Debt-ceiling negotiations: Why Republicans are winning.

Who's winning, who's losing, and why.
June 24 2011 1:24 PM

Adults Gone Wild

Why are the debt-ceiling talks going so badly for Democrats?

Speaker of the House John Boehner and House Majority Leader Eric Cantor. Click image to expand.
Speaker of the House John Boehner and House Majority Leader Eric Cantor

The way Rep. Brad Miller sees it, his fellow Democrats started the debt-ceiling crisis by accident. In December, after the announcement of the deal that would temporarily keep the rates set by the 2001 and 2003 Bush tax cuts, the vice president and the director of the White House Office of Management and Budget met with House Democrats (Miller represents North Carolina's 13th District) for the hard sell. Democrats still ran Congress, for a few more weeks, but had barely been notified of the deal; they "had to read about it on right-wing blogs." Tough luck: They were told they had to vote for it anyway, without more conditions, or they'd kick off a double-dip recession.

David Weigel David Weigel

David Weigel is a reporter for Bloomberg Politics

"I argued that we should not vote to extend all the Bush tax cuts," Miller said. He argued not to give Republicans "everything that they would want in any potential compromise on the debt ceiling and make the discussion entirely about spending. It might have been a good idea to put in a provision that the cuts in the deal were revoked if we hit the debt ceiling. We didn't have anything like that, and I voted no. I think, with the benefit of hindsight, that was the right vote."

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Were Democrats giving up leverage? Were they signing off on the GOP's ideas? The White House dismissed all that at the time. "Once John Boehner is sworn in as speaker, then he's going to have responsibilities to govern," said President Obama in a December press conference. "You can't just stand on the sidelines and be a bomb thrower." In other words: This won't get out of hand.

That assumption doesn't hold up very well in the wake of House Majority Leader Eric Cantor's decision to bail on the debt-ceiling talks, with Boehner's sympathy ("I know the frustration he feels"). Sure, some grand debt compromise is possible, even if the players are increasingly, nervously discussing the impact of a possible default. But all of the discussion about a deal is happening on Republicans' turf.

The issue that Cantor cited on his way out the window was tax increases. It's taken for granted that there won't be any tax increases in a deal, even though the White House wants them—even though that December tax deal moved the day of reckoning forward. The tax deal cost around $860 billion, giving up most of that in marginal tax revenue, around an eighth of it with a payroll tax cut and about one-sixteenth of it in unemployment benefits. The rationale for the deal: It would prevent an economic backslide. Now even the people who cut the deal don't think that worked.

Discussion on the debt has come down to a couple of minor disagreements between Republicans. Democrats are basically sidelined, making catty comments and issuing press releases, as Republicans decide whether the deal can include the elimination of a few tax breaks—ethanol's the big one—or whether killing those breaks without lowering taxes somewhere else would be a violation of anti-tax pledges.

"It's a game of chicken," said Rep. Peter Welch, a Vermont Democrat, who got most Democrats to sign on to a petition in support of a "clean" (no cuts, no bargains) debt limit vote, and watched that totally fail to matter. "They have the leverage because they're saying no."

The debate's not over tax hikes—Cantor and Boehner have now ruled them out completely—but over tax breaks. Any Democratic optimism about a deal comes when hard-line Republicans say they could support ending some tax breaks without asking that their savings be applied to tax cuts.

"There's $1.2 trillion if you total the tax breaks," said Rep. Mike Quigley, D-Ill. Yet "they were never given performance criteria. You have no idea if an oil tax break works! You have no idea if a tax credit for a second home, something that wouldn't have been bought without that tax credit, creates a job. You have to deal with these tax breaks to make the math work." And this is the progressives' only argument that doesn't involve further temporarily tax cuts, like yet another payroll-tax holiday.

A little while after Cantor's announcement, Rep. Doug Lamborn, R-Colo., one of the conservatives who won his seat with the help of the Club for Growth, said he'd be willing to vote to eliminate tax breaks even if it violates the wording of Grover Norquist's anti-tax pledge."I respect and admire Grover Norquist," said Lamborn. "But I'd have to think, looking at the overall debt package, it would satisfy even the strictest tax cutter if we're cutting spending all over the place."

I posed the same question to Republican Study Committee Chairman Rep. Jim Jordan of Ohio.

"We're not for raising taxes, period," he said. "I don't see how raising taxes is going to create jobs." Referring to one of the tax breaks Democrats have marked for execution, he added: "I still want someone to tell me how raising taxes on gas companies will lower gas prices."

Yet Democrats have a killer argument for debt reduction that they can't, or won't, deploy. Two months ago, a Washington Post/ABC News poll found that 72 percent of Americans favored raising marginal tax rates on people making more than $250,000. Only 21 percent of Americans favored Medicare cuts; 42 percent favored defense cuts. It's a soft target that is, for some reason, politically impossible to hit.

On Thursday, there was another reminder of how Democrats are finding themselves on the losing end of debt-limit politics. Chris Van Hollen, the highest-ranking Democrat on the House Budget Committee, reminded reporters that Boehner had talked about the painful debt vote—a vote so unpopular that the party out of power often opposes it—as an "adult moment" for the GOP. Miller laughed at the characterization. "I don't think this is an adult moment at all," he said. "They're throwing crayons at each other."

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