I’ve spent most of my day on the bin Laden beat, but today was going to be consequential regardless. Because today the Congress returned to session for a month in which the Treasury Department is expected to reach the debt limit. They may be able to take extraordinary measures to keep under the limit for a while, but it’s likely that under normal conditions, the limit will be reached this month. Joe Biden will open a discussion between the parties on how to get a vote passed to increase the limit this week.
Both sides of the aisle have laid out their positions, with Republicans providing a long list of demands. The most likely outcome is some kind of deficit or spending cap, a structural reform that would be put in place now, with negotiations on how to get under that cap ongoing. Whether the cap is on spending or the deficit is a major question:
Some Democrats are exploring the possibility of budget “triggers,” spending cuts that would kick in automatically if the government failed to reach agreed-upon deficit reduction targets over the long run. Republicans are demanding immediate spending reductions and stricter enforcement mechanisms, like a balanced budget amendment to the Constitution.
Republicans see the vote over raising the debt limit as leverage for immediate and concrete progress in their efforts to cut spending and reduce the size and reach of the government. President Obama has called for a no-strings-attached increase in the debt limit but has also proposed a budget plan that would include broad spending reductions if the federal debt as a percentage of the total economy is still rising in 2014.
Reflecting the political potency of the issue, some Democrats in Congress are now signaling that they would accept linking some kind of automatic trigger to a debt-limit increase [...]
House Republicans, saying they were leery of budget limits that could easily be circumvented, quickly came out against Mr. Reid’s suggestion that deficit caps could be a legislative solution. But many Democrats are equally opposed to automatic spending restraints that they say could apply a meat-ax approach to the budget or deny the government sufficient financial flexibility in periods of conflict or economic hardship.
The mechanism of the trigger, not necessarily its existence, is the key detail here. You can envision a trigger that never triggers; that’s in fact the normal circumstance in Washington. But you could also envision one that does trigger, and causes massive spending cuts (because let’s face it, no Republican will sign onto a trigger that forces tax increases).
About the worst idea is the one to increase the limit every two months to extract more concessions. Democrats would have to be literally insane to agree to that.
House Republicans are considering a plan to grant only incremental increases to the federal debt limit in a bid to extract more concessions on spending cuts and budgetary reform from the Obama administration.
The idea has a champion in Grover Norquist, the conservative activist and president of Americans for Tax Reform, who says he is “building allies” in the House Republican Conference to push for extending the debt limit every two months.
“My argument is, you give them two months at a time, because each time you could get something reasonable,” Norquist told The Hill in an interview this week at his downtown offices.
As if Norquist hasn’t won enough of these fights this year already. This would crush the borrowing markets with uncertainty.
My sense is that everyone in Washington is waiting for the Gang of Six to come in and be saviors and come up with some palatable plan on which all the serious people can agree. The two-month gambit should put a rest to that.