The Debt Ceiling Crisis: Did McConnell Just Throw Obama Into a Briar Patch?

Today, Mitch McConnell, the leader of the Republicans in the Senate, proposed a "backup" plan for the debt ceiling crisis: a law that would allow President Obama to raise the debt ceiling in three steps over the remainder of his presidency. The proposed law provides an elaborate procedure for Democrats and Republicans to tag each other "It." Obama would tell Congress of an increase in the debt limit. Congress could (and perhaps would) adopt a resolution opposing the increase. The President would then veto Congress' resolution. The Republicans would be unable to override the veto since Congress, as currently constituted, would not give debt ceiling opponents the two-thirds majority needed. Obama could use this procedure to increase the debt ceiling by a total of $2.4 trillion through the end of 2012.

Failure to raise the debt ceiling could cause chaos in the financial markets, and trigger an economic downturn. Opinion polls show that much (and perhaps most) of the blame would fall on the Republicans. McConnell surely wants to steer his party away from self-immolation. At the same time, unilateral increases in the debt ceiling might weaken Obama's standing with swing voters in the middle, bettering the chances for a Republican victory in next year's presidential elections.

Obama himself may be wary of the Republican proposal, because he would three times be taking action that would appear profligate in a time when austerity seems to be in political vogue. The amount of increased borrowing he could authorize--$2.4 trillion--is slightly below the $2.5 trillion to $2.7 trillion projected as the government's increased borrowing needs through the end of 2012. So McConnell's proposal would keep Obama on a fairly tight leash, and expose him to being excoriated by right wing debt ceiling zealots three more times before he faces the 2012 election.

At the same time, though, Obama would get an opportunity to shift his attention away from the deranged histrionics that now permeate the debt ceiling debate. He could focus on tax and entitlements reform (where the budget deficit problem will really be solved). He could also stay on top of defense matters. Completion of our withdrawal from Iraq, and a brisk drawdown from Afghanistan might do much to close the gap between the $2.4 trillion debt increase McConnell would allow, and the $2.5 trillion to $2.7 trillion Obama is projected to need.

Although the White House hasn't reacted to McConnell's proposal, it may go along in the end. One clever aspect of the McConnell proposal is that it allows both Democrats and Republicans to cater to their respective alternative political universes. The Republicans would allow the debt ceiling to increase--something they really have little choice about--while forcing the President to take the blame for this heresy by vetoing Congressional objections. The debt ceiling ideologues on the right would have a field day doing what they like best--babbling 17-second soundbites for the evening news. The Democrats in Congress would avoid a distasteful task (neither party likes having to raise the debt ceiling), while the President would three times have to grit his teeth momentarily but then be able to get on with more substantive matters. This may be a briar patch he doesn't mind being tossed into.

Commentators on the right have already blasted McConnell's proposal. That alone tells you it could be a sensible compromise. It wouldn't give the President the grand $4 trillion long term deal he's been seeking, so he can't claim it's a victory. Moreover, McConnell has now positioned the debt ceiling zealots to take the blame if his proposal isn't enacted, the debt ceiling isn't raised, and the financial markets tank. That surely infuriates the Tea Partiers who have bedeviled McConnell's efforts to negotiate with the President.

McConnell may be aiming to forestall a longer term checkmate for the Republicans. The extension of the Bush tax cuts, enacted last fall, expires at the end of 2012. That means the Democrats get the tax increases they want simply by not agreeing to extend the Bush cuts again. They don't need to negotiate with the Republicans to raise taxes. They can simply wait, and they win the waiting game if President Obama is re-elected next year. By forcing the President to take the initiative on raising the debt ceiling, three times no less in the next 18 months, McConnell may weaken Obama's chances for re-election.

Because of right wing fury, there's no certainty that McConnell's proposal will become law. Many in his own party already question it. McConnell himself may have floated the idea simply to send his Tea Partying colleagues a message that they should talk turkey instead of preaching hellfire and damnation. The debt ceiling crisis remains far from resolution. Don't bet the rent money on the financial markets being stable in the near future.