DEBT CEILING OCTOBER 9, 2013
The big news this morning is a Wall Street Journal op-ed by Paul Ryan, in which he dangles a new offer to President Obama and the Democrats. According to Ryan, Republicans could agree to fund the government (thereby ending the shutdown) and increase Treasury’s borrowing limit (thereby avoiding default) as long as Obama and the Democrats agree to negotiations over fiscal policy. Familiar Beltway interlocutors like NBC’s First Read are calling this a major breakthrough: “Ryan’s op-ed is a pretty big deal. It’s an olive branch (from its tone) and it lays a potential way out.”
Not so fast. Ryan’s offer is definitely less crazy than what Republicans have proposed previously. Primarily that’s because of what it doesn’t mention: Obamacare. It was a determination to undermine the new health care law that first led Republicans to shut down the government and threaten default. Ryan is suggesting, in effect, that Republicans give up trying to achieve this goal, at least in the context of this particular debate.
But let’s suppose that Ryan, House Speaker John Boehner, and their allies could get the Republican caucus to support this proposal. (That's no sure thing.) Would Republicans be giving up their ransom demands? Or simply reducing them?
It looks like the latter. Ryan in the op-ed doesn’t simply call for negotiations over fiscal policy. He also sketches out what a deal should look like. And it would involve major concessions from Democrats—cuts to Social Security benefits and more means-testing of Medicare, plus tax reform that, presumably, would not raise revenue. In exchange, Republicans would offer some relief from the budget cuts taking place from budget sequestration. But this isn’t much of a concession. Just as Democrats are unhappy about sequestration’s cuts to domestic spending, Republicans are unhappy with sequestration’s cuts to defense spending.
It’s hard to see how Republicans could get such a deal in a routine negotiation. Democrats would likely accept some benefit cuts, like the “Chained CPI” proposal that would reduce future Social Security payments, but only in exchange for some combination of new revenue and investment in infrastructure, universal pre-kindergarten, or other Democratic priorities. It doesn't sound like Ryan is offering any of those things—or that House Republicans would be willing to consider them. It's also possible that Democrats would accept a narrower deal, one that imposed different, milder changes to mandatory spending programs—for example, further changing the way Medicare pays for services—in order to end some sequestration cuts to domestic programs. In fact, over the last few months, many smart observers thought that such a deal might emerge from informal, unofficial talks taking place at the White House and on Capitol Hill. But this also doesn't appear to be what Ryan has in mind.
If not—if Ryan and his colleagues wouldn't insist that negotiations hew to their policy constraints—then restarting talks should be easy. All Republicans have to do is pick up the phone and offer to discuss fiscal policy, with all options (i.e., revenue as well as spending) on the table and under something resembling a normal negotiating process. But that's unlikely to happen, for the same reason House Republicans wouldn't appoint members of a conference committee to negotiate with the Senate over the fiscal 2014 budget. Simply put, Republicans don’t want a normal negotiating process, because they wouldn’t like what that process would produce. Their goal, all along, has been to alter the power dynamics—to use shutdown and, now, the threat of default to win concessions they might not otherwise. As the Washington Post’s Greg Sargent writes today, “Republicans will only agree to have these negotiations in a context where a government shutdown and the threat of default do give them that added leverage. “
This is extortion when the demands include Obamacare. It’s extortion when the demands don’t.
Update: In the op-ed, Ryan suggests his offer is reasonable because Obama already endorsed policies like Chained CPI. But Obama made these proposals as part of a larger package, one that involved Republican concessions, as well. Bob Greenstein, from the Center on Policy and Priorities, explains via e-mail the difference:
Ryan’s formulation is cynical. To be reasonable and try to get negotiations going, Obama put in his budget a bunch of entitlement cuts — like chained CPI and more income-relating of Medicare premiums — that Republicans want and many Democrats oppose, as part of a larger deal that also includes revenues. Boehner was willing to do more revenues in December until Ryan and others [said no]. Now, Ryan wants to pocket the entitlement savings Obama offered with no revenue allowed in return.