With the debt-ceiling battle heating up, I thought I’d take this opportunity to offer Republicans a few pieces of unsolicited advice. Five pieces, to be precise.
We’ve already hit the debt ceiling. On December 31, 2012, our debt-cup runneth over as the United States reached the limit of its statutory borrowing authority. But like any good barman, Tim Geithner used one of those suds skimmers to rake the excess head off frothy federal spending and get another inch of pour in the form of “Extraordinary Measures,” a collection of accounting tricks (that mostly rely on raiding federal retirement funds) that allowed Treasury to free up another $200 billion to fund government operations. It is the exhaustion of these measures that we’re set to hit sometime between February 15 and March 1 — “X date.” This seemingly semantic distinction implies that . . .
No matter what the president says, there is a Plan B. President Obama doesn’t want a default, and the White House has repeatedly claimed that there is no Plan B in the event that Congress fails to authorize more borrowing. That’s probably garbage. It would be reckless for the administration not to prepare contingencies for hitting the ceiling. Indeed, the “Extraordinary Measures” can be seen as Plan B. As for Plan C, a number of firewalls have been proposed. Treasury could prioritize payments — say, interest payments, military pay, Social Security checks, etc. — from cash on hand (federal revenue is expected to meet about 60 percent of federal obligations) and leave others hanging. But nobody is sure whether this is legal. Alternatively, Treasury could make all payments scheduled for a given day, but only when enough revenue becomes available to meet them. So everyone due money on, say, March 1, would get it, but not until, say, March 3. This could be combined with a current practice called apportionment, by which OMB advises federal agencies as to when, during the course of a fiscal year, they can spend their budgets. Together, the two could stretch the federal dollar and limit the damage until resolution. Republicans could help make this more orderly by passing something like Pat Toomey’s Full Faith and Credit Act, which makes debt-service payments sacrosanct and establishes procedures for prioritizing other payments.
No matter what the president says, he will negotiate. He already has. There is no reason to believe President Obama’s late bluster that he won’t deliver Republicans a “ransom” in exchange for more borrowing. The debt ceiling was a central part of the fiscal-cliff negotiations. If Obama was willing to trade horses for a debt-ceiling hike then, why wouldn’t he now? Some, such as Ezra Klein, argue that the White House has quite consciously painted itself into a corner with its repeated and unambiguous claims that it won’t negotiate this time around. But of course, as Klein admits, that’s exactly what they said last time around. It’s true that Republicans don’t hold as many cards as they did during the last debt-ceiling debate, so they shouldn’t expect to get as much. But it makes sense to operate under the expectation that they’ll get something.
President Obama is not the enemy. Harry Reid is. House Republicans would do well to remember the old D.C. chestnut about the freshman House member who refers to a member from the other party as “the enemy,” but is rebuffed by a senior colleague who reminds him: “No, he is just a part of the opposition. The Senate is the enemy.” The fact is, the American people like the president, well enough that they just reelected him. They don’t like Congress. They like Congress even less than they like head lice or colonoscopies. So why are Republicans rearing for a fight with President Obama instead of Harry Reid? It is Reid who has refused to pass a budget since 2009, in contravention of the law, and who has allowed a series of “continuing resolutions” to enshrine the post-stimulus level of federal bloat as the de facto budget baseline. And it is Reid who has played the Jar Jar Binks to President Obama’s Emperor Palpatine, begging to deputize the president to “take any lawful steps” to avoid hitting the ceiling, “without congressional approval, if necessary.” By contrast, President Obama has repeatedly made it clear that it is Congress’s responsibility to pay the bills it has already racked up. This is an opening for the House to exclude the administration from negotiations altogether and take the fight directly to Reid. As Senator Jeff Sessions (R., Ala.) has suggested, Republicans should force Reid to introduce a budget — thus refocusing the conversation on spending — as a precondition to debt-ceiling negotiations.
Bluff, but don’t get called. Okay, this last one is just for Republicans, so I’ll have to ask any lurking congressional Democrats or White House staffers to scram. Go ahead, I’ll give you a minute. Okay, Republicans, here’s the thing: You have to raise the debt ceiling. Have to. Default is unconscionable, and even a partial shutdown in which interest payments are still made would be economically catastrophic. Each of the firewalls outlined above comes with major question marks, and each could throw markets into chaos and create an insta-recession for the millions of individuals and business owners who rely on government salaries, contracts, and transfer payments. Republicans are supposed to be the party with a healthy respect, and fear, of unintended consequences, and you have to act like it.
But. The White House doesn’t have to know that. There is a faction of the House Republican caucus with an appetite — nay, a bloodlust — for a government shutdown. This is the House’s greatest source of leverage. But you have to wield it carefully. If John Boehner cuts out the shutdown caucus too quickly, and thus lets Nancy Pelosi provide a big chunk of votes to pass a debt-ceiling hike, he’ll of course get nothing. But if Boehner casts his lot too convincingly with them, he’ll spook the markets even before the coming of X date, and render the Democrats both more sympathetic and less predictable. The key is to project a kind of (barely) controlled chaos. Which is why the emerging media narrative of Boehner’s tenuous grip on the shutdown caucus is the perfect starting point for negotiations. Think a leathery old chain-smoking Boehner, twinkle in his eye, holding back a foamy-mouthed Rottweiler on a rusty chain. How do those spending cuts sound now?
— Daniel Foster is news editor of National Review Online.