Okay, now we have eight days to the debt ceiling breach (or maybe more). I see nothing encouraging out there. The only supposedly good news is that Obama has said he will agree to a short-term increase in the debt ceiling, followed by negotiations. Great! So we get a few weeks respite (a month or two if we are lucky) and the whole thing starts all over. If Democrats were so foolish as to think there would be any relaxation of the sequester, they are being proven wrong. Republicans current position is that sequester-level spending is intolerably high and the only negotiation they will allow is on how much further to cut. And that is the good news!
This is what really scares me. Republicans, or at least a significant faction thereof, say they don't care what political harm they take or what harm it inflicts on the world economy. Breaching the debt limit will be well worth doing if it ends deficit spending and heads off an even greater crisis that is presumed to loom ahead. If they do raise the debt ceiling it will only be in exchange for -- well, it is not clear what, but truly massive spending cuts. Now, granted, I think their resolve may be weaker than they think. We do not, in fact, know when the breach will take place, but when it does, bills will start going unpaid, and the people who do not get paid will start to howl. I think this will have the effect of getting the debt ceiling raised in a big hurry, and (probably) discouraging Republicans from threatening any more defaults for at least the time being. But the harm to the country could be considerable.
So, the choices appear to be traumatic debt ceiling breach that temporarily scares some sense into Republicans, or short-term extension with this drama playing out over and over every few months. Pick your poison.
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