In remarks before the Senate today, Majority Leader Harry Reid appeared to endorse the Rube Goldberg plan to allow the debt limit to increase with a series of tough votes for Democrats to take. Here’s the relevant portion:
I am glad to hear that the Republican Leader has come forward with a backstop proposal to address the debt limit. I am still studying it and discussing it with Senators.
But I am heartened by what I read. This is a serious proposal. And I commend the Republican Leader for coming forward.
I believe that the Republican Leader’s proposal, combined with ideas he and I have been discussing to force a vote on deficit reduction proposals, could go a long way toward resolving the impasse in which we find ourselves.
In the meantime, this afternoon, Congressional Leadership will again meet with the President and his senior advisors to try to advance our discussions.
Reid knows that only 34 votes would be needed to “pass” this plan by sustaining a veto on the resolution of disapproval (it’s complicated; read my story at the American Prospect for the details). He knows that he wouldn’t even need votes from endangered Democrats like Claire McCaskill or Ben Nelson or Jon Tester to get this done. And he knows that this defuses the debt limit bomb, essentially getting an increase passed and avoiding default with only the minor inconvenience of a tough vote or three.
Previously, Reid said that he would not consider any changes to entitlements unless they were part of a large deal with trillions in tax increases, something that Republicans have ruled out. So he’s certainly doing his part to get to the point where the McConnell surrender plan would have to be invoked.
There is a downside to the collapse of the debt limit talks. There was a dim hope that some stimulative measures would get wedged into a large deal, things like extending the payroll tax cut or unemployment benefits. Larry Summers promoted this kind of “stimulus now, deficit reduction later” plan in a column for the Financial Times today. Kent Conrad did the same, calling for a “$100 billion rebuild America plan” to be included (I think he’s talking about the Local Jobs for America Act). That would probably go by the boards in the near term.
But any stimulus would probably be dwarfed by the deficit reduction in the deal, so I’m not sure that’s a concern. Nor do I believe that Republicans would actually allow stimulative measures to be included (maybe on the tax side to “offset” the closure of tax loopholes, but supply-side stimulus hasn’t really worked in a demand crisis). When faced with the array of legitimate choices, doing nothing on the debt limit but increasing it, and moving on to the 2012 budget fight, is the best possible option. And Reid’s endorsing it.
…This doesn’t mean the entire Democratic Party endorses this idea. Some who actually wanted to use the debt limit as leverage to reduce the deficit are unhappy that the bomb’s been defused. I give you Steny Hoyer.