Debt-ceiling deal: Why the GOP victory was a generational defeat for liberals.

Who's winning, who's losing, and why.
Aug. 2 2011 4:00 PM

Blackmail: It Works

Why the GOP's debt-ceiling victory was a generational defeat for liberals.

Nancy Pelosi. Click image to expand.
Nancy Pelosi

It ended with scenes straight from a Nora Ephron movie, or one of those weaker West Wing episodes with Kristin Chenoweth as the way-too-competent consultant. Gabrielle Giffords returned to the House to cast her first vote since surviving a bullet to the brain. The House and Senate passed a debt-limit deal that got the votes of Nancy Pelosi and John Boehner, Harry Reid and Mitch McConnell. The crisis concluded with a Rose Garden speech, as if someone had just won a war.

David Weigel David Weigel

David Weigel is a reporter for Bloomberg Politics

All of that obscured the truth about the debt crisis. The truth: It was completely insane. It was, as Democrats say, largely unprecedented and mostly unnecessary. It was, as Republicans say, fogged up with hype that made the politics and market moves uglier than they needed to be. The inevitable tick-tocks of the deal and the slide shows of winners and losers obscure the fact that Washington just blew two months negotiating a 10-year budget cut right before it was about to knuckle down and … negotiate the 2012 budget.

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In the final hours before the votes—269-161 in the House, 74-26 in the Senate—no one sounded completely happy. House Republican leaders appeared the most pleased. Rep. Paul Ryan, R-Wis., who will have to fight again on the budget in September, crowed that he'd gotten two-thirds of the cuts that he'd wanted over 10 years. Sen. Mike Lee, R-Utah, a constitutional scholar whose single-mindedness turned him into one of the stars of the crisis, predicted that the debt limit would never again be raised without a debate over spending cuts. Democrats were conceding all this. They just didn't like it.

"Democrats will use this on a Republican president," sighed Rep. Richard Neal, D-Mass., right before voting "no" on the deal on Monday. "You can take it to the bank. I remember a moment in the Clinton impeachment when they were interviewing [then-Rep.] Elizabeth Holtzman about the special counsel's office. She said it was never intended to be used the way Ken Starr was using it. Well, that's what happens here. Down the road, I'm sure the Democratic caucus will embrace it. And it'll make for a tone that is angrier and uglier. And then people will say, 'Oh, that wasn't what we intended!' "

Why didn't it ever occur to Democrats to use the debt-limit vote as a negotiating tactic? Partly it's that they really believed what they were saying—they never thought the debt-limit vote should be subject to politics. And if you'd paid attention to the politics of spending and debt before, nothing would have convinced you that a Sergio Leone standoff like this would pay off.

At the end of 1995, the first year of Newt Gingrich's Republican revolution, the GOP threatened to vote against a debt-limit hike unless they got policy concessions. Gingrich argued that the Treasury "has the authority to avoid default." Treasury Secretary Robert Rubin said that he couldn't make that work. Republicans rapidly lost the P.R. battle over the debt limit, especially when Moody's issued a potential downgrade threat. They conceded: The debt limit could be increased, with provisions for a child tax credit and presidential vetoes for budget line items.

That was the precedent, but it wasn't revisited for years. In the Bush era, Republicans once deemed the debt-limit hike as "passed" in another funding bill. In February 2009, Democrats simply added an $800 billion hike in the debt limit—from $11.3 trillion to $12.1 trillion—to the stimulus bill. There was a consensus: Play with the debt limit and you lose. That was true until July 2011, when Republicans played with the debt limit and won.

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