osewalrus (osewalrus) wrote,

A few more quick observations on debt ceiling dynamic

Just a few more random thoughts for them what care.

1. We will not negotiate the debt ceiling, we will negotiate sequestration. Remember the Fiscal Cliff? We didn't actually solve that problem. We settled the tax rate issue but pushed sequestration, the automatic spending cuts unless Congress passes a budget, down the road to March 1. By not so mysterious coincidence, March 1 is also -- approximately -- when we are likely to default (or experience some sort of catastrophic financial meltdown) over the debt ceiling issue.

The President has said he will not negotiate over the debt ceiling. But he will negotiate over sequestration. The resolution of the standoff between "We will not negotiate over the debt ceiling" and "we will not raise the debt ceiling without negotiating spending" is rather obvious.

2. Republicans face other pressures. Most of the discussion seems to imagine the President and Congress sitting in some hermetically sealed bubble. Actually, Republicans are under a lot of pressure (a) military con tractors and (b) financial interests to avoid a total financial meltdown and serious defense cuts. The source of the pressure are the people who contribute a lot of money to the Republican party.

The Tea Party true believers are, by and large, resistant to this pressure. This is one of the Tea Party's admirable qualities. Most of them are absolute true believers and stubborn as Hell. But the leadership are more pragmatic. This is why the the vote went as it did. Pushed to the wall, Boehner decided it was better to pass a package with Democrats than it was to risk the economy crashing by doing nothing on fiscal cliff.

In 2011, financial interests and the various groups financed by them (e.g., US Chamber) did not start scrambling until pretty close to Zero Hour because they simply did not believe it could really happen that Republicans and Democrats would not cut a deal. They have been much more engagwed this time. Yes, they have very clear preferences as to how they would like to resolve the issue -- and it aligns totally with the Republican caucus. But unlike the Tea Party members, these guys (a) believe that failure to resolve either sequestration or the debt ceiling would mean serious financial catastrophe for them personally; and, (b) they are not willing to suffer for principle.

The result is that I am rather more optimistic than the current doom and gloom about reaching some sort of deal that does not require the Administration to "cave." Oh sure, Obama could totally cave on core issues. The sad truth is that there is something in Centrist Democrats that makes them think spitting on their base makes them brave and noble and reasonable and stuff. But as we saw in the tax fight, it is hard to sell out when the other side keeps pissing on you. There aren't enough cuts in the world to satisfy the hard core Tea Party faction (we saw that in 2011-12), so the ability to sell out for a deal is more limited than it would otherwise appear.

All this is very preliminary and subject to change. But I expect we will see much back and forth until we get frantic around mid-February. The problem, of course, is that it is relatively easy for both sides to miscalculate. Nothing like high-stakes chicken.

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