Over at The Plum Line, Greg Sargent has an important post about the way the debt ceiling fight could end without triggering a cash-crunch crisis for the federal government. Greg thinks is could be one of two possibilities.
First, the House GOP could agree to a version of the plan first proposed by Senate Minority Leader Mitch McConnell (R-KY) that helped solve the last debt ceiling fight in August 2011. That plan effectively transfers the ability to raise the government's borrowing to the president. Greg notes that this time the plan would be approved over the legislative equivalent of McConnell's dead body, that is, over a filibuster McConnell himself would lead. Greg also notes, however, that there may well be enough Senate Republicans willing to join the 55 Democrats to make this happen.
Second, Greg says that the same combination of Democrats and some Republicans in the House that voted for the fiscal cliff deal would likely approve the McConnell plan or a clean debt ceiling increase if the GOP leadership allowed the vote to take place.
Politico had an outstanding but truly bone-chilling story yesterday about how appealing the prospects of a default and a government shutdown may be to House Republicans.
According to the piece by Jim VandeHei, Mike Allen and Jake Sherman, forcing a default by not raising the debt ceiling and shutting down the government by not passing a continuing resolution may be the preferred ways to go by a majority of the House GOP caucus no matter what that would mean to the U.S. economy, the Republican Party's overall approval rating, the GOP's prospects for a Senate majority in 2014 or a Republican winning the White House in 2016.
To those of us who have watched Washington operate for a while, this obviously sounds like totally insane, crazy self-destructive behavior by the House GOP.
But it would be wrong to dismiss it out of hand. From the conversations I've had with Republicans House members and staff since the 2012 election, the threats, are real and make a great deal of political sense no matter how obnoxious and damaging it otherwise would be.
The U.S. Treasury yesterday dashed the hopes and dreams of many in the blogosphere when it announced that neither it nor the Federal Reserve saw the idea of a $1 trillion platinum coin as a realistic alternative to raising the debt ceiling.
Actually, the Treasury statement was much stronger and more definitive than that. Treasury spokesperson Anthony Coley said "Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt ceiling." In other words, neither the Treasury, which would produce the coin, nor the Fed, which would exchange the coin for cash, are wiling to enter into the transaction. That means that, even if minting and selling the coin is legal, neither the buyer nor the seller are interested in doing the deal. That effectively eliminates the trillion dollar coin option from the debt ceiling debate.
Two reports over the past two days by the most credible organizations that do budget analysis prove that, no matter what they say publicly, congressional Republicans don't actually give a damn about reducing the federal deficit or lower government spending.
Each report shows that, for the GOP, the deficit not only comes in no better than second every time, it's not really a serious consideration.
The first report, produced by the excellent analysts at the U.S. Government Accountability Office (GAO) and released on Monday, shows that last August's GOP-induced fight over raising the debt ceiling increased federal borrowing costs, that is, spending on interest, by a minimum of $1.3 billion. Here's the money quote:
There are two money quotes in a column by Betsey Stevenson and Justin Wolfers on Bloomberg about the extreme debt ceiling threat House Speaker John Boehner (R-OH) unilaterally decided to issue a few weeks (ht Mark Thoma):