Debt Limit Deal: Unlikely

I'm increasingly of the gloomy outlook that we will not reach a deal to raise the debt limit.  Josh Marshall wrote a piece today at TPM that ends with a clear picture of why.  He first outlines the picture as it stands right now in the context of the press not covering the story well (to say the least).

It's been said many times. But it's never enough: the conventions of journalistic 'objectivity', as currently defined, frequently make journalists violate their biggest duty, which is honesty with readers. The top headline running now on CNN reads: "They're all talking, but no one is compromising, at least publicly. Democratic and GOP leaders appear unwilling to bend on proposals to raise the debt ceiling."



By any reasonable measure, this is simply false, even painfully so. It might be right to say they are not agreeing, that's demonstrable. But I don't think any observer -- one who has actually watched the specifics of the debate -- honestly believes that neither side is compromising. Indeed, even the firebreathers on the Republican side aren't suggesting this. Their argument is that the nature of the 'crisis' is so great that there can be no compromise on their basic demands. That is what it means when they say they will not support any new taxes as part of a global deal.



The current offer from Sen. Reid (D-NV), even if doesn't quite add up to the $2.7 trillion because of its assumptions about future spending on wars, is more dramatic and Republican-leaning than what Speaker Boehner was demanding a few months ago and has zero revenues, which has been the primary demand of Republicans from the beginning.


Talking Points Memo on FacebookIt is not partisan or spin to say that the Democrats have repeatedly offered compromises. The real driver of the debate is that the fact that Republican majority in the House can't agree to win. Even Fred Thompson is urging Republicans to declare victory and get out. But that's the point. Their leaders cannot control their caucuses. The real problem at the moment isn't that neither side's caucus can accept the other side's 'plan'. The real issue is that Speaker Boehner doesn't have the votes in his caucus for his own 'plan'.

He then goes on to express his fears, which are my own.

A week or so back I was talking to a guy who's a big time investor. The sort of person who has more money than you or I could ever imagine -- and knows all the market side of this stuff -- but doesn't have an intimate feel for Washington. And this person basically asked: What's the story? What's actually happening here? Is this theater? Are they actually going to do this? Run us off this cliff?


I hemmed and I hawed because I'd been thinking about the question myself for so long and I wasn't sure I had any good answer. And what I finally came up with was this. Yes, at some level it's a game of chicken. Something we can all understand pretty intuitively in human nature and game theory terms. But to really get what's really going on you've got to understand one key point: one of the two cars doesn't have a driver in it. Which changes everything.

We are going over a cliff indeed.

26 July 2011
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