It seems crystal clear that Republicans will and know that they will concede the game on rates and try to reclaim power with a new debt ceiling hostage drama early next year. Having spent a few days in DC, it seems clear to me that absent a dramatic and preemptive climb down on the part of Congressional Republicans, this means we’re headed for the Mother of All Government Shutdowns.
Here’s why.The President says under no circumstances will he negotiate a ransom for a debt ceiling extension as he agreed to do in 2011. It’s still not entirely clear to me what end game they envision. But they’re being very clear that this is their line in the sand. That ups the stakes dramatically and the President will have a hard time climbing down from that promise even if he needs or wants to.
The White House has made it equally clear that the President and his advisors do not believe there’s a constitutional rabbit he can pull out of his hat to sidestep the whole issue. In other words, no ’14th Amendment’ solution in which the President just blows through the debt ceiling and continues to sell bonds. They don’t believe the President has the power. And they also believe it’s not viable in market terms since, remember, it’s not simply a constitutional issue. It’s a market auction. You need people to buy this paper that John Boehner and company will be saying is illegitimate. And at what price will they buy? Arguing the merits is secondary. It’s clear they don’t think it’s a viable path.
Next the Republicans. They feel and are cornered on rates. And they will give way … but seething. The right of the party will not accept anything less than another debt-ceiling hostage drama. Their leaders in Congress are promising one. The folks on the Hill are desperate (by several definitions) to refight the budget with the President on more favorable ground.
It seems very difficult to conceive that they will simply give up the hostage taking option — and they’ve said as much.
Add in to the mix that John Boehner is a weak leader of his party. Not only structurally weak, in terms of his position within the caucus, which he is, but personally weak. A strong leader might be able to pull back from the brink which will significantly damage the country and quite likely his own party. A weak leader lacks that power.
Put these assumptions together and it’s a collision course.
So let’s game it out.
The President can say he won’t negotiate. But at some point the Treasury Secretary will run out of money and he’ll have to make an affirmative choice about what he will do if he won’t negotiate.
By my reading of the constitution, the President has a primary obligation to honor the debt of the United States. Pragmatism points in the same direction. But as a constitutional matter the President is required not to default on the public debt. So the only thing the President can do — if he’s really not going to negotiate — is continue to service the existing debt and shut down big enough parts of the federal government to be able to fund it through existing tax receipts. And no, shuttering the national parks would by no means cut it.
Just how much you’d have to shutter and which parts I’m not completely sure. But a whole, whole lot.
Sure, someone could flinch. Perhaps a global deal gets agreed to before the end of the year that has a debt limit extension folded in. But if those things don’t happen, I do not know of another possible outcome of this chain of events.