I’d like to pause for a moment and point out how totally wrong I
was have already managed to be about the debt ceiling. When I claimed that House Reps’ breaking the Hastert Rule twice in two months was extremely unlikely, I hadn’t counted on their breaking it twice in two weeks. When I was in DC a few weeks ago, Sen. McCain was talking about what I think was the Senate version of that bill. He kept going on about trees and how the government doesn’t need to buy new ones. He might just have been killing time until Obama and the House and Senate leaderships returned from a fiscal cliff meeting, but regardless, the objections didn’t sound like something anyone was going to rally around. I don’t know exactly what was in the House bill, but outside of ideological objections to the government’s buying and planting trees, nothing discussed while I was there for an hour and a half seemed objectionable.
I also assumed the Republicans had some of that legendary party discipline left over and that they, as a group, still had credibility about being insane. That no longer appears to be the case. If the Koch brothers, Republican legislators in both houses, and a group of economists that was convinced to say that Romney’s tax plan added up are all bailing on a plan, that plan must be so insane or so dangerous that it’s not worth it to find out what happens if you actually do it.
There are still sequestration and the budget in the month after the debt ceiling deadline, but it seems like both sides have given up on having a big fight about the debt ceiling. If I sound disappointed, it’s only because I don’t know yet what occasion hard money advocates or people confused about fiat money will have to make more graphics like this one in the coming fights:
(borrowed from The Daily Beast)
So Mike Konczal put some optimism in your strategic analysis of the debt ceiling.
The relevant image:
Noticeably absent from this table’s “negotiate” branch is “weak deal,” which past discussions suggest might include (the worst idea) gutting reforming social security and medicare with chained CPI or a change in the eligibility age.
Pruning the “negotiate” branch — that is, credibly committing to being insane — would have forced the tree down the “don’t negotiate” branch in a world in which House Republicans don’t want the platinum coin to happen. This could have been done through disconnecting the phones in the White House, announcing a vacation to Hawaii until Feb. 16, and launching a “Design the Platinum Coin” contest in the nation’s elementary schools similar to the one that was done for the state quarters.
It’s not that #mintthecoin is a good choice or good outcome, but it had to stay on the table to make pruning the “negotiate” branch credible. Obama has to believe that the House Republicans both hate the idea of default and take his cheap talk verbal commitment not to negotiate seriously, and he has no reason to believe either.
There are too many things to worry about, the the official demise of #mintthecoin has me focused on the debt ceiling.
Obama has committed to not minting the coin, which I think everyone has to agree is a crazy idea anyway. Tim Duy, for instance, claims that too much was at stake in terms of fiscal and monetary independence for the Fed to accept the coin anyway, so the president and treasury would have been pretty much on their own. That’s fine in a world in which reconciliation is a reasonable bargaining strategy. A shuns extreme strategic choices, convincing B that A is reasonable, so B shuns extreme strategic choices. It’s unclear that that’s the expected result in this case though.
A Politico story quoted House Republican Conference Chair Cathy Rodgers as saying “I think it is possible that we would shut down the government to make sure President Obama understands that we’re serious.”
Unless the noisy and extreme House Republicans take seriously the chance that Obama is willing to pursue strategies as insane as theirs, they have nothing to worry about. Obama’s threats to make sure everyone knows that everything is the House Republicans’ fault are basically a promise to call them bad names. It’s like he actually believes that because several articles have described his having a mandate — it’s in his inventory next to three ultra balls and a hyper potion — he has a cudgel. Unless there’s a sea change in the House Republicans, I don’t know how we’re going to get around the debt ceiling without Boehner breaking the Hastert rule twice in three months, and he’s never winning anything above a county commissioner seat as a Republican if he does that.
So: Boehner can’t afford to cave, and Obama has made a point of caving in advance. Your Medicare is going away! Your social security is going away! Your education funding is going away! Your ACA provisions are sunk!
Krugman is understandably cynical about whether Obama has a backup plan. It seems like he probably doesn’t. Someone get this man a game theory textbook.