debt ceiling

Roll Call is reporting that the White House has decided to delay making the formal request to Congress that it previously announced it would make today for the third increase in the federal debt ceiling that is allowed by the Budget Control Act, the debt ceiling increase deal enacted in early August.

This means that the 15-day period during which Congress may consider a resolution of disapproval will not expire while the House and Senate are out of session and that representatives and senators who want or need to vote against the $1.2 trillion increase in the government's borrowing limit will have an opportunity to do so.

As I posted several days ago, there is no practical effect of this change because the debt ceiling is virtually guaranteed to be raised whether or not there's a vote. The disapproval legislation will be vetoed anyway in the unlikely event that both houses adopt it, and there isn't a two-thirds majority in either the House or Senate to override.

There was a flurry of activity in the media and on Wall Street yesterday after the White House let it be known that it was going to request a $1.2 trillion increase in the federal debt ceiling on Friday.

I received a number of calls from reporters and clients wanting to know if this was just a bureaucratic exercise of the government's responsibilities or a power play by the Obama administration that would end up angering Congress and starting yet another round of hyperbolic and hyperventilating fights over the budget.

Everyone please take a deep breath. This may be fun to talk about but doesn't change the very likely outcome -- an on time increase in the debt ceiling -- in any way.

Here are the basics:

1. To request this increase, the Obama administration is using the procedure agreed to in the Budget Control Act that was enacted in early August. This is the same law that created the anything-super committee that so completely failed to agree on a deficit reduction plan.

Long-time CG&G visitors may recall that My Beautiful and Talented Wife (The BTW) is a professional actor who tends to think of the world in theater terms. As I continued to describe the events of the past few weeks to her, she kept saying that it reminded her of the plot of something by William Shakespeare (or Game of Thrones on HBO, but that's a different post).

The question was which of Shakespeare's plays was most appropriate.

As this article by renowned University of Texas Professor Jamie Galbraith indicates, Much Ado About Nothing might be right.  Given the fact that most of the action took place in July and August and a week or so later and is still hard to imagine, A Midsummer Night's Dream might be correct.  The Tempest is an obvious choice.  And The Comedy of Errors is just too good to pass up without further consideration.

Stepping back from the details of the debt limit deal just reached, I think this was a productive summer in Washington.  In July in most years, nothing gets done in Washington.  This July, there was some progress made to restrain the growth of the federal debt.  Normally, as a nation, we are preoccupied with something utterly inconsequential during the summer.  At least over the last month, our elected representatives were finding ways to negotiate with each other and reach an agreement on something of consequence. 

Did we do ourselves proud with this extended soap opera?  No, the need to use the debt ceiling as the forcing event and the juvenile way that the negotiations sometimes played out certainly didn't elevate our standing in the world.  But I'd rather have the deal than the standing at this point.  And there really was little concern that the federal government would default on its explicit debt.

Don't make nonrefundable plans just yet for a vacation under the assumption that the debt ceiling agreement that has been hinted at the past 24 hours is, in fact, a done deal.  

I'm hearing that there is significant opposition from the tea partiers in the House who (1) don't like some (taxes and military spending) of what's in the current deal and (2) think that they can hold out for more concessions from the White House by waiting until Tuesday or Wednesday.  As of now, there's no indication at all that House Speaker John Boehner (R-OH) has the political gravitas with his caucus to simply demand that it vote for any deal.  The same dynamic that forced Boehner to change his plan earlier this week to please the tea partiers is still in place.

House Democrats aren't that happy about the deal either so House Republicans may not be able to count on them to make up for for the tea party missing votes as Boehner seems to have been assuming.

In other words...It's not over yet.