Tax Analysts Blog

Republicans Are Confused About Their Leverage in the Debt Debate

Posted on Sep 3, 2013

Washington is poised for a big fight over credibility, as Congress debates the appropriate American response to Syrian chemical weapons. Some observers have speculated that the vote will expose important divisions within the GOP, which seems entirely possible.

Meanwhile, however, another issue seems even more likely to expose Republican infighting. Arguments over the federal debt ceiling are almost certain to separate reasonable Republicans from their party’s radical fringe.

And that would be good for everyone.

The debt ceiling debate has featured lots of talk about “leverage,” especially from the GOP leadership. “What I'm trying to do here is to leverage the political process to produce more change than what it would produce if left to its own devices," explained House Speaker John Boehner in recent remarks.

Leverage is all well and good, but levers need a fulcrum to get the job done. In today's debt limit debate, that fulcrum is default. If Republicans are prepared to drive the nation over the brink, then they have a powerful lever to extract concessions from a level-headed White House. But if they aren't, then all they have is a big stick – useful for playacting but not much else.

Josh Barro, among others, thinks the GOP is bluffing. In demanding spending cuts as the price of a debt ceiling hike, the party is making an empty threat, he contends.

    If Republicans were to stage another debt ceiling showdown over entitlement reform, they would have to (1) threaten to cause an economic crisis unless (2) they are given a package of reforms that many Republican officials don't even want, which (3) would also happen to be hugely unpopular with voters.

What are the chances that Republicans will go down that road? Barro is pretty clear about his level of concern:

    This. Is. Never. Going. To. Happen.
Barro is probably right. After all, Republicans have blustered before, only to cave when things came down to the wire. Moreover, Boehner has repeatedly signaled that while he may be willing to court disaster, he isn’t ready for a trip to the altar. “I’m not going to risk the full faith and credit of the federal government,” he said in March. (ThinkProgress has rounded up some other reassuring Boehner comments.)

Given such statements, Boehner is left with a pretty weak hand. Even if you discount his past words, Boehner’s past actions suggest he will eventually cave -- as he did as recently as last December.

Of course, there’s always the chance that House Republicans will live up to their billing as the party’s lunatic fringe and force the nation to the brink of disaster. They could stage a revolt and refuse to join Boehner in his inevitable (but responsible) retreat from disaster.

Even then, however, it’s unlikely that the nation will actually default on its obligations, since Democrats would join with a handful of relatively moderate (or just non-crazy) Republicans to pass a debt limit extension. Brian Beutler of Salon has outlined the scenario:

    Boehner introduces legislation that both increases (or extends) the debt limit and includes some goodies for conservatives that make the bill a non-starter with Senate Democrats and the President (maybe a year-long delay of the individual mandate — let your imaginations run wild); that bill fails on the House floor; everyone panics; faced with no better option, Boehner breaks the Hastert rule, puts a tidy, Senate-passed debt limit bill on the floor, and we all dress up as Speaker Pelosi for Halloween.
This prediction seems reasonable to me. And it suggests that the debt ceiling crisis will -- once again -- go out with a whimper, not a bang.

But the debt debate will still be important. Almost certainly, it will widen evident rifts within the Republican party. That’s a bad thing for the GOP over the short term; it can only hasten the party's electoral marginalization, at least outside the South. But internal strife might be a good thing for Republicans over the long run. As long as the party engages in empty theatrics, it will do precious little governing. And Americans will not tolerate unalloyed posturing forever.

By exposing GOP theatrics for what they are, the debt debate might empower more moderate voices in the GOP. That, in turn, could reverse the party's steady retreat into extremist irrelevance and give voters some real -- still realistic -- choices in the years ahead.

Read Comments (4)

Mr. HSep 3, 2013

It saddens me when TNT publishes commentary that substitutes name calling for
logical argument, but since Mr. Thorndike started it, who are the unreasonable
crazy lunatics: those who insist that our federal government modestly trim its
expenses in order to move toward living within its means before the federal
debt becomes unserviceable and causes our government to collapse a la Greece or
those with their heads in the sand who beleive that it is OK to demand unending
increases to the debt limit so that federal government can continue increasing
its spending? We started down this road when Congress placed government
spending on autopilot by abdicating its responsibility to pass annual budgets
because it was politically unwilling to make the necessary choices that
budgeting requires. Everyone knows which party controlled both houses and the
presidency when that started.

edmund dantesSep 3, 2013

Mr. Thorndike, now that you've thrown mud at Republicans, could you deliver a
lecture to the Democrats on their unrestrained spending? The federal
government is wasting money at a staggering rate. Do you have any positive
suggestion for getting it to live within its means?

Joseph J. ThorndikeSep 3, 2013

Mr. H: I don't think this is name calling. Refusing to raise the debt ceiling
is, in fact, just crazy. It's not akin to cutting up your credit cards so
you'll stop spending; it's like burning your credit card bills for the things
you bought last Christmas.

I know you're aware that the debt limit is about past spending, not future
extravagance -- you need no lecture from me on that. But refusing to pay for
things you already bought is genuinely crazy -- not to mention wrong.

If Republicans really want to do something about future spending, then they do
the gutsy thing and vote against ... wait for it ... future spending.
Conveniently, the opportunity to do exactly that is right around the corner.
Republicans who are outraged by spending should vote against the continuing
resolution. Yes, that would mean a government shutdown, and yes it would be
unpopular. But at least it's honest.

The whole debt limit thing is a bluff. Or maybe it's a cry of desperation.
Either way, it's not a substitute for actual governance. It's posturing pure
and simple, and I, for one, don't think we have time for empty theatrics. I
suspect that most voters will feel the same way.

Edmund Dantes: I didn't throw mud at all Republicans. Just the ones who are
threatening bankruptcy for the sake of staving off bankruptcy. Which is
ridiculous on its face and in every other way. There are, in fact, some
Republicans talking sense about the debt limit, as well as long-term spending
issues. We need more of them. If some of them run for office in Virginia, I
will vote for them. The country needs a viable Republican party -- preferably
one committed to real fiscal prudence rather than empty threats.

Read my past writing and I think you'll find that I'm something of a fiscal
scold. The nation needs to address it long-term fiscal gap. But ridiculous and
irresponsible debt ceiling games won't get us there.

amt buffSep 5, 2013

If bankruptcy is inevitable, isn't it cheaper and better to declare bankruptcy
immediately? The sooner the bad debt is wiped away the sooner we can get to
work rebuilding.

In the long term view, deferring the day of reckoning hurts the country more
than it helps. Unless you see some magical way that the government will not
default on its debt explicitly or by hyperinflation.

Joe, if default is not inevitable, please tell us all why, preferably with a
relevant historical example. If the road does not end in a cliff then I'll
agree that kicking the can down the road might be the better course of action.

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