This day in fiscal brinkmanship revolved around a failed House GOP effort to supplant a pending Senate deal with one of their own: a debt limit extension and CR matching the Senate’s but with new and unilateral concessions involving Obamacare and a clampdown on the Treasury’s ability to delay a future debt default.
As it transpired, the House GOP leadership could not obtain the Republican votes to pass this latest face-saving semi-surrender, even after adding changes that made it even more egregiously offensive to Democrats. This failure ceded the momentum back to the Senate, which will now race the October 17 debt breach deadline for a renewed “deal” that the House could still deep-six if Boehner refuses to accept the help of Democrats.
The House dynamics spurred an inspired series of theories about why the House GOP has pursued this destructive and doomed path, which I assessed today at Political Animal before offering my own hypothesis:
One fairly straightforward hypothesis is from WaPo’s economics writer Neil Irwin, who suggests House GOPers are suffering from the “sunk cost fallacy:”
“House Republicans pushed a hard line in the runup to the government shutdown, demanding a repeal of Obamacare in exchange for agreeing to fund the government. There was never any way that the White House or Senate Democrats would go along with that, but that was their strategy, and it led to the shutdown of the government.
“Two weeks later, Republicans have started to accept that they will not get a full repeal of the health reform legislation, and are trying to work on more attainable goals. But there is a strong current within their caucus that sees the fact that they have shut down the government and attendant decline in popularity as a reason that they must continue to fight.”
So they have to “win” something Democrats don’t want to give them, or the “sunk costs” of a bad strategy will have been for naught.
A second and more complicated theory was articulated by Jonathan Chait: that the principle House Republicans are actually fighting for is the right to change “governing norms” and take big hostages for ransom:
“The principle undergirding the emerging Senate bill — ending hostage tactics, and making all deals reciprocal — is unacceptable to House Republicans, who want to preserve debt-ceiling hostage-taking as a form of policy leverage. So, rather than wait for the Senate to act on its own, the House is attempting to move its own bill, which demands a small ransom: suspending the medical device tax, and eliminating employer health-care subsidies for congressional staff. The ransom is minor, but preserves the principle that the House can use the threat of default to force the president to accede to otherwise unacceptable policy demands, without making any policy concessions of its own.”
So in Chait’s view, Democrats must avoid any “nonreciprocal” concessions lest the political terrorists be emboldened and return to take hostages in the future. This appears to be the principle the White House and Senate Democrats have adopted as fundamental, though I would observe that it would have been a much clearer principle had Obama stuck to his original position of refusing any negotiations–“reciprocal” or not–until a “clean” debt limit increase and CR of tolerable length had been passed (Democrats’ interest in negotiating an end to sequestration, and perhaps even some changes they wanted in the Affordable Care Act made the “no negotiations” posture difficult to sustain, of course).
A third theory, congruent with Chait’s but having the benefit of sounding more like what Republicans are actually saying, is laid out by Josh Barro:
“There is a reason behind this fight beyond questions of ego and economic stability. It goes to who has what power in a divided government.
“A divided government has to pass spending bills at least once a year with support from both parties, and that leaves considerable room for each party to make demands about discretionary spending. That’s why, over the last two years, Republicans have more or less gotten their way on discretionary spending, which declined this year and will likely decline next year, too.
“But for mandatory spending programs like Social Security and Obamacare, which don’t have to be reauthorized every year, divided government produces a major status-quo bias. If the two parties can’t agree about what to do with these programs, they stay in whatever way the law already says they should. And Democrats are broadly satisfied with the legal status quo in these programs, while Republicans want big changes, including repeal of Obamacare.
“For that reason, Republicans have a reason to try to find a way to break that dynamic, and they’ve settled on using the discretionary appropriations process and the debt limit — matters that controlling one house of Congress does give you leverage over — to demand changes in mandatory spending.
“In other words, their strategy for getting entitlement reform is saying, ‘Hand it over or the economy gets it.’ This situation enrages Democrats partly because it’s terrible for the country. But it also enrages them partly because it endangers a structural advantage that they get as defenders of the mandatory spending status quo.”
Now the best response to the argument that conservatives are simply using the only tools they possess to get what they want is that the economic and political risks of pursuing that option are simply too high, and that the more responsible approach is to accept their disadvantaged position as the inevitable consequence of losing the 2012 presidential and Senate elections, and wait until 2016 for another chance at the “trifecta” they missed last year, when they were fully prepared to enact their entire fiscal agenda (including the crippling of Obamacare and the enactment of the revolutionary Ryan Budget) via the reconciliation process. If, as they claim, the “American people” are behind them in this endeavor and their bad presidential and Senate candidates just queered the pitch, then surely they get it right in just a few years, without wrecking the U.S. economy and destroying their own popularity?
But that’s where the peculiar views of the Tea Folk come into the picture, which have a huge bearing on GOP strategy and tactics. They view the present moment as a “tipping point” after which the reigning in of spending, the undermining of the Entitlement State, and most of all the repeal of Obamacare–which they strangely but strongly consider the Crown Jewel of the Entitlement State–will become impossible. Putting the battle off until 2016 isn’t an option for them. “Sunk costs” are just a down payment on what they are willing to pay for a major blow against Leviathan. And they will continue to favor hostage-taking no matter what precedents are or are not set in this particular deal.
More to the immediate point, any likely consummation of the current crisis by Boehner, whether it generates largely or entirely symbolic trophies or none at all, is likely to do little more than nourish their contempt for the Republican Establishment squishes who don’t understand America is on the edge of a moral, economic and political catastrophe beside which bad poll numbers or even a debt default pale in significance. And for reasons of arithmetic, these people have a hold on John Boehner and to some extent (in his case, exacerbated by Kentucky politics) Mitch McConnell that is more powerful than all the rationales articulated by Irwin, Chait and Barro.
So while it may be strategically important for Democrats to crush Boehner and force his surrender in the fiscal fight, it’s also important to recognize that the Tea Folk won’t surrender at all, and will use Boehner’s likely surrender to increase their leverage over the GOP.