No Dealing On The Debt Ceiling, Part 8

Ezra Klein gives us the status of the debt ceiling fight today as we bonk our heads on it.

There's not been much evident progress towards a deal in recent days, though there's been an escalation in Republican demands from the Senate side (McConnell wants Medicare cuts but no tax increases) and a plea from the Obama administration for Democrats to stop adding new demands onto an already overburdened negotiations process. But the outlines of a deal have been relatively obvious for some time: For better or worse, the final deal will be heavily tilted towards spending cuts, and accompanied by some sort of procedural mechanism to make future deficit reduction more likely.

To some degree, that's backwards. The smartest deal going forward would be one in which the two parties stuck to PayGo -- or, if you want to reduce the deficit, SaveGo -- and thus figured out how to pay for tax cuts and spending increases when those tax cuts and spending increases were passed rather than when the bills came due. But given that the House Republicans replaced PayGo with a weaker policy in which spending cuts had to be paid for but tax cuts didn't, that Congress is really interested in avoiding future debt-ceiling showdowns. The minority would very much like to use the debt ceiling to make changes to government that they'd also like to make in the absence of the debt ceiling. But it's not at all clear that the debt ceiling has convinced them to make changes to government that they wouldn't otherwise support, and if they'd supported PayGo in the first place, we'd be in much better shape today. 

Republicans don't care about the debt.  They do care about dismantling social programs and cutting taxes on the wealthy as much as they can.  Ezra believes the Republicans will get most of what they want.  The problem this time is "most of what they want" would be trillions of dollars in cuts to programs and zero revenue increases.  So yeah, this is a problem. 

Obama pulled a fast one on the GOP on both the tax cut issue last December and the budget showdown last month.   The Tea Party howled that Boehner was an apostate.  But this time around they are willing to let us default.  The stakes are much higher.

So who will come out on top here?  We'll see.  The default clock is now counting down, and the Treasury's going to have to make some ugly decisions here in the meantime...