Friday, January 07, 2011

A Deal Easily Averted

Jonathan Chait of The New Republic is impressed. He notes that at an event sponsored by the Manhattan Institute at the National Press Club, House Budget Committee chairman and, GOP wunderkind Paul Ryan admitted

Will the debt ceiling be raised? Does it have to be raised? Yes.

Chairman of the House Budget Committee, the Ohio Republican is poised to be given extraordinary power to shape spending priorities and the federal budget and, far less significantly, has been boosted as the GOP's 2012 presidential nominee. Chait adds

Ryan says Republicans should attach some conditions about spending cuts. But once you've conceded that the limit is going to be raised, your ability to extract concessions is gone. My guess is that Republicans are hearing from the business lobby that even risking a default would be totally unacceptable.

Chait notes also "You knew President Obama would cave on the Bush tax cuts when he first started saying that a deal was going to be made." However, in September then-Minority Leader John Boehner stated "I want to do something for all Americans who pay taxes. If the only option I have is to vote for some of those tax reductions, I'll vote for it ..." Fewer than 90 days later, he and his party had all the tax cuts, granted them by a President who said that he opposed reductions on upper incomes.

Nonetheless, as Chait implies, the President is in a stronger bargaining position now than when confronted with the issue of tax cuts, especially with the likelihood that talk of default is making the financial community nervous. Hopefully, the President won't rush in, negotiate a "compromise" with Republicans, and hold himself out to Wall Street as The Man Who Saved The Economy, or at least the bond markets.

It is unlikely that even this President, who worships bipartisanship as an end in itself, would jeopardize programs critical to both his party and the American people. Jonathan Chait's confident assertion (on January 6, 2010) that Republicans are bluffing is a reminder that, if concessions are made to the GOP, they were made out of preference rather than necessity.

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