It's looking increasingly like a debt "grand bargain" deal is not going to get done. Many Republicans, frustrated at the Obama administration's insistence on hiking taxes in the middle of an economic recovery, are increasingly deciding that Democrats just aren't worth the trouble negotiating with.
sen. Bob Corker laid out the Republican strategy recently, saying that the GOP had hoped to use the debt ceiling as a negotiationg point to achieve a deal that would bring some marginal amount more sanity to the United States' fiscal future. "Maybe the debt ceiling was the wrong place to pick a fight, as it related to trying to get our country's house in order," the Senator admitted Thursday.
GOP leaders are now attempting to whip their caucus into accepting a smaller deal and possibly attempting political maneuvering similar to the much-maligned McConnell plan. Leadership brought in their biggest fiscal-policy weapon, Rep. Paul Ryan to speak on the catastrophic consequences of not raising the debt ceiling. As the Los Angeles Times reported,
At a closed-door meeting Friday morning, GOP leaders turned to their most trusted budget expert, Rep. Paul D. Ryan of Wisconsin, to explain to rank-and-file members what many others have come to understand: A fiscal meltdown could occur if Congress fails to raise the debt ceiling.
House Speaker John A. Boehner of Ohio underscored the point to dispel the notion that failure to allow more borrowing is an option.
"He said if we pass Aug. 2, it would be like 'Star Wars,'" said Rep. Scott DesJarlais, a freshman from Tennessee. "I don't think the people who are railing against raising the debt ceiling fully understand that."
The warnings appeared to have softened the views of at least some House members who, until now, were inclined to dismiss statements by administration officials, business leaders and outside economists that the economic impact would be dire if the federal government were suddenly unable to pay its bills.
Freshman Rep. Steve Womack (R-Ark.) said the presentation about skyrocketing interest rates that could result from downgraded bond ratings was "sobering."
If anyone is going to have ironclad fiscal conservative bonafides with the new Freshmen Republicans, it's Rep. Paul Ryan. Either GOP leadership is really worried that they won't have the votes for a ceiling hike or they know that it's getting down to the wire and the chances are that the GOP is going to have to cave on some of their demands.
There are about four options that are still on the table that can be identified by their biggest supporters. The aforementioned McConnell plan would force Barack Obama to take some very uncomfortable public positions but, policy-wise, would likely mean the fewest amount of real spending cuts. The plan Eric Cantor is pushing for is a short-term small-cut deal that would cut much less than the "grand bargain" and would force more debt ceiling votes and negotiations before the 2012 election. Barack Obama is negotiating for a medium-term cuts-and-taxes deal that would solve the issue past 2012. And finally, there's the John Boehner-backed "grand bargain" that would contain up to a reported $4 trillion in cuts.
As Democrat intransigence on tax hikes gets more apparent, prospects for a McConnell-like plan are increasing by the day. It sounds like leadership is doing all they can to tamper down expectations for a big bargain on spending and making sure everyone knows the disaster that will happen if the debt ceiling isn't raised.
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