Senate Republican Leader Mitch McConnell, recognizing that debt limit negotiations are going nowhere, has come up with “Plan B”, presenting a plan that effectively punts on the debt ceiling issue, giving the President de facto authority to raise the debt ceiling throughout his first term. McConnell’s proposal would force the President to submit “requests” for increases to Congress, with a requirement that he provide, in writing, proposals for budgetary reductions that correspond to his “request” for debt ceiling increases. From the Washington Post:
That measure would create a new legal structure authorizing the president to raise the debt limit by as much as $2.5 trillion in three installments. The first, an increase of $700 billion, would come immediately. The next two, worth $900 billion each, would come this fall and sometime next summer.
On each occasion, Obama would be required to submit to Congress an explicit request for an increase, along with a menu of proposed spending cuts equal to the requested increase. The submission of the president’s first request would automatically raise the debt limit by $100 billion to give the Treasury Department breathing room while Congress considers the request.
Lawmakers would then have 15 days to pass a resolution of disapproval, giving them an opportunity to go on record against raising the debt ceiling. But Obama could veto the resolution, and the debt limit would then rise, providing that at least 34 Democratic senators stood firm in upholding his veto.
McConnell and Republicans are now feeling the heat from Wall Street, where discomfort over the antics in Washington is growing. McConnell’s plan shifts the political burden for debt ceiling increases to President Obama and the Democratic Party, and is designed to make the debt issue an albatross around the President’s neck for his re-elect bid in 2012. At this point McConnell is willing to give some ground, and wager that Obama can be beat in 2012.
The President appears lukewarm, at best, to the McConnell gambit, recognizing the political danger inherent in that scheme. It appears that the President feels that he is making political gains at Republican expense, and is not eager to let them off the hook that easily. And with Eric Cantor effectively running the Republican House operation the President may be in luck.
But the measure’s failure to enforce spending cuts presents a major hurdle in the House, where rank-and-file Republicans on Tuesday threatened to reject even a $4 trillion debt-reduction plan that failed to conform to their demands.
Arriving back at the Capitol after the White House meeting, Cantor declined to comment on the McConnell plan. But, he said, “we are still at a point where nothing can pass the House.”
Nothing can pass the House! It looks like House Republicans are demanding default. With the financial contagion spreading in Europe House Republicans appear willing to buck even the business community, who recognize the dangers inherent in failure to authorize this increase. McConnell’s plan will bring the fight on fiscal matters to where it has always belonged, the appropriations process in Congress. The Republicans control the House, and can shut government down if agreement cannot be reached on adequate deficit reduction. Let us move to that battlefield, and stop toying with the full faith and credit of the United States. As far as the President goes McConnell may be as good as it gets for him, and if that is the case he should agree. Ezra Klein over at the Washington Post summed it up quite nicely:
I should say that I don’t know why House Republicans would go for it and it seems clear that this is going to be a big black eye for McConnell. But that doesn’t make it a bad plan. In essence, McConnell is proposing to permanently disarm the bomb that is the debt ceiling. He’d formalize the informal arrangement the parties have had in recent years, which is that the debt ceiling is used to embarrass the party in power, but it’s not allowed to threaten the American economy. If his plan passed, it’d become easier for the minority party to embarrass the majority party, but harder for them to threaten the economy. It’s win-win.
He is right about this being a Republican black eye for McConnell. The Red State blog was pretty quick to condemn the proposal:
McConnell was quickly excoriated online by tea party bloggers, with Erick Erickson of the Web site RedState.com blasting the plan as “the Pontius Pilate Pass the Buck Act of 2011.”
Ouch! Plenty of politics being played, but McConnell has deftly managed to protect Republican political interests while getting us out of the default danger zone. That is why the proposal is a huge betting underdog.