Apocalypse soon: Slim but growing chance that Congress might have to raise debt ceiling again ... before next year's election

This was, of course, The One’s nightmare scenario, a prospect so politically horrific that he refused to agree to a short-term debt-ceiling deal this past summer even while he was busy warning people of an economic catastrophe if no deal got done. He would have rather hit the ceiling and taken his chances with blaming the GOP for the aftermath than make a deal averting disaster but forcing a new round of negotiations before the election.

The bad news for Obama: The killer asteroid’s been spotted in the night sky. The good news: The only way it can make it to Earth is through circumstances that will have already finished off O’s re-election bid by the time it gets here.

Let’s do the math: If the super committee agrees to $1.2 trillion in deficit savings, the debt limit would rise by $2.1 trillion since the Budget Control Act passed in August; if it agrees to $1.5 trillion in deficit savings, the limit would rise by $2.4 trillion. The $300 billion difference is significant – amounting to enough funds for the Treasury Department to pay America’s bills for roughly a month or two.

While economists in August expected the minimum debt-ceiling increase to be sufficient through 2012, analysts now caution that the situation has changed. The European sovereign debt crisis has escalated and its outcome is far from clear. In the United States, the San Francisco Federal Reserve this week put the odds of a double-dip recession in the first half of 2012 at 50-50.

Unlike the financial and economic crises of 2008, which brought Democrats and Republicans together momentarily, a debt-limit fight in a campaign year would be a “very, very messy thing,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan organization dedicated to fiscal responsibility.

In other words, if the economy tanks again next year, tax revenue will dry up and the feds will be forced to borrow more than they projected, thus accelerating the debt to a pace that’ll force another raising o’ the ceiling before November 2012. But of course, if the economy tanks again next year, Obama’s campaign will be all but finished regardless of what happens with the debt. I wonder what negotiations would look like in that situation, with O’s defeat seemingly a fait accompli. The GOP would have an incentive to drive a hard bargain on the assumption that they’d soon be re-negotiating with a Republican president, but they’d also be paranoid that if they drive too hard a bargain and we hit the ceiling, Obama might be able to turn public anger against them and snatch victory from the jaws of defeat. (The GOP nominee would be in the same bind, of course. Imagine the panic inside Team Romney over having to stake out a clear position on that.) Precisely because they’d expect to win big in November, I think the GOP would be amenable to a short-term deal raising the ceiling for a few months in return for token cuts or, if need be, for no cuts at all. Obama would counter by doubling or tripling down on “tax the rich” proposals in order to try to harness the populist wind before the election, but if the GOP calls his bluff by offering a clean debt-ceiling hike, I don’t know what he’d do. That would destroy his strategy of trying to blame them for obstructionism; even if he came up with a clever counter-proposal, Boehner could simply dismiss it and play the Mr. Agreeable role by insisting on a clean hike, secure in the knowledge that O would soon be out of office and Republicans could build a deficit reduction deal to their liking.

Of course, none of this matters if the Super Committee reaches a larger-than-expected deal for $1.5 trillion in savings … which pretty much nobody expects will happen. The latest GOP offer is for a scaled-down package of $643 billion in (some) new revenue and (mostly) spending cuts with no major changes to either the tax code or entitlement programs. The Democratic response: “Do we look stupid?” Since they’re not being asked to relent on the lapsing of the Bush tax cuts, the only things they’d be giving up by agreeing to a deal this modest are (a) bragging rights with their base, which will probably throw a tantrum if they don’t insist on a one-to-one mix of cuts and new revenue, and (b) the all-important talking point of blaming those darned wingnuts when the Committee implodes, despite the fact that the GOP’s made two concrete offers now and Jeb Hensarling says they’d be willing to listen to more even if they involve higher revenues.

There’ll be more Super Committee news this weekend, but just so that you’re in the right mindset about what a travesty this whole process is, go look at this graph from Veronique de Rugy about how much the vaunted “automatic cuts” would take out of the federal budget if they went into effect. Our political class is a disgrace.