US Fiscal: Debt Ceiling Capitulation Nears

Published on February 10, 2014

House members are returning to the capital this afternoon with crucial Republican House conference meetings tonight and tomorrow morning that will determine the fate and timing of the bill to extend the suspension of the federal debt limit.

*** Despite the political victory it will hand to the White House and to Democrats, the odds are high the House Republicans will resign themselves to passing a clean debt ceiling bill without conditions attached, though there is some effort to find a credible payfor of perhaps no more than $3 billion or so for a one year “delay” to the reduction in the military pension cost of living adjustment that could still be added as a condition to the debt bill. ***

*** House Speaker John Boehner and the GOP House leadership may announce their intentions as soon as tonight, though for tactical political reasons, the debt ceiling bill may not emerge in its final form before Wednesday night, when the House leaves for a ten day recess, and only after Congress returns February 25 — just two days before Treasury’s self-prescribed February 27 drop dead date. ***

*** That may lead to headline scares of another fight over the debt ceiling bill. But in fact the potential delay is to ensure passage: to allow more time to exhaust the alternative of still attaching conditions that might draw Democratic votes and avoid the look of capitulation, and more importantly, to avoid giving outside pressure groups on the right the time during the recess to rally opposition to the bill. ***

In other words, while there is still a slim chance for a rapid movement in pushing a debt ceiling bill out of the Ways and Means Committee and through the Rules Committee to a rapid floor vote in the House, it is unlikely. A delay, however, is not necessarily a bad thing, but could be the best possible outcome considering the extent of the disarray and discontent still coursing through the Republican House conference.

Avoiding GOP Fratricide

Getting a debt ceiling vote to the floor, without inciting another fratricide riot among House Republicans, is the task that Speaker John Boehner and the Republican leadership have been struggling with these last few weeks and practically since they captured the House in 2010.

Nearly all Republicans believe the federal government is spending too much as a percentage of actual GDP growth, and are still struggling to find a condition large enough, or relevant enough, to the task of total spending reduction, that would justify a yes vote to increase the debt limit, which, to them, is tantamount to a license to spend even more.

Boehner has thus had to patiently run through all the options with his restive conference, but persist throughout in pressing that the House must pass a debt ceiling before the end of the month.

The Republican leadership already shopped around and quickly discarded earlier proposals to attach a rapid approval of the Keystone XL pipeline or some rather clever reforms to the Affordable Care Act based on waivers sought by various Senate Democrats.

The more recent idea was to attach another “temporary” fix to the reduction in the government payments to Medicare providers and/or repeal the modest decrease in annual cost-of-living adjustments for military retirees still of working age that were included in the recent Ryan-Murray budget agreement.

But both would need credible payfors to ever make it into legislative language, undercutting the odds with so little time left of their inclusion as an attached condition. One compromise making the rounds this morning would be to limit the reversal in the military COLA to only a year’s delay or to be tied to the same length of the debt ceiling suspension, most likely to the spring of 2015, as a new way to substantially reduce its cost and put a credible payfor within political reach.

But a clean debt ceiling bill, despite the disarray within the Republicans, still remains the most likely outcome. Even some of the more vocal Tea Party dissidents are signaling they would rather just capitulate on the debt ceiling and be done with it. And with the House Democrats certain to all vote yes for a clean bill, it frees discomforted Republicans for a politically convenient no vote to help them with their 2014 re-election campaigns.

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