The two principals in the debt-ceiling talks, President Obama and House Speaker John Boehner, began talking on Monday with the same deadline: August 2, when the federal government will default on its debt. But Obama’s clock is running slower. And that means his leverage may ultimately be greater if he waits for several weeks before making a deal.
Obama’s political apogee will be in late July, when, if there’s no deal, the bond market will begin to panic, leading interest rates to rise and the stock market to fall. That’s when the public will begin to understand what happens when the U.S. can’t make its payments to creditors. That’s when the president can use his bully pulpit to call for an adult conversation.
That’s why Republicans want the White House to focus on vote counts right now. What combination of policies will exceed the necessary threshold for passage in the House and the Senate? Boehner is willing to concede that a debt-ceiling deal based on Rep. Paul Ryan’s budget plan may not get 218 votes. And Republicans have already conceded that they’re willing to cut significantly from defense appropriations to get them.
What Boehner would like the White House to concede early is that its effort to, say, end oil-company subsidies, raise taxes on individuals making $500,000 and up, or curtail sugar and ethanol tax breaks, would also fall short. If the vote were tomorrow, he’d probably get a higher spending-cut to deficit-trigger ratio from Democrats, too. He’d get close to $2 trillion in real cuts over 10 years.
Boehner's bottom line: real spending cuts that exceed the amount by which the debt limit is raised looks reasonable today. Since a large minority of his conference does not believe that the August 2 date is real, Boehner's aides insist that it's foolhardy to think they are any more likely to accept revenue raisers (including getting rid of tax breaks) as the weeks go by.
But Obama knows that vote counts in the absence of the crucible of crisis will differ when Wall Street, the U.S. Chamber of Commerce, and other traditionally Republican interests begin to nervously walk lawmakers out of their partisan garrisons.
And he’s betting that Republicans, having learned that his team is on nimble feet when it plays close to the edge of the cliff, will concede more up front than they did in December, when only the threat of a government shutdown (darn it, the Smithsonian would be closed!) loomed as the existential sword of Damocles. The longer Obama waits, the more Republicans will privately panic, knowing that their leverage decreases steadily as the weeks go by -- and exponentially at the turn of August.
Republicans have succeeded in turning Washington’s orientation toward spending, but they probably aren’t willing to blow that credibility if the endgame comes down to either a government default or an end to subsidies. That’s why, in private, Republicans want the discussion to begin with the president getting inside Boehner’s head: What can the White House offer to allow Boehner to get enough of his Republicans to go along, anticipating that Democrats will need at least a third of their caucus or more to reach the threshold? After last year’s election, overconfident Republicans assumed that Obama would not be able to broker any deal, with demoralized Democrats retrenched and the public having markedly signaled their distaste with Washington. They were wrong then and they’re trying to be more careful now.