in the Union and our way of government, and shows that it has no respect for the full faith and credit of the United States by even threatening to drag that credit through the mud just to wring some partisan advantage. The rest of us, Republican and Democrat alike, have the duty to assume the responsibility that this faction scorns by taking the power of majority in the House from them.
That’s how the question needs to be framed for the moderate Republicans who don’t want to follow the teahadists over the cliff. We must force them to make a choice. We can’t fudge that by giving them any out, by agreeing to fill in for the crazy and malignant wing of their party to make up the majority that saves the credit of the United States, only to then let the crazies back into the driver’s seat of a Union that we have saved from disaster.