One proposition that I’ve heard expressed by some commentators is that Republicans believe they would benefit politically from a debt default and the subsequent economic crisis that it might create — as could very easily be triggered by a failure to raise the federal debt ceiling.
I tend to view elected officials as a Machiavellian lot — but I’m not sure that this conclusion about the political consequences of a debt default is so self-evident. A few things to consider:
1. As I wrote a couple of months ago, the negotiations are not truly a zero-sum game. Rather, there is a quite tangible possibility that all incumbents — including Mr. Obama and the Republicans in Congress — would be worse off if a debt default prompted another economic crisis. Your typical Republican in Congress cares a lot about seeing that Mr. Obama is defeated — but he’ll probably care even more about preserving his own job.
2. One poll suggests that Republicans would incur somewhat more blame than Mr. Obama in the event of a failure to raise the debt ceiling. The difference is modest — 42 percent would blame the Republicans against 33 percent blaming Mr. Obama (with 13 percent suggesting that they’d blame both sides) — but Mr. Obama’s relatively strong personal favorability, coupled with the intrinsic unpopularity of Congress and some of the aesthetic advantages that the White House enjoys in times of national emergency, might imply that while both sides would get lots of blame, the Republicans would get a little bit more of it.
3. Irrespective of the explicit political consequences of a debt default itself are the implicit consequences of a significantly weakened economy; that’s where Mr. Obama might be more vulnerable. However, the notion that the public mechanistically reacts to every tick of change in the economic fundamentals and reflexively blames the president for all of it is somewhat oversold.
Clearly, the economic fundamentals matter quite a lot — which is why the recent weakness in these numbers means that Mr. Obama’s re-election prospects have deteriorated. But they don’t tell you everything, particularly in times of crisis. One reason that Mr. Obama’s approval ratings have been better than they “should” be, based on the sour mood of the country, is that voters still give George W. Bush and Republicans quite a lot of blame for the recent recession.
Would Republicans rather have a somewhat bad economy that they can castigate Mr. Obama for? Or a very bad economy (triggered by a debt default) that the White House would have some fresh justification for blaming them for instead? It isn’t entirely clear.
4. In the event that a default seemed imminent, the White House could employ a “nuclear option” to avoid one, which would be to cite constiutional provisions suggesting that the U.S. was obligated to pay its bondholders and instruct the Treasury to do so. I’m not qualified to speculate on the legal and ecomomic implications of this — but the potential political implications would be enormous. Republicans would be outraged by the move, maybe sufficiently so to initiate impeachment efforts, with highly uncertain outcomes for all parties involved. Maybe this would turn out well for Republicans or maybe not — but it would be a much different battle than the one in which the economy goes into another severe recession and both sides are playing the “blame game”. And the White House has the perogative to choose which battle it prefers.
None of this is to suggest that Mr. Obama would be a “winner” in the eventuality of a failure to raise the debt ceiling. But the Republican incumbents in Congress might not be winners either. At the very least, there is significant uncertainty about what might ensue, enough so that the devil-on-your-shoulder temptation to undermine the economy by way of a default is a tenuous political proposition, regardless of the moral reservations that Republicans might have about it.
Instead, I’d suggest that the Republicans’ negotiating position is motivated by two things. The first is the perceived political weakness of Mr. Obama — both in the sense of his mediocre approval ratings and also in the sense that he may be seen as too risk-averse to negotiate optimally. The second is that a vote to raise the debt ceiling is a really challenging one for many rank-and-file Republicans. Not only would such a vote be unpopular unto itself, but the austerity measures that a budget deal might entail might also not be such an easy sale. Americans have a deep desire to cut the debt — in theory. But in practice, most of the measures that might be employed to do so are unpopular. One of the few potential exceptions is tax increases on the wealthy, but that is not in Repubicans’ DNA.
Almost all of the stakeholders in this negotiation, in other words, are really between a rock and a hard place: a vote to raise the debt limit would probably be unpopular, but failing to do so (because of the economic consequences that a default might trigger) would be hazardous to the health of incumbents as well.
We shouldn’t be surprised, therefore, if the negotiating positions of the parties seem volatile. This is not to suggest that a default — or a Constiutional crisis motivated by White House actions to avert one — is not a real possibility. But it seems unlikely that this is Republicans’ implicit or explicit goal.