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January 02, 2013

Three Reasons to Doubt Obama Will Hold Firm on the Debt Limit

Posted in: Barack Obama

President Obama again re-affirmed his line in the sand over the debt ceiling saying, “while I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed.” While his statement sounds firm there are three big reasons to be concerned he will not stick to it.

1) Failure to stick to previous lines in the sand – In past negotiations Obama has failed to stick to his previous lines in the sand. Obama did not stick to his demand that the Bush tax cuts end for income over $250,000. Similarly, despite saying he would not play games with the debt ceiling, Obama seemed to treat it as just another bargaining chip when trying to get a deal with John Boehner.

2) Dismissing unilateral action – The Obama administration has dismissed unilateral action to address the debt ceiling. Doing something like invoking the 14th amendment would probably be the easiest way to defuse the fight, but the administration has declared that “not an option.” Even if the Obama team didn’t think it was a legally viable solution, by completely removing the threat it has weakened its bargaining position.

3) Allowing the creation of a new super cliff in two months – When VP Joe Biden took over the negotiations from Sen. Harry Reid the major concession he made was to have only a two month delay of the sequestration cuts instead of a one year delay. From the Huffington Post:

Perhaps the most important concession he wrangled from the administration, which Reid had been unwilling to make, was a two-month extension of the sequester, automatic cuts to defense spending and domestic programs that were supposed to be triggered Jan. 1. Reid wanted much more, worried that the two-month period will simply set up another colossal showdown that will also rope in the debt ceiling and funding for the government. “The deal itself is OK, but sets up Democrats for [a] worse fight and strengthens Republicans’ hand for what they really want: cuts,” said a Democratic source close to Reid. “Biden gave away the store on timeline. Two months and we’re back at this and in worse shape.”

This is a very troubling concession because two months is also when the debt limit should be reached. While Obama says he will not negotiate over the debt limit, he has said  he plans to negotiate over the sequestration cuts, which thanks to the deal reached by the administration will now acquire at the exact same time. Obama has potentially given himself a way to save face by claiming to only negotiate over the sequestration cuts even though he is really also negotiating over debt limit.

Photo by James O’Malley under Creative Commons license.


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