• Spending cuts of a greater value than the increase in the debt limit. Right now the White House wants a $2 trillion increase, so that translates to $2 trillion in cuts. No time horizon for those cuts was specified, just that they could be over a longer time than it would take to reach the new debt limit.
• Those cuts can come from anywhere but tax hikes, which are “off the table.”
• Deficit caps or targets are not enough, though “program reforms” should be included.
• “That includes honest conversations about how best to preserve Medicare.”
The speech actually started by criticizing Dodd-Frank, but let’s focus on the debt limit parts, because that’s the near-term issue. This is a pretty hard line. You’re talking about a budget deal that slices trillions within 2-3 months, without any tax hikes (cuts of tax expenditures may be allowable – that’s even in the Ryan budget – but Boehner didn’t really say). This is about as maximal a demand as you can get, after Republicans last week appeared to back off and recognize that their Medicare phase-out plan wouldn’t fly. My sense is that Boehner, reacting to the iron law of institutions, is desperately trying to maintain his stature in the GOP, amid rumblings from the Tea Party that he’s a terrible negotiator.
Incidentally, this was the wrong audience for a red-meat speech calling the need to pay America’s debts already incurred “the arrogance of power”:
The Speaker’s stand drew little reaction from the banquet hall of Wall Street executives, who offered polite applause at the end of Boehner’s speech but sat in silence through his demands on the debt limit [...]
“I know there are many in this room who are uneasy with this debate,” (Boehner) said. “I understand your concerns.”
Attendees offered a mixed reaction to his presentation, with some saying he did little to allay concerns in the financial community about the debt threshold.
“Disconnected from reality,” one attendee said as he walked briskly out of the ballroom.
“It was predictable,” said Perry Braun, chief investment officer of Wilton Re., a life reinsurance company. “Not that he wasn’t genuine, but I think it was posturing.”
Others quoted understood this as the Speaker taking a strong position in a negotiation, something that you’d never hear from attendees walking out of a speech by, say, President Obama.
Perhaps Boehner’s bluff should be called. He wasn’t willing to be specific about the Ryan plan or Medicare or Social Security (though at the end he did endorse means testing, which I’ll get to later). He really wants the President to put forward those plans to give him some cover. We saw what happened in town halls when Republicans had no cover for cutting Medicare. But I think Boehner is more attentive to his own base, which wants him to posture, rather than the need to get a deal done.
Eventually, the debt limit will be raised, but with Kent Conrad talking about short-term increases, you could see a similar death by a thousand cuts strategy that was successful in the 2011 appropriations fight. Only the numbers would be much bigger here, because Boehner (and actually his Tea Party base) just laid down the marker.