The Debt Ceiling Vote: Understanding the “TARP Dilemma”

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Reuters

Fact: Almost every Republican in Congress is against voting to raise the debt ceiling unless coupled with massive cuts.

Fact: Almost every Republican in Congress thinks the debt ceiling will be raised, even if it doesn’t come with the massive cuts they’re seeking.

 “The idea that this is catastrophic is wrong,” Sen. Tom Coburn, an Oklahoma Republican, said Sunday on NBC’s Meet The Press. “What is catastrophic is to continue to spend money we don’t have.” Still, Coburn insisted that the “debt limit doesn’t really mean anything because we’ve always extended it.”

In other words, somehow, magically, without most GOP votes, the debt ceiling will pass. There is a group of Republicans, like Coburn, who have always voted against debt ceiling increases. The problem is that with the influx of Tea Party freshmen, the “no” group may now be large enough to impede passage. Coburn and his ilk had the luxury of standing for their ideals while the vote was carried on the backs of their colleagues. This time around, that pool of moderate Republicans in dwindling – especially in the House.

Let’s call this phenomenon the TARP dilemma. In the first vote on the bank bailouts, almost no Republicans voted for the measure and it failed; the Dow plummeted 778 points. The market scare convinced enough Republicans to switch their votes on a second attempt the next day, and TARP passed.

House Speaker John Boehner’s challenge on the debt ceiling will be to avoid the market-plunging first vote — or, even worse, a total impasse. To that end, Republicans have been pushing Democrats to agree to attach deep budget cuts to the debt limit vote. Some sort of deal looks likely. But it doesn’t help that Coburn is the only Republican out there right now saying everything, including taxes, should be on the table.

On Boehner’s right flank, there are still members of the party content to let the debt ceiling vote fail, much to the horror of the business community. “As history suggests, the strategy of creating a debt-ceiling boogeyman works every time,” wrote Senator Mike Lee, a Utah Republican, calling on senators to “aggressively oppose” raising the debt ceiling without budget balancing amendments, in an op-ed in the National Review today. “Having maxed out one card, they habitually demand another, using threats of fiscal Armageddon to extort taxpayers into giving them ‘just one more’ … The debt-ceiling charade must come to an end.”

This complaint may seem outlandish, but it’s actually helpful to Boehner’s negotiations with Democrats: The Speaker can claim that without concessions, he has no hope of controlling his caucus. There’s no such hard line among Democrats. We’re not hearing much from the left on this issue and polls show that President Obama might have wiggle room to move farther to the right. A CBS News/New York Times poll on Friday found that just 20% of voters think Obama has compromised too much in budget deficit negotiations and 35% said he’s compromised too little. As some hecklers sang to Obama last Friday: “We’ll vote for you in 2012, yes that’s true/Look at the Republicans – what else can we do.”

Still, Democrats should remember that even though TARP was passed under a Republican President with bipartisan votes, they have borne the brunt of the political blowback.

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