Yesterday I took a stab at explaining why the debt ceiling negotiations between the White House and the GOP leadership currently revolve around concessions that seem out of the range of possibilities for Republicans. To recap, the administration is asking for about $400 billion in tax hikes to go along with $2.4 trillion in spending cuts, according to the Wall Street Journal. They would not take the form of rate increases, but instead include "a repeal of oil and gas subsidies, an acceleration of the depreciation on private jets, a limit on deductions for the wealthy, and a change in how businesses value their inventory."
With all of the key Republican players constantly swearing off tax hikes, it's hard to see how this remaining distance between the two sides will be bridged. But one way or another -- whether it's allowing some tax increases, cutting defense spending, or permitting some increase in fees -- it will be, simply because Republicans will not get everything they want.
It should be obvious that the reason that Republicans have made, and continue to make, maximalist demands is that doing so is good bargaining strategy. At the start of negotiations, you make the biggest demands possible, and threaten to walk away if they're not met. And this is just the start.
What both Republicans and Democrats know is that Republicans will not walk away. Despite the conspiracy theorizing of some progressives (Christopher Hayes of The Nation wondered if Republicans "want some sort of crisis" to increase interest rates on MSNBC last night) the vast majority of Republicans really have no interest in risking the credit of the United States. They also know that they have time to use this issue against Obama. Sure enough, there are new indications today that the August 2nd deadline set by the Treasury will be pushed back.
In other words, Republicans have a real chance to extract some serious reforms from the Democrats, including, possibly, structural budget reforms or much-need entitlement spending reforms. But they're not going to get a full-scale retrenchment of the welfare state, as, for instance, Marco Rubio has demanded. As with the continuing resolution negotiations, Republicans have overpromised to their constituents, and did so as part of their bargaining strategy.
[Photo taken from SpeakerBoehner's Flickr Feed]
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