Get Ready For Game of Chicken Over Debt Ceiling

Byron York

4/26/2011 12:01:00 AM - Byron York

You want to get attention on Capitol Hill? Threaten to lower the U.S. government credit rating.

When Standard & Poor's lowered its outlook for the United States from "stable" to "negative" on April 18, the news shot through congressional offices. An already hot fight over raising the national debt got even hotter.

"S&P sent a wake-up call to those in Washington asking Congress to blindly increase the debt limit," House Majority Leader Eric Cantor said in a statement released minutes after the news broke. "House Republicans will only move forward on the president's request to increase the debt limit if it is accompanied by serious reforms that immediately reduce federal spending and end the culture of debt in Washington."

On the other side, Democratic Rep. Peter Welch, of the liberal Congressional Progressive Caucus, sent out a letter to Democratic leaders, signed by 114 House Democrats, demanding that Congress pass a debt-limit bill without any spending reforms at all. "Mr. Cantor should today abandon his dangerous plan to leverage America's duty to pay its bills to achieve a partisan advantage in budget disputes," Welch wrote.

Given all the maneuvering, you might think a debt-limit showdown is coming soon. It's not. Lawmakers, who are on a two-week Easter recess, have plenty of time before they are required to act.

In early April, Treasury Secretary Tim Geithner sent a letter to congressional leaders with his best estimate of when the United States will actually hit the $14.3 trillion limit on its borrowing ability. It will happen in mid-May, Geithner told Congress, but the Treasury Department can take "certain extraordinary measures" to put the deadline off a little longer. Geithner said there would be "no headroom to borrow" left by July 8.

Maybe Geithner was trying to prod lawmakers to act quickly, but when Hill politicos read that, they immediately thought: We have loads of time. "It doesn't hafta hafta be done until July 8," said one GOP Senate source. "We've got all of May and all of June." Remember, the last crisis, averting a government shutdown, was literally settled at the 11th hour on the day the government was to have closed.

That's why Geithner took to the talk shows recently to argue that there can't be shutdown-style brinksmanship this time. "If you take it too close to the edge, then people will start to wonder, really, what are we doing, what are we thinking," Geithner told ABC.

The treasury secretary is unlikely to get his wish. Both sides are so far apart, and feel they have so much time, that it's impossible to imagine the issue being resolved before the end of June, or maybe early July. Especially not with Speaker John Boehner telling President Obama that the White House can forget about getting a so-called "clean" bill, that is, one that raises the ceiling without other measures to control spending. "There will not be an increase in the debt limit without something really, really big attached to it," Boehner said at a fundraiser on April 9.

But here's the problem for Republicans. They control the House of Representatives. The debt ceiling has to be raised -- Boehner has always conceded that -- and the party in power has to do it. Even as Boehner demands spending concessions as the price of raising the ceiling, the White House knows that in the end, he will have to pass a bill. "Our bargaining power derives from our controlling the House but is also limited by it," said a House GOP source.

In the Senate, on the other hand, minority Republicans will be free to oppose any debt-ceiling bill that isn't to their liking, because in the end, it will be the Democrats' responsibility to pass it. Protest-minded Republicans are heartened by Obama's recent admission that his own vote against raising the debt ceiling in 2006 was "a political vote as opposed to doing what was important for the country."

"People know there is hypocrisy coming out of the White House," said the GOP Senate source. "Someone who took a political vote and let the other party pass the debt-ceiling bill -- well, it's a little difficult for him now to say, you shouldn't do that."

The bottom line is, the debt-ceiling issue won't be settled before an extended game of chicken, one in which Republicans will undoubtedly win some concessions but will, in the end, have to give in.