Ending the government shutdown by scheduling a new crisis

Four days ago, as realistic GOP offers started to circulate for ending the impasse in Washington, I asked in a blog post, “Have Democrats left themselves room to accept anything short of complete capitulation by the GOP?�

Republicans are asking that same question now, after Senate Majority Leader Harry Reid (D-Nev.) and President Obama rejected a proposal that Sen. Susan Collins (R-Maine) had floated with the apparent support of half a dozen Democratic colleagues (who issued a statement later saying the proposal wasn’t yet to their liking). As Minority Leader Mitch McConnell (R-Ky.) put it, “It’s time for Democrat leaders to take ‘yes’ for an answer.�

It’s not as easy as that, though. Getting to yes from both sides (or all three, if you believe Obama’s interests are distinct from congressional Democrats’) may take a scaled-down version of the “grand bargain� on spending, taxes and entitlements that has proved so elusive to the current iteration of divided government. More likely, though, it will take both sides recognizing that they have to tee up another potential crisis further down the road.

Obama and Reid’s publicly stated goal is to reopen the government and raise the debt ceiling without paying “ransom� -- that is, making a concession on the 2010 healthcare law or any other disputed policy. But it’s also clear that they’re willing to make concessions afterward; in fact, they have no choice. They’ll have to offer Republicans something to get rid of the ever-deeper “sequester� cuts they despise.

Based on what’s happened in recent years, most Republicans aren’t willing to trust the threat of another round of sequester cuts to force Democrats to bargain. So while they’re willing, even eager, to reopen the government and remove the threat of a catastrophic default, these lawmakers still need to have some assurance that the political price they’ve paid thus far won’t be for naught.

Granted, some of the comments they’ve made Sunday and Monday have sounded like pleas for mercy, which only invites Democrats to remind the GOP who picked this fight. (One example: Arizona Sen. John McCain said on CBS Sunday: “Democrats, they better understand something. What goes around comes around. And if they try to humiliate Republicans, things change in American politics, and I know what it’s like to be in the majority and in the minority, and it won’t be forgotten. Now is the time to be magnanimous and sit down and get this thing done.�

But I digress.

The two sides seem to be closing in on a deal, despite the well-publicized hiccups. The House GOP leadership is expected to bring up more rifle-shot spending bills for popular programs and a behind-covering debt ceiling bill soon, but they seem to recognize now that nothing short of funding the entire government and raising the debt ceiling will be enough to get Democrats to the negotiating table. Senate Republicans recognized that some time ago.

The sticking points are the conditions to place on those talks. And this is where the grand bargain problems come in. Democrats want to do more than just suspend the sequester cuts; they want to increase discretionary spending in the short term to boost the economy. They’re willing to trim some entitlement programs to create more budgetary headroom for spending on infrastructure and research, but they insist that higher tax revenues be part of the equation. So they resist any effort to keep tax hikes or spending increases out of the coming negotiations. And while they’ve already accepted the House’s proposed spending limits in the stopgap funding bill, they want to keep those limits in place as briefly as possible, while keeping the government from running up against its borrowing limit for as long as possible.

Republicans, meanwhile, see a real possibility that the shutdown fiasco may actually undo some of the gains they made in 2011, when the sequester was enacted (as part of the last debt ceiling deal). Some are willing to restructure the sequester to boost defense, either by cutting nondefense discretionary spending or, as House Budget Committee Chairman Paul D. Ryan has proposed, trimming entitlement costs. What they really don’t want to do is simply lift the spending caps in the 2011 law, which would allow more deficit spending.

There’s also the question of whether the deal will include something cosmetic for the GOP -- for example, requiring the new insurance exchanges created by the 2010 healthcare law to verify the eligibility of subsidy applicants. Federal regulations already require the exchanges to do so, although Republicans have argued that the regulations don’t go far enough.

It’s hard to see this one ending without the two sides repeating what they did two years ago: agreeing to set a new deadline for Congress to make tough decisions that lawmakers haven’t been willing to make, and imposing some consequences for not making those decisions. After all, that’s what Democrats and Republicans have been proposing all along, implicitly, with their calls for funding the government and increasing the debt ceiling temporarily.

The previous years’ results and the yawning chasm between the two parties’ economic theories suggest that the next round of negotiations will yield something small and incremental. And maybe that’s the only realistic result, despite the need for a thorough overhaul of the ridiculously complex tax code and the serious long-term problems fiscal problems in Medicare and other entitlements.

But if that’s the ultimate destination, it will only amplify the public’s dissatisfaction with the path Congress has been taking to get there. What point was served by the partial shutdown, which cost the economy hundreds of millions of dollars daily? How did Congress help the federal government’s ability to attract investors by threatening to not pay at least some of its creditors?

If it’s all been Kabuki theater, why did we have to pay so much to watch it?

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