The Unity Is Over: Congress Returns to Debt Ceiling Fight

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Osama bin Laden is dead and gone. Republicans and Democrats this week came together to rejoice and pass resolutions praising U.S. troops and the intelligence community. Even Donald Trump called a truce.

In the wake of the 9/11 attacks, Congress and the country remained unified for months – some might argue for years. In the wake of bin Laden’s death, however, the unity has been much shorter lived. On the floor of the House, both sides spent much of Tuesday slugging it out over a couple of bills to repeal certain health care reform provisions. And later this week, the Senate is expected to vote on dueling 2012 budgets designed not to legislate, but to lay political traps for the opposing party.

With the 2011 budget finally dispensed with, Congress will now turn to what will likely be the final piece of major legislation before the 2012 elections: deficit reduction on the back of the debt ceiling vote.

Heading into Easter recess, both sides laid out their first offers. Republicans demanded that the debt ceiling vote come with significant cuts and, possibly, a vote on a balanced budget amendment. Democrats insisted that increased tax revenues be put on the table.

In the two ensuing weeks, though, Republicans went home to find constituents angry at House Budget Committee Chairman Paul Ryan’s proposal to reform Medicare and Medicaid. TV images from rowdy townhalls helped unite the Democratic base, while the business community, led by Wall Street and the Chamber of Commerce, issued increasingly dire warnings to the GOP not to play politics with the debt ceiling. “We’re urging our Republican colleagues to listen to their constituents, to listen to the people of this country,” Rep. Rob Andrews, a New Jersey Democrat, told reporters Tuesday. “Instead of being outside the mainstream of that consensus, join us in the mainstream. Join this consensus.” Republican momentum has faltered as the party’s leaders enter into the first round of negotiations. And let’s be clear: this is still just the first round.

By the Treasury Department’s estimates, the debt ceiling will have to be raised by August 2, which gives negotiators roughly three months to work out a deal. Congress never does anything early. In fact, Democrats worry that House Speaker John Boehner might drag out the process, as he did the budget negotiations, with a series of short-term extensions. Much to the horror of the business community, House Majority Leader Eric Cantor said Tuesday he might bring up a clean debt ceiling vote just to prove it would fail without significant cuts.

But while the prospect of shutting down the government is a serious one, the repercussions of allowing the debt ceiling to lapse would be more dire. Democrats worry short term extensions would create so much market turmoil that the fledgling economic recovery could be crushed. “The idea that the United States would take the risk, people start to believe we won’t pay our bills, is a ridiculous proposition, irresponsible, a completely unacceptable basic risk for us to take,” Treasury Secretary Tim Geithner warned last week. He extended the deadline Monday, but cautioned he was already using “extraordinary measures” and that Congress should vote swiftly.

At the same time, several moderate Democrats, many of them vulnerable incumbents up for reelection, have said in the past two weeks that some kind of deficit reduction package must be attached to the debt ceiling to win their vote. While the official White House line has been to insist the debt ceiling be passed in a stand-alone vote, it has been increasingly apparent that they will be forced to agree to something that addresses spending. What remains to be seen is whether that’s a grand bargain with serious long-term solutions or a more modest package.

This Thursday, Vice President Joe Biden, whom Obama has tasked with leading negotiations, is expected to convene his first meeting with House and Senate negotiators. But, more immediately, both sides are eagerly expecting Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, to unveil the results of months of work by his bipartisan working group, the so-called Gang of Six. There is no question that the final product must be bipartisan and Conrad’s discussions have been the only game in town to that end. If the Gang’s three Republicans — Oklahoma’s Tom Coburn, Idaho’s Tom Crapo and Saxby Chambliss of Georgia — sign on, the deal could become the basis for a deficit reduction package.

Though Conrad hoped to have something this week, Crapo and Conrad both told reporters yesterday that the Gang is still in the thick of discussions and not to expect anything soon. Conrad presented his ideas to the Senate Democratic Caucus on Tuesday, but Senate Majority Leader Harry Reid declined to endorse them. It’s not clear the package will reach a vote, even if they strike a deal. ““I’m running out of time,” Conrad told reporters Tuesday.

So, what does this mean for Washington in the next few weeks? A lot of gabbing but not a lot of doing. The first milestone to watch for will be Conrad’s deficit reduction plan – if he gets one. The second will be a proposal from the Obama administration, which could come as late as June. In the mean time, both sides are returning to their corners.

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