Debt Deal Back on Track After Derailment

Bloomberg and other news services are reporting that a “stop the default meteor from hitting the planet” deal is back on. According to sources on the Hill, the current outline a short-term deal in which the government stays open through January 15, and the authorization to borrow is pushed back till February 7 with a budget that supercedes the short-term deal due in by December 11.

So what happened yesterday, and more generally? As we’ve said, various whip counts based on public statements of Republicans members have shown that Boehner has had the 19+ Republican votes needed to join House Democrats to pass a clean continuing resolution, which also meant he’d also have enough votes to pass a clean bill to lift the debt ceiling. Obama has been insistent that he would not make policy concessions based on the use of the debt ceiling or shutdown threat, that it makes it impossible to govern. The Democrats wanted a December budget because a new round of spending cuts kicks in under the sequester on January 15 and they want a budget wrapped up before then.

And the Republicans have lost big from the shutdown and they know it, even if the Tea Party faction is trying to tell itself otherwise.

So why did everything blow up yesterday? The short form is the Senate was working on passing a deal. The House Republican caucus knew that if a bill passed the Senate with 70 or so votes, it would be pretty much impossible for the House not to pass it. So Boehner tried to gain control of the dynamic by passing a bill in the House first so as to get something a little more Republican-favorable than the Senate bill to the Senate to put them on the back foot. But he couldn’t do it. He tried first moving terms to the right and to the left and various Republican factions balked along with some Democrats.

So as of now, things look to be on track, with the goal of getting a deal inked today or at worst early tomorrow.

But, but, but….what about the Tea Party? Well, the Republicans who vote to support the debt ceiling increase in so-called “deep red” districts know that they might have to deal with a challenge from the right. But the rest of the party knows they’ve been damaged by this adventurism. And public opinion is much more sensitive to propaganda than most people want to admit to themselves. I saw it directly when I compared public sentiment about the war in Iraq in the US versus in Australia in early 2003. The tone and placement of the stories could not have been more different, and it was reflected in polling results (even though Australian PM John Howard joined the “coalition of the willing,” polls were 94% against the war on the eve of the US invasion, which is as close to unanimity as you ever see in polling). There are examples (for instance, in Serbia) where a 180 degree change in public reporting produced a massive shift in poll results in six weeks. Fox News is very powerful with Republican voters, both mainstream and Tea Party. If Fox starts moderating its tone, that will be a sign that powerful advertisers have decided the Tea Party needs to be leashed and collared. We’ll see if that happens in the coming weeks and months.

Another point a DC sources made is the ugliness of this fight is the result of the elimination of earmarks, which is the way members would get funds committed for spending in their district, like repairing bridges or funding foreclosure relief. Even though it’s become conventional to deride earmarks as pork, the job of Congress is to approve spending, and the job of individual Congressmen is to do things that are good for their district. Even though ending earmarks was depicted by liberal reformers as a way to end pork, it’s actually anti-democratic. Democracy is a messy tug-of-war over what our collective priorities should be and how they should be implemented and funded. Earmarks were a way of getting district-level needs into the mix. Without them, it’s harder for Congressmen to tell voters what they’ve done for them lately, and that thus winds up serving the narrative that the Federal government is just an apparatus that takes money from people and doesn’t deliver enough in the way of benefits.

But the other issue is that even though it now looks as if we will have a short-term deal sooner rather than later, we’ve also just been through a process that has left a lot of bad feelings on almost all sides. This is going to make meeting that December budget deadline a difficult task. Stay tuned.

This piece is cross-posted from Naked Capitalism with permission.