Saturday, October 12, 2013

Five Days (Maybe) and Counting

Well, I missed yesterday, but here we are five days from a (possible) debt ceiling breach and, although proposals are being made, none have been accepted.  Obama has rejected a six-week extension in the debt ceiling and "moving quickly" to reopen the government in exchange for deeper spending cuts.  Good!  That would simply prolong the hostage crisis for six more weeks.  Senate Republicans (and a few Democrats) have blocked a one-year clean debt ceiling increase.  Senate Democrats have rejected a plan by Susan Collins to extend the debt ceiling until January, keep the government open till March, give agencies more flexibility in how to manage spending, and repeal the medical devices tax from Obamacare.  Reasons given for rejecting the plan include that it sets funding too low, changes Obamacare, and the debt ceiling extension is too short.  The article does not say whether the new deal permits or forbids "extraordinary measures" to keep from defaulting on our debt.

Speaking for me, I would say that whether this plan is worth accepting would depend on whether it allows extraordinary measures to avoid default.  Trying to avoid locking in lower spending is a waste of time.  Ain't gonna happen.  Republicans are convinced that current levels of spending are intolerable and must be massively cut (even if they don't know how or where to cut them).  They are not going to agree to spend any more.  Period.  Nor do I see accepting a repeal of the medical devices tax as all that big a concession, certainly not a hill worth dying on.  Obamacare in substance will survive.  That is no longer under dispute.  Tiny tinkering around the edges will allow Republicans to save face without serious damage to the program.  I do not see it as a big deal.  Keeping government open until March works fine with me.  Democrats should be seeking as long an extension as possible, even at current funding levels, to avoid shutdowns as long as possible.

The debt ceiling is the big thing.  I notice that no Republican proposal so far extends the debt ceiling longer than it reopens the government.  The only possible exception is the six-week extension of the debt ceiling, which kicked the can down the road.  Having the debt ceiling breach after the government shut down has gone against the Republicans' interests. It means that people tend to conflate the two, and to want the government to reopen, and not to pay much attention to extending the debt ceiling.  Republicans would rather have a crisis in which ordinary people feel no discomfort, thus lowering the pressure on them, but catastrophe looms, thus raising pressure on Democrats.  Democrats, of course, if they cannot stave off a crisis altogether, would rather shutdown come first and debt ceiling after.  That is why extraordinary measure matter.  If the debt ceiling falls due at the end of January, but the Treasury can use extraordinary measures, it should (based on past performance) be able to extend it until at least May or June.  That will, once again, tend to conflate the debt ceiling with any shutdown that may occur in March, and to give time for pressure to extend to build.  It will also take place late enough in the season that the Republicans will be looking over their shoulders and not wanting to inflict too much damage on the country for fear of losing the next election.

Of course, if that means that Republicans hold onto the House, then we will simply be in the same position for the next two years.

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