JONATHAN CHAIT JULY 5, 2011
John Cornyn suggests it may already be too late for a debt ceiling deal, and floats a six- and eight-month extension. This seems deeply worrisome. An extension is going to expose everybody in Congress who votes for it and make them more reluctant to support the next debt ceiling vote. And it will locate the next debt ceiling vote during the peak of the GOP presidential primary, when candidates will start staking out anti-extension views and forcing the rest of the party to follow suit. Cornyn's idea may be necessary, but if it is necessary, we're in trouble.
Meanwhile, libertarian writer Megan McArdle reports that numerous right-wingers have a completely blithe attitude about default:
I am getting the same sinking feeling that Brooks is having--that there is a sizeable faction on the right, and worse, in the GOP caucus, that is willing to default rather than make any deal at all. In fact, I think it's worse than Brooks suggests. It would be bad enough if these people were simply against higher taxes, because then you might persuade them by pointing out that if we default, we're probably going to end up with higher taxes, right now, in order to close the current gap between spending and tax revenue.
But when I point this out, the response in my comments and email and twitter is "Fine, I'll accept higher taxes, as long as they come with radical changes in spending." The BATNA (best alternative to negotiated agreement) is default on either our debt, or entitlements like Social Security that people have planned their lives around; the Democrats properly view this as a disaster. But I'm hearing from people who seem to think that it's better than raising one thin new dime in taxes. This makes me very much afraid of where this is headed.
If you ignore the financial effects of debt default, then failing to lift the debt ceiling is a lot like immediately implementing a balanced budget amendment that rules out tax hikes. Now, I think that's a crazy idea. But many Republicans are in fact demanding a balanced budget amendment that rules out tax hikes. It's not just the lunatic fringe that believes this. Mitt Romney, paragon of sane Republicanism, has signed a pledge to support this.
Now, maybe Romney understands that it's crazy, and he's playing politics. The mere fact that he has to play this game, though, signals how strongly extreme right-wing economics has captured the conservative mind. The voices of sanity on the right exist, but for the most part, they're speaking quietly behind closed doors. It seems almost inevitable that any debt ceiling deal will expose any Republican supporter to a right-wing primary challenge. You have the countervailing power of the business lobby pushing for a deal, and that's nothing to sneeze at. But this may simply have grown into a problem that has no legislative solution, at least not until financial consequences have been felt.