The debt-ceiling hostage strategy starts to unravel

The debt-ceiling hostage strategy starts to unravel
The debt-ceiling hostage strategy starts to unravel
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In 2011, the Republicans held the debt ceiling hostage, vowing to crash the economy on purpose unless their unconditional demands were met, and they enjoyed complete unanimity on the right – every GOP lawmaker, pundit, and activist was fully invested in the plan.

In 2013, this is obviously not the case, with a growing number of prominent Republican voices balking at the entire endeavor. Just today, Charles Krauthammer, a prominent conservative pundit, told Republicans they “won’t get” their ransom, they’ll have to “give in” eventually, and they should “forget about forcing tax reform or entitlement cuts or anything major.” Jennifer Rubin added, “The jig is nearly up…. [T]he threat of bumping up against the debt ceiling is not realistic and hence not useful.”

For the first time, it appears this point is not lost on House Republicans.

Republicans appear to be willing to avoid a showdown over the debt limit and instead use the sequester as their main negotiating lever in upcoming fiscal fights with the White House and Senate Democrats.

House Budget Committee Chairman Paul Ryan, R-Wis., said Republicans at a closed-door retreat in Williamsburg were weighing a short-term increase in the country’s borrowing limit, giving all sides time to work on a broader fiscal plan in March that would include substantial spending cuts.

“Sometimes you’ve got to lay down a sacrifice bunt,” said Rep. Dennis Ross of Florida about the debt ceiling increase.

Ryan said he warned his GOP colleagues they had to “recognize the realities of the divided government that we have.” This is the exact opposite of the posture Republicans took on the debt ceiling several weeks ago, and bears no resemblance at all to what they said in 2011.

It would probably be an overstatement to say Republicans are already surrendering, but let’s just say they’ve taken the white flag off the shelf, even if they’re not yet ready to wave it.

That said, it also appears the congressional GOP hopes to trade one hostage for another.

Even if Republicans now seem to realize they can’t follow through on their debt-ceiling threats – they really should have thought this through beforehand – GOP policymakers still appear committed to aggressive confrontations on automatic sequestration cuts and funding levels for the government itself.

To be sure, these threats carry a punch. The sequester includes deep cuts that neither side wants and a fight over spending levels may very well lead to a government shutdown, but neither pose the catastrophic dangers associated with a genuine debt-ceiling crisis – and even House Republicans seem aware of this, which is why they have no intention of shooting this hostage.

There’s apparently growing GOP support for a clean, short-term extension of the debt ceiling – which, as we discussed yesterday, doesn’t seem to make any sense at all – which would presumably set the stage for additional talks. This will play out soon enough, but at a certain level its impact is limited. Once everyone in Washington – Democrats and Republicans, the White House and Congress – realizes that GOP leaders aren’t prepared to allow a default on our obligations, the game is effectively over.

House Republicans can vote on a debt-ceiling increase once a week, once a Congress, or somewhere in between. Either way, once it’s clear they won’t shoot the hostage, their leverage has vanished.

As Greg Sargent concluded yesterday, “Republicans need to accept the inevitable: Either agree to a clean debt ceiling hike, or accept the need to compromise, agree to a deal with revenues that can pass the House with Dems, and attach a debt ceiling hike to that. The easiest way out of this hostage crisis is for Republicans to release the hostage.”