It's Either A Ransom Or A Bargain, Not Both

by Jonathan Chait | May 13, 2011

The debt ceiling negotiations are very hard to figure out, because every side has an incentive to keep its bottom line hidden from public view. That said, I don't understand what President Obama is thinking here. First, he's allowed Republicans to turn the debt ceiling into an opportunity to wrench policy concessions, something that has never happened before. If he announced from the outset that debt ceiling votes have never been bargaining chips for policy changes, and that he would only sign a clean debt ceiling hike, and any failure to raise the debt ceiling is the GOP's responsibility, do you think Republicans could stand up to pressure from business? I don't. But we'll never know because Obama gave up that leverage immediately.

Second, he's allowing Republicans to take hostages without specifying their demands. David Brooks, who spends a lot of time talking to Republicans in Congress, has some good insight into their bargaining strategy on the debt ceiling:

Events are being driven by the Republican leaders. The playing field on the debt-ceiling fight is tilted in their direction, so they want to make this fight as consequential as possible. They want to use this occasion to reshape fiscal policy for decades.
They have the advantage, first, because raising the limit is extremely unpopular. According to a poll commissioned by The Hill newspaper in Washington, only 27 percent of Americans want to raise the debt ceiling while 62 percent oppose it. The only time you can get voters, especially independent voters, to tolerate a debt-ceiling increase is if you tie it to a broad array of spending cuts.

Brooks is correct, if "spending cuts" is defined entirely in abstract terms. But Republicans want to cut Medicare, and that is highly unpopular. Attaching a highly unpopular Medicare cuts to an unpopular debt ceiling vote does not make the whole thing popular. That's why Republicans also want Obama to help them hid their spending cuts for them, as Lori Montgomery reports:

McConnell said he views the debt-limit debate as a critical opportunity for the parties to work together to accomplish something that would otherwise be impossible politically.
“If there is a grand bargain of some kind with the president of the United States, none of it will be usable for either side in next year’s election — none of it,” McConnell said. “We can do something important for the country together, and this is the opportunity.”

McConnell also says he won't consider any revenue increases, period. Now, maybe he's bluffing, and wants to strike a balanced deficit reduction deal. But, at the very least, he's obviously using the threat of the debt ceiling vote to make that deal -- a deal that will affect policy "for decades," as Brooks writes -- as GOP-friendly as possible.

I don't understand why Obama would cooperate with that. Republicans want to force him to agree to a budget deal he doesn't like as the price for lifting the debt ceiling? Then he gets to attack the terms of that deal. That's how ransoms work. You can demand that the mayor hand over a suitcase with ten million dollars in non-sequentially marked bills in return for you not blowing up a bus, but you can't also expect the mayor to run around saying how proud he is that he and the hostage-taker were able to work out this wonderful bargain. If the Republicans want to strike a fiscal bargain that both sides believe would improve public policy that happens to be concurrent with the passage of the debt ceiling, then that's another story.

Source URL: http://www.newrepublic.com//blog/jonathan-chait/88367/its-either-ransom-or-bargain-not-both