- - Monday, September 9, 2013


The debt-ceiling struggle is soon to envelop Capitol Hill, again

Congressional insiders were surprised when the Treasury Department announced that the federal borrowing limit would be reached in mid-October. They had previously thought that they had at least until November, and probably until December, to air out their many arguments before finding a workable compromise.

That won’t happen. The debate over budget levels and taxes will be jammed into September and early October, giving very little time to spare.

Some Republicans smell a rat. They suspect that Treasury Secretary Jacob Lew manipulated the numbers to move up the deadline and, in that way, force Republicans to take a hard position that might lead to a government shutdown or, worse, a default on government debt. There isn’t any evidence of that.

What is happening, though, fits a common and often-misunderstood pattern in Washington. Both sides take extreme opening positions so that the final outcome, they hope, will be closer to where they want to be. If their initial bids are too reasonable, the negotiators end up giving up too much when crunch time comes. This creates the impression, now increasingly believed, that a solution can never be found because the opposing sides are so far apart.

Don’t believe it. Yes, positioning is in full swing. For example, the White House asserts it will not negotiate anything that might be attached to a “clean” debt-ceiling bill. House Speaker John A. Boehner, in turn, recently told a fundraising crowd that he would demand at least a dollar-for-dollar cut in federal spending for every dollar increase in the federal borrowing limit that is passed. (This is a retreat from a softer position on that same topic earlier this summer.) Don’t accept that view as immutable. These are opening bids in what will be a wild set of negotiations starting soon.

Neither side wants a government shutdown or a debt default (though a minority have said they do). Congressional Republican leaders understand that they would be blamed politically if either of those happened and do not wish to destroy their already tenuous standing with the public. Congressional Democrats are also leery of these outcomes because they (and President Obama) would surely have to share blame if economic reversals resulted from such avoidable calamities.

In the end, it’s hard to imagine that the parties’ leaders will be so self-destructive that they would permit either a government shutdown or a default. What no one on Capitol Hill or the White House knows is how those things will be avoided.

More likely is a series of short-term extensions of the current budget, essentially at sequestration levels. If history is a guide, Congress and the president have been unable for years to do anything but put off hard choices or accept automatic changes for which they can escape responsibility. Extending current law, first for short periods and, eventually. for a longer period, would fit that trend.

If there’s a secret and more consequential deal being cooked up somewhere, no one has been able to locate it. We do know, and should keep an eye on, one interesting wrinkle: The Senate Finance Committee is seriously considering passing repatriation of multinational company profits that are marooned overseas because of current tax laws. The proposal would lure hundreds of billions of dollars back to the states using lower tax rates as bait. Lawmakers could claim that the windfall is not a tax increase because the money was already taxable and was simply not collected. House Republican might even accept such a plan.

That’s a long way from a deal. In the meantime, posturing for the great fiscal showdown of 2013 has begun.

Jeffrey Birnbaum is a columnist for The Washington Times, a Fox News contributor and president of BGR Public Relations.



Click to Read More

Click to Hide