Resuming The Debt Dance

by Brendan James

Now that the Treasury has declared we’ll hit the debt ceiling mid-October, Congress is once again ready to fight over whether to raise it. Yglesias advises the White House to refrain from engaging the GOP on the issue:

Republicans have been offering a lot of wild theories about their negotiating strategy around this, but on CNBC this morning Secretary Jack Lew said the right thing about the administration’s bargaining strategy—there is no strategy because there is no bargain. Getting sucked into a negotiation over raising the debt ceiling back in 2011 is one of the biggest mistakes the Obama administration ever made. It’s one they avoided repeating the second time around and should never try to repeat again.

Schieber agrees, and puzzles at a proposed sitdown between administration officials and Republican senators:

The White House willingness to engage in a multi-issue mega-negotiation plays entirely into Boehner’s hand. It’s basically a strategy designed to maximize Republican leverage and minimize Obama’s. At the very least, the White House should want to keep each track of the negotiation unambiguously separate, forcing Boehner to acknowledge his terrible bargaining position.

But I’d go a bit further and recommend the following: Obama should announce immediately that he’s perfectly happy to negotiate over pretty much any budgetary issue the GOP wants to talk about, but that—and this is the key—he won’t negotiate for a second until Congress raises the debt ceiling. That is, don’t just say you won’t negotiate over the debt ceiling. Make raising the debt ceiling a precondition for any future negotiation.

Barro insists the GOP knows demanding default is a dead-end strategy:

If Republicans were to stage another debt ceiling showdown over entitlement reform, they would have to (1) threaten to cause an economic crisis unless (2) they are given a package of reforms that many Republican officials don’t even want, which (3) would also happen to be hugely unpopular with voters.

This. Is. Never. Going. To. Happen.

So why is Boehner making debt ceiling threats again? Well, for one thing, it’s August, and in August, Republican House members go to town halls filled with rabid conservative constituents who need red meat. A lot of Republican activists think rendering the government unable to pay its bills is just what the country needs.

Despite all that, Drum expects the debt loons may get their way:

[L]ogic is selling at a deep discount these days. The fever swamp wants a debt ceiling default, and there’s a pretty good chance they’re going to force one through. Boehner just doesn’t have the clout or the influence to stop his lemmings from racing over the cliff. At this point, the most germane question probably isn’t whether Republicans are going to force a default, but how long they’ll hold out after they’ve done it. Just how badly do global markets have to panic before they finally come to their senses?