GOP's "demands" for debt-ceiling hike: Approve the Keystone pipeline or repeal the ObamaCare bailout program

These aren’t demands in the sense of “pass them or we’ll walk.” These are “demands” — scare quotes — in the sense of “we’re going to force Democrats to vote them down so we can use it against them in the midterms, and then we’re going to pass a clean debt-ceiling hike.”

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Boehner’s never been willing to risk a technical default before. He’s not going to start now, in an election year when the GOP’s looking at significant gains.

Several House members told The Washington Post on Monday that Republican leaders have narrowed their list of possible debt-limit strategies to two options: trading a one-year extension for approval of the Keystone XL pipeline, or trading a one-year extension for repeal of a provision [the “risk corridor” program] of the Affordable Care Act…

A clean debt-limit extension is not yet on the GOP’s radar, though Boehner has said he would avoid default.

Other proposals, such as requesting a balanced-budget amendment in exchange for an extension, still have broad support in Republican ranks, but have been momentarily shelved, since they are unlikely to win even scattered Democratic support.

If they’re not prepared to hit the ceiling, they should at least make the process as painful as possible for Pryor, Landrieu, and the rest of the red-state Democrats up for reelection this year. Solution: Make them choke on popular populist measures like Keystone approval and an anti-bailout resolution. Vote no on the former and they’re against new jobs; vote no on the latter and they’re for taxpayer giveaways to insurance companies. If they vote yes on both, that’s fine too. Most Democrats will vote no and the GOP can run on that nationally. But how do you make Reid force a vote in the Senate? This way:

Under the plan, discussed by Republicans in a close-door meeting Tuesday, the House would vote on two measures. One of those would permit raising the ceiling on the national debt, which now tops $17 trillion. The other would contain one, two, or more items sought by Republicans in return, such as approval of the Keystone Pipeline or repeal of the so-called “risk corridor” provisions in the Affordable Care Act, which some call a “bail-out” for insurance companies…

Both resolutions would be brought under a rule that allows the Senate to pass just the first measure as a “clean” debt-ceiling increase, but only after they vote on the other resolution, which could contain measures that Republicans believe would be politically difficult for Democrats to reject.

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The Keystone and/or “risk corridor” resolution(s) will split 50/50 or 55/45, failing to achieve cloture, and then the clean debt-ceiling hike will be passed. That makes it nice and simple for House Republicans insofar as they won’t be forced to approve a new clean hike after Reid rejects their demands.

One hitch to all of this, though. Remember that the point of the “risk corridor” program is to spread risk among insurers in the volatile first few years of the ObamaCare exchanges. If an insurer comes in under budget on a given plan, it pays the difference to Uncle Sam; if another insurer comes in over budget, Uncle Sam makes up the shortfall. Under the current program, if insurers collectively come in over budget, Uncle Sam’s partially on the hook to cover the excess cost. That’s the bailout fear. According to the new CBO projections today, though, the “risk corridor” program would actually raise $16 billion in revenue for the feds this year versus costing only $8 billion. Repeal it and that’s $8 billion in net revenue for Treasury up in smoke, a fact that’ll be pushed widely by Democrats in defending their eventual “no” votes on the GOP’s repeal resolution. The obvious solution for Republicans is to tweak their resolution so that, instead of repealing the “risk corridor” outright, they make it budget-neutral. I.e. insert a provision that says Uncle Sam will pay out no more to over-budget insurers than it receives from under-budget ones. If CBO’s projection holds, that’s $8 billion for taxpayers. If it doesn’t and insurers collectively end up with a loss, the GOP’s budget-neutral resolution would block a federal bailout to cover those losses. It won’t pass either way, but if they’re worried about the Democrats treating the repeal measure as some sort of money loser, this is a way to take that talking point away.

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