-UPDATE 2- Obviously I hope my prediction is wrong. Greg Sargeant outlines a possible maneuver the Dems might use. It sounds pretty good to me. It’s certainly devious, but its the type of gamesmanship that was necessary to pass health care.
-UPDATE- After I posted this, some new evidence came out (warning: it’s a link to the awful Jennifer Rubin) that makes it look like my prediction below may well, sadly, be true.
-ORIGINAL POST- I just had my Leamus moment. The quote above comes from John le Carre’s spy novel masterpiece, The Spy Who Came in from the Cold. Leamus goes through most of the novel with a particular set of assumptions, and by the end they are upended completely in an instant.
Likewise, I am now reasonably sure** I know how the debt ceiling crisis will end. And it just hit me like a ton of bricks. As recently as a couple days ago, I told Stendhal that I truly had no idea know how things would shake out. Default or not? Credit downrating or not? Long-term deal or short? Any new revenue or none?
So here’s how it will work. Apparently this weekend was a deadline of sorts. While it’s been pretty well publicized that Aug. 2 is the day the U.S. will cease to be able to pay its bills without raising the debt ceiling, slightly less known is that due to the procedural requirements of Congress, this weekend is when bills were going to need to be on their way to becoming laws in time for the law to take effect before the Aug. 2 default occurs.
The latest news is that as of late Sunday, there is still no deal. So what will happen? The House Republicans have enough votes to pass their own bill. Of course, they’ve already passed one: Cut, Cap, and Balance. The House GOP could stick with that, but they will more likely pass a new one within the next 24 hours. This will send to the Senate a short-term bill that raises the debt ceiling but also includes draconian cuts intended to shift wealth from the poor to the wealthy and – of course – there will be not a dime of new revenue.
Then, one of three things will happen:
(1) The Senate could modify it somehow, in which case it goes back to the House, but there doesn’t seem to be enough time for that happen and get back to the President in time. So we’d default.
(2) Alternatively, the bill the House sends might be so awful that it cannot pass the Democrat-controlled Senate. In which case the bill dies the every Republican and talking head will shout forever that the Democrats ruined everything. In this second case, we default.
(3) Or, the bill might actually be palatable enough that a coalition of every Republican senator and a few Blue Dog Democrats actually manage to pass it, in which case Obama is faced with the same dilemma that the Senate Dems faced in the second scenario. He can either sign an awful, awful bill into law and avoid defaulting, or he could veto, in which case we default.
So, in those three scenarios I just outlines, they result in (1) default, (2) default, or (3) default or not, depending on Obama’s signature. Because I still find it very difficult to imagine the U.S. defaulting, I think Obama will ultimately sign a terrible bill that the Republicans force through but the Dems decide they cannot oppose. Obama has promised to veto a bill that doesn’t settle the debt ceiling through 2013. The GOP will call Obama’s bluff. And it was the GOP strategy all along to wait until the clock runs out to force the bill through in a desperate climate in which it otherwise never would have had a chance.
**Of course I should point out that my predictions are as likely to be wrong as everyone else’s, and that I do not have a particularly good track record at these kind of things.