An Exit Strategy for Republicans

Like many other Americans and observers around the world, I find the ongoing spectacle in Washington both perplexing and distressing. But having seen the President follow the advice of our mighty blog for choosing the next chair of the Federal Reserve, I feel emboldened now to recommend a course of action for the House Republicans.

Problem 1 is that the debt-ceiling vote has always been, and always will be, a political charade. The real decision is how much the government is going to spend on programs and how much it is going to collect in taxes. Once Congress has made those two decisions, if spending exceeds taxes, of course the government needs to borrow more. The idea of holding a separate vote on borrowing, as if it was a separate decision from spending and taxing, serves only one purpose– allow representatives from the minority party to grandstand as if they were actually doing something about the deficit.

But what if representatives start to take their rhetorical posturing seriously, or repeat it often and fervently enough that the more gullible or ardent among their supporters won’t let them vote for an eventual debt-ceiling increase once the games are over? If the Treasury actually fails to honor promised interest payments, or fails to make Social Security disbursements on time, I think all reasonable people can agree the result would be an economic disaster, not to mention political suicide for the Republicans.

And that’s the basic problem with trying to use the debt ceiling as a bargaining chip with which to achieve some real objective. Intellectually, the position simply cannot be defended. If your bluff is called, you’re left with no good options.

And so what I expect to see this week is the Republicans to cave, trading their vote on the debt ceiling for whatever fig leaf might offer meager political cover for having taken us to this point and then turning back.

Let me suggest to my Republican friends a bolder alternative. Seize the day as an opportunity to renounce this weapon of self-destruction. The President says he wants a clean debt-ceiling increase. So give him exactly that– a stand-alone debt ceiling increase, say $2 trillion. No strings attached, no riders, just do it.

What would Republicans gain from this? Well, one obvious thing– it would help them to avoid getting trapped in a self-destructive endgame for at least another year. For another, it would give them an intellectually defensible claim with independents that they are trying to find compromise and common ground, by giving the President exactly what he asked for, getting nothing in return.

And while I’m making suggestions that won’t be followed, here’s another. The President says he wants a clean continuing spending resolution. So give him this too. Say with a 60 day time limit, but otherwise no strings, no riders, just do it.

The benefit of that for Republicans? See point 1 above.

After those two votes, then begin the real work. I propose a series of individual spending bills, not in the recent fashion of some huge unwieldy patchwork coalition, but rather as finely broken down as possible. What’s the budget for defense? Let’s have the number, vote it up or down all by itself. And so on, down the line.

Here’s one final reason the Republicans might want to consider such a strategy– it’s the way grown-ups are expected to behave.

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About James D. Hamilton 244 Articles

James D. Hamilton is Professor of Economics at the University of California, San Diego.

Visit: Econbrowser

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