President Obama's decision to agree to a "fiscal cliff" deal that doesn't address the debt ceiling was premised on the thinking that congressional Republicans will not be as successful at holding the economy hostage in the coming months as they were in the summer of 2011. For one thing, the administration believes the business community, and elite opinion more broadly, will be much more vocal than they were last time around in cautioning Republicans against debt-ceiling hijinx.
Is this a fair assumption to make? Well, there are already signs that business leaders will in fact be more outspoken (not difficult, given that they were virtually mute in 2011). “You don’t put the full faith and credit of the United States’ finances at risk,” David M. Cote, chairman of Honeywell and a Republican member of the 2010 Simpson-Bowles fiscal commission, told the New York Times yesterday. “The whole idea of using debt ceiling that way or saying ‘I’ll do this horrible thing to all of us unless you give in’ just doesn’t make any sense for anybody. It makes me very nervous. It’s not a smart way to run the country.”
But it's looking as if elite opinion more broadly is more sanguine about another debt-ceiling showdown than the White House had hoped. It is striking to what degree the Washington establishment has come to normalize Republican hostage-taking of the debt limit, to see it as a predictable and almost natural element of the political landscape. Greg Sargent argues convincingly why this is a problem, noting that the debt ceiling must be raised to pay for past spending, and should not be used as a chip in negotiating future budgets: "In the current context, conservatives and Republicans who hold out against a debt limit hike are, in practical terms, only threatening the full faith and credit of the United States — and threatening to damage the economy — in order to get what they want. Any accounts that don’t convey this with total clarity — and convey the sense that this is a normal negotiation — are essentially misleading people. It’s that simple."
What bears stating even more strongly, though, is how far we've come from 2011, when the Washington establishment viewed the Republicans' threat of credit default as as the utterly brazen and unprecedented step that it was. Even those who supported the gambit recognized it as a newly deployed weapon. "While opposition to raising the debt ceiling is common, using the face-off to extract real concessions is less so," conservative economist Kevin Hassett, of the American Enterprise Institute, wrote in January 2011.
News reports on the threat of default cast it as a truly risky move: "The debt ceiling debate presents some congressional Republicans with an unhappy choice: A vote to raise the ceiling might expose them to primary challenges in the 2012 election, while a vote against it risks a default on U.S. debt obligations that could jeopardize the fragile economic recovery," wrote Peter Nicholas of the Los Angeles Times that May. As the deadline neared, the tenor of the coverage grew even more ominous: "Georgia Republicans today will help decide whether Washington's unprecedented debate over the federal debt ceiling should be pushed closer to the edge of --- or even beyond --- a potentially dangerous Tuesday deadline," the Atlanta Journal-Constitution reported on July 28. Even after the crisis had passed, official Washington looked on the Republican strategy with a mix of awe and horror -- I was part of a major effort at the Washington Post to reconstruct the year-long tale of how the House GOP came to embrace this previously unthinkable approach.
Now? Political convention has successfully been defined down, and the Republicans' stated intent to hold the debt-ceiling hostage again is being viewed as a matter of course. This Politico report on Tuesday is representative of the Beltway establishment's acceptance of the negotiating tactic:
The fiscal cliff has consumed Washington for months, but it may end up being the long opening act for a fiscal drama with even higher stakes: the debt ceiling. Even as senators breathed a sigh of relief and overwhelmingly passed a historic tax deal to avert the much-feared fiscal cliff early Jan. 1, Congress was already lurching right into the new round of brinksmanship. Congress will have to raise the Treasury Department’s $16.4 trillion borrowing limit by late winter, and Republicans see the debate as their best opportunity to extract spending cuts out of the White House. That’s why they effectively conceded the tax rate battle to President Barack Obama and agreed to a fiscal cliff deal that, if cleared by the House, will raise taxes on individuals making more than $400,000, and couple making more than $450,000.
The Washington Post's Chris Cillizza was more blunt in casting the debt-ceiling limit as the natural next step in negotiations: "Make no mistake: No deal on the fiscal cliff was a political loser for Republicans; this is an issue they needed to get off the table in order to find better political ground — debt ceiling — to make their stand."
So: a threat to plunge the nation's into default and with it imperil the nation and world's economy, seen only a year and a half ago as the political equivalent of a nuclear option, is now viewed as "better political ground." What to make of this? The shift in mindset is surely in part a function of basic human nature: our remarkable ability -- for good or ill -- to adapt ourselves to new realities. More than that, though, it is a function of that far more Beltway-unique tendency, to report and comment on politics and governance as pure gamesmanship in such a way that conveys savvy but not judgment. And if it's all a sport, who's to object if one side has radically shifted the goalposts? Good for them, if they can get away with it. And after all, the higher the stakes in the clash, the better the story.
It's one thing if this blitheness about the coming hostage-taking is contained within the Beltway. But if this perception starts to percolate out more broadly, the White House is in far weaker position heading into the next round than it would like to believe.
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