White House: We'll take a short-term deal on the debt ceiling

Did the White House just blink on the debt-ceiling fight? After weeks of insisting it won’t negotiate on either the budget or the debt ceiling, a top White House adviser said this morning that Barack Obama would sign a short-term lift in the latter to gain more time for a longer-term agreement:


President Obama would accept a short-term increase in the federal borrowing cap , rather than one lasting a year or more, a senior White House official said Monday. The statement was an acknowledgment by the administration that it may not be possible to reach a deal on a long-term increase in the debt ceiling before a critical Oct. 17 deadline.

Gene Sperling, director of the National Economic Council, said members of Congress ultimately have the responsibility to decide how often they want to raise the debt ceiling, although he argued that an extended hike is preferable. …

The Treasury says it will run low on cash in as little as 10 days, placing the nation at risk of a historic default. Some Republicans have suggested that if Congress can’t reach an agreement by Oct. 17, they might try to forge a coalition to support an interim measure to increase the $16.7 trillion debt ceiling for as little as six weeks.

Sperling’s comments Monday suggested that the White House would accept such a measure. The statement was notable because administration officials had rejected a short-term debt ceiling increase during a similar impasse in the summer of 2011, when the White House insisted that the debt limit be increased to cover borrowing through 2012.

Until now, the White House has insisted that it will not negotiate at all, and that John Boehner should bring a clean bill to the floor for both the debt ceiling and the CR — and not short-term bills, either, but comprehensive long-term bills. Democrats spent all weekend pushing the message that Boehner won’t bring such bills to the floor because they’ll pass over the objections of most Republicans. In that paradigm of diktat, there is no place for a short-term bill.


That at least implicitly concedes that Democrats and the White House have to negotiate with Boehner and the Republicans on terms for both, an admission that undermines their entire no-negotiations strategy. If the White House is willing to bargain on the debt ceiling, which is the bigger problem for American credibility than a 17% government shutdown, then it’s impossible to argue against some give-and-take on the budget, too.

Why reverse course and agree to a short-term debt ceiling lift now? I’d suspect that the White House has discovered that its shutdown strategy is backfiring in a spectacular manner, thanks to the spiteful attempts to impose unnecessary and arbitrary pain on Americans for the last several days.  It might also be that the statement from Moody’s CEO this morning undercut their messaging to Wall Street, and the utter lack of panic among investors has killed the Obama administration strategy to force the GOP to knuckle under to Harry Reid and Obama.

For his part, Boehner remains consistent on Republican messaging that budgets and debt ceilings should be negotiated rather than dictated:

A default is widely regarded as a much bigger economic disaster than the shutdown of non-essential services. President Barack Obama has demanded that Congress raise the debt ceiling, and avoid default, without conditions.

But House Speaker John Boehner said Sunday there will be no debt limit increase, and no end to the partial shutdown, unless President Barack Obama and Senate Democrats negotiate with House Republicans.

Boehner told ABC News that President Obama and some objective observers are wrong about the number of House Republicans who would vote for a so-called “clean” continuing resolution to re-open the federal government without conditions.

“There are not the votes in the House to pass a clean CR,” the speaker said.

But Boehner also used his rare Sunday news show appearance to back away from insisting on repeal or delay of the Affordable Care Act, or “Obamacare,” as a condition for ending the shutdown and raising the debt limit.

Instead, Boehner said, he wants spending cuts through entitlement reform.


I’d guess that Boehner will take a short-term deal on the debt ceiling in order to force negotiations on long-term budget issues, and it looks like the White House has conceded that it really has no choice but to negotiate.

Update: Ron Fournier explains why Obama has to negotiate:

Obama has at least two incentives to talk. First, there is the matter of optics. Voters want to believe that their leaders are open-minded, a trait they particularly expect in a president who promised to change the culture of Washington. Obama simply undermines his credibility by stiff-arming the GOP. Their obstinacy is no excuse for his. During the last protracted government shutdown, President Clinton talked almost every day with GOP rivals Newt Gingrich and Bob Dole.

Second, Obama has an opportunity to deftly steer an embattled and divided GOP away from Obamacare and to an issue worthy of high-stakes negotiations: The nation’s long-term budget crisis. While it’s true that the deficit has dropped in recent months, nothing has been done to secure Social Security and Medicare beyond the next 10 years. Punting this red-ink quandary to the next president would mar Obama’s legacy.

In April, I wrote that both the White House and the GOP House had incentive to strike a deal that would both raise taxes and trim entitlement spending. The story traced the outlines of such a deal, but the moment was lost. Boehner doesn’t trust Obama and is worried about a revolt from his no-compromise caucus. Obama doesn’t trust Boehner and is worried about a revolt from his no-compromise caucus. The House speaker reportedly raised the idea of a so-called grand bargain at a White House meeting last week, and got laughed at. That is the exact wrong response.


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