Saturday, September 28, 2013

Why a Shutdown Might be the Least Bad Option

Yesterday, I saw an article which I can no longer find saying that the Republicans are falling behind Boehner and agreeing to pass a mostly-clean funding bill (until November 15) and save their ammunition for the debt ceiling.  More ominously still, plenty of Senate Republicans who were obviously annoyed at Ted Cruz for pushing for a shutdown seemed to favor making the debt ceiling the point of confrontation.

Today the news is relatively reassuring.  And by relatively reassuring, of course, I mean disastrously bad, but with the possibility of things working out.  They now plan to take the clean continuing resolution bill the Senate sent them, extend it till December 15, and add a one-year delay of Obamacare and the repeal of the medical devices tax that helps to fund it.  It will go to the Senate on Monday, the day before the government shuts down, and the same routine will play out as last time.  The Senate will strip out both provisions and send it back.  Ted Cruz and Mike Lee will drag the process out for several days.  It will get back to the House around Thursday or Friday, but by then the government will have shut down.  The House know it, but think they will be able to blame the Democrats in the Senate for the shutdown.  The Senate also hopes to have a clean debt ceiling increase by Friday, but Lee and Cruz will no doubt find ways to delay it for a few days as well.  Meanwhile, about when the Senate clean CR reaches the House, the House will be introducing its debt ceiling bill.  Of course, by then the government will have been shut down for several days, to remain shut down until the sides reach some sort of agreement.

Why do I consider this (relatively) good news?  For several reasons.

First of all, an actual shutdown will ramp up pressure on Congress to find some way to end it.

Second, it ramps down the danger of a default.  Consider, we only have tax revenues to fund about two-thirds of all spending and are borrowing the rest.  A debt ceiling will cut off the funding and force an overnight cut in federal spending by one-third.  Well, a shutdown cuts government spending by a third anyhow, and so will put off the day of reckoning until funding returns.  This will buy time for the negotiations. Of course, once we start funding the government again, there will be an immediate spurt of spending that will bring back the day of reckoning.  In fact, if the shutdown continues until October 17, then resuming funding will mean default.

Which leads to the third conclusion, that the longer the shutdown continues, the more necessary it will be to include raising the debt ceiling as part of any funding deal.  Otherwise, Congress will pass some sort of a funding bill and we will promptly breach the debt ceiling and default will be upon us.  Tea Party members will no doubt be delighted that (1) government spending is being cut and (2) the public asked for government to resume and I bet they're sorry now.  This is unlikely to be acceptable to anyone else, including a significant portion of the Republican House.

And fourth and finally, if debt ceiling discussions start during a shutdown, whether they are linked to funding discussions or not, they are almost certain to be conflated in the public eye.  Republicans have apparently decided to make their biggest fight over the debt ceiling, rather than funding, because the polls show the public clearly opposed to a shutdown, but generally supports the idea the raising the debt ceiling should be linked to cutting spending.  Well, if the government shuts down and the Republicans start issuing a bunch of ransom demands, especially if those demands include something really unpopular like cutting Medicare or Social Security, they are going to look a lot like demands for reopening the government.  I do not think it will do Republicans any good to explain that, no, these aren't conditions for reopening government, only for raising the debt ceiling.  No one will care about the distinction, they will just want government opened again. Worse still, from a Republican perspective, their majority is narrow enough that if all Democrats vote against their ransom demand, it will take only 16 defectors to sink the bill and some Republicans, estimated at 10-15, have vowed to vote against any bill raising the debt ceiling, no matter what.

I do not see any other way out. I have long believed that sooner or later, John Boehner would have to take the kamikaze option and bring some sort of continuing resolution and/or debt ceiling increase to the floor and allow it to pass with mostly Democratic votes and a few Republican defectors, and then be deposed as Speaker and replaced with some Tea Party crazy.  The logic of a shutdown with a debt ceiling looming will more or less force them to be done together.  We will see.

PS:  Bad news in the follow up.  The Republicans' continuing resolution with a one-year delay passed 231-192.  That means Democratic unity is fraying, while Republicans are holding.  Joe Manchin has already said he will defect in the Senate.  I have no objection to tinkering around the edges, like repealing the medical devices tax or denying subsidies to federal employees.  I would even grit my teeth and settle for a conscience exemption from the contraceptive mandate if Republicans will stop trying to kill the program.  But a one year delay will simply lead to another one year delay and mean killing the program without admitting it.

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