The hotter precincts of the blogosphere were calling this a sellout yesterday, though they might want to think before they shout. The debt ceiling is going to be increased one way or another, and the only question has been what if anything Republicans could get in return. If Mr. Obama insists on a tax increase, and Republicans won't vote for one, then what's the alternative to Mr. McConnell's maneuver?
Republicans who say they can use the debt limit to force Democrats to agree to a balanced budget amendment are dreaming. Such an amendment won't get the two-thirds vote to pass the Senate, but it would give every Democrat running for re-election next year a chance to vote for it and claim to be a fiscal conservative.
Now this is clearly the Wall Street wing of the GOP telling the Tea Party wing to sit the hell down and shut the hell up. Remember, the Tea Party position is that there's no valid reason to raise the debt ceiling at all. The insistence here that it will be raised anyway, and the cynical admission that the Republicans were holding the country hostage in order to try to extort concessions out of President Obama and the Democrats, is not something that the Republicans would admit to unless they had lost the game.
We agree with those who say that Treasury Secretary Tim Geithner can cut other federal spending before he allows a technical default on U.S. debt. No doubt that is what he will do. We'd even support a showdown over technical default if we thought it might yield some major government reforms. But Mr. Obama clearly has no such intention.
Instead he and Mr. Geithner will gradually shut down government services, the more painful the better. The polls that now find that voters oppose a debt-limit increase will turn on a dime when Americans start learning that they won't get Social Security checks. Republicans will then run like they're fleeing the Pamplona bulls, and chaotic retreats are the ugliest kind. By then they might end up having to vote for a debt-limit increase and a tax increase.
The tea party/talk-radio expectations for what Republicans can accomplish over the debt-limit showdown have always been unrealistic. As former Senator Phil Gramm once told us, never take a hostage you're not prepared to shoot. Republicans aren't prepared to stop a debt-limit increase because the political costs are unbearable. Republicans might have played this game better, but the truth is that Mr. Obama has more cards to play.
And this right here folks is a full-on white flag surrender. I've long said that Wall Street would never let the Tea Party wreck their bond market ZIRP gravy train, and this is the clearest indication yet that the powers that be in Manhattan's towering edifices aren't about to let the teahadists crap the bed.
The Tea Party reaction to this is not pleasant. Erick Erickson at Red State lost his marbles over McConnell's proposal. Think tanks like the Heritage Foundation are screaming bloody murder. But with conservatives like Jennifer Rubin at the Washington Post, Fred Barnes at the Weekly Standard, Andrew Stiles at the National Review, and John Podhoretz at Commentary Magazine all selling the McConnell Plan as the only way out of this mess, the Republican retreat is on.
Wall Street has had enough. The Tea Party just got cut off at the knees. And Obama? Still looks like the smartest guy in the room.
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