Despite daily meetings at the White House and a flurry of press releases from negotiators, a deal to raise the debt ceiling effectively died over the past several days. On Saturday, House Speaker John Boehner pulled out of talks that might have produced a “grand bargain.” President Obama was reportedly willing to raise the Medicare eligibility age from 65 to 67, tinker with Social Security’s cost-of-living formula, lock in tax rates below a full repeal of the Bush-era cuts, and enact $4 trillion in spending cuts. The catch was that he also insisted on raising government revenue, which prompted Boehner’s walkout.
Revenue and recalcitrant Tea Party members stand as seemingly immovable obstacles to a deal. There are at least sixty or seventy Republicans in the House, mostly Tea Partiers, who will vote against any deal that comes before them—either on principle, because they simply don’t believe the debt ceiling should be raised at all (John Boehner admitted this on Fox News yesterday), or because they will only approve a deal that includes a balanced budget amendment, which is not making it into any package.
These holdouts mean that any deal will need significant Democratic votes to pass the House. But minority whip Steny Hoyer has vehemently insisted that a bill that doesn’t raise revenue won’t get a single Democratic vote, and he’s probably right. Meanwhile, majority leader Eric Cantor has said that any deal that does raise revenue won’t get Republican votes—also probably correct. This impasse isn’t likely to be resolved. The Rubik’s cube, as Boehner calls it, is basically unsolvable.
Faced with the very real possibility of a federal default, Senate minority leader Mitch McConnell opened the escape hatch yesterday. He floated a plan that would give Obama the authority to raise the debt limit all by himself. There’s a catch, of course—Obama has to request the increase three times before the end of next year, with the final request coming only months before the presidential election.
Under McConnell’s plan, when Obama requests a debt limit increase, $100 billion is given to him automatically. He must also outline spending cuts commensurate to the increase. Then Congress has to consider his request to raise the debt limit, and either chamber can pass a “resolution of disapproval” by a simple majority vote. That freezes the increase, but only temporarily—Obama can veto that resolution, meaning Congress would need to muster two-thirds of members to overturn that veto, which will not happen.
It’s a stunning de-leveraging of their position—after spending much of 2011 threatening to execute the economy unless they get their way, McConnell is now proposing to just release the hostage without one scrap of policy concessions from Democrats. Obama will propose spending cuts, but there’s nothing guaranteeing anything happens with that proposal.