National Journal:
With an anxious eye toward the coming debt-ceiling negotiations, House Republicans are drafting what members call a “menu” of mandatory spending cuts to offer the White House in exchange for raising the country’s borrowing limit.
This menu is more a matrix of politically fraught options for the Obama administration to consider: Go small on cuts and get a short extension of the debt ceiling. Go big--by agreeing to privatize Social Security, for example--and get a deal that will raise the ceiling for the rest of President Obama’s term.
There are a lot of problems with this, starting with the assumption that there will be debt-celing negotiations. Perhaps President Obama was bluffing, but he's made it clear for some time now that he won't negotiate over raising the debt ceiling because raising isn't about making new policy—it's about allowing the government to pay the bills for spending levels that have already been set.
Assuming that he doesn't change that position, the new GOP plan is completely irrelevant. It's like a hostage-taker claiming that he's being reasonable because he's willing to accept his ransom in an installment plan. Last I checked, kidnapping was illegal, no matter what your demands.
Republicans, apparently, are betting that he is bluffing. So here's their "offer":
For a long-term deal, one that gives Treasury borrowing authority for three and a half years, Obama would have to agree to premium support. The plan to privatize Medicare, perhaps the most controversial aspect of the Ryan budget, is the holy grail for conservatives who say major deficit-reduction can only be achieved by making this type of cut to mandatory spending. "If the president wants to go big, there's a big idea," said Scalise.
For a medium-sized increase in the debt limit, Republicans want Obama to agree to cut spending in the SNAP food-stamp program, block-grant Medicaid, or tinker with chained CPI.
For a smaller increase, there is talk of means-testing Social Security, for example, or ending certain agricultural subsidies.
Accepting any element of this list would be even crazier than President Obama's budget offer to trade chained CPI for tax hikes. First and foremost, with the exception of agricultural subsidies, none of these are good policy options. Moreover, allowing Republicans to use the threat of economic armageddon to force the adoption of one of these options would be a terrible precedent for the future.
But it's not just that caving to the GOP's demands would be bad—it's that standing up to them will be good. As long as President Obama and congressional Democrats refuse to get sucked into a hostage crisis, Republicans will have two choices: They can avoid federal default by raising the debt limit in order to meet obligations we have previous agreed to or they can refuse to raise the debt limit, throwing the country into default and the economy into turmoil. I'm about 99 percent sure they will cave (can you really imagine them tanking the world economy because President Obama refused to cut Social Security or to end Medicare as we know it?), but either way is a win on both political and policy grounds. In fact, it makes so much sense to dismiss the GOP's gambit that I actually think there's a pretty good chance that they will get the answer they deserve: "No thanks."
