Andrew Leonard interviews Bruce Bartlett about what might happen if the US doesn't raise its debt ceiling and defaults on its debts:
The problem is that the Tea Partyers are nuts. That is my point. They are irrational, they are ignorant, they don't know anything about financial markets and they think that they are standing up for God and the balanced budget.
Yglesias differs and urges Obama to call the GOP's bluff.
Do Bartlett and Sullivan want the GOP to give Obama an increase in the debt ceiling in return for nothing? I certainly don't.
Bartlett acknowledges that there is the possibility of a negotiated solution:
This is all being sorted out and negotiated right this minute. The problem is, I'm just not sure, and I hope I'm wrong, I'm just not sure that there is anything that these people can be given, that will be a sufficient sop, to allow a debt limit increase to occur. I'm just not sure that there is anything.
I think that's unduly pessimistic. Sure there may be a few fringe members of the tea party that would reject any deal, but I'd be willing to make a rather large wager that the House GOP leadership has enough control over its caucus to put a deal through.
In fact, unlike Bartlett (and, I assume, Sullivan), I think the more worrying scenario involves Democratic objections. Bartlett seems to assume that the House Democrats will be rational and patriotic:
I have no doubt that there are enough rational people in the Republican Party together with enough Democrats to have the votes to increase the debt limit.
But suppose Obama and Boehner cut a deal that swaps a raise in the debt ceiling for cuts in non-defense discretionary spending. What if Pelosi decides that she's not going to support the deal? With the 2010 election having washed almost all moderate Democrats out of office, it's not hard to imagine the hard left core of the Democratic caucus deciding to let the House GOP take all the blame for raising the debt limit. If the deal includes cuts to the left's favorite spending programs, it gets even easier to see such a scenario.
It's in my scenario that Bartlett's concerns about the tea party become salient.
The House is currently divided 242 to 193. If all 193 Democrats vote no, 25 GOP defections would kill a deal to raise the limit. With 52 GOP members of the Tea Party Caucus, if half of them are as unpatriotic and/or economically illiterate as Bartlett claims, we have a problem.
On the other hand, if the House Democrats support raising the debt ceiling, all 52 Tea Partiers could vote no and the deal would sail through.
So it's really up to the Democrats to make a deal work. (Bartlett assumes that few Republican members of Congress are willing to risk a tea party primary challenge. I assume that those with such concerns will join the Tea Party caucus preemptively to get protection, which is why I assume that only the 52 current members are the ones at issue in this exercise.)
Update: To be clear, I am accepting Bartlett's view of the tea party for the sake of argument, but it is not an assumption I share. There is much about the tea party movement that I don't like, including its affection for Sarah Palin and its populist rhetoric, but the evidence simply doesn't support the idea that these are irrational people. As for 52 tea partiers in Congress, my guess is that none of them are as far out of the mainstream as Dennis Kucinich, Bernie Sanders, or the unlamented Alan Grayson.
Also I should note that Joe Weisenthal gets it:
... law professor Stephen Bainbridge raises a possibility that it will be the Democrats who torpedo any deal, and create sovereign debt havoc.
Why? Well, just think about what happened in the tax deal. Obama reached out to the GOP, left the Democrats out, and then had to struggle to get them on board. If Obama has to touch Social Security or other popular programs in order to get the deal, watch out. The Democrats may not be eager to put the votes over the top.
Having said all that, however, I completely agree with Bartlett on several points. First, it would be globally irresponsible for the US to default on its debts. Second, although a default would not result immediately from a failure to raise the debt limit, the markets would treat such a vote as a de facto default. Three, nobody knows for sure what would happen next, but there are no plausible scenarios in which it's a good thing.
Hence, while I don't have a problem with the GOP using the debt limit as a vehicle for negotiations, I would have serious concerns if they let those negotiations become a game of chicken.
In game theory, the chicken game is used to model situations reminiscent of 50s car flicks:
The name "Chicken" has its origins in a game in which two drivers drive towards each other on a collision course: one must swerve, or both may die in the crash, but if one driver swerves and the other does not, the one who swerved will be called a "chicken," meaning a coward...
There best way to win a chicken game is via a credible precommitment strategy. The classic analogy is where one driver throws his steering wheel out the window. That driver no longer has the option of swerving. he's committed to a collision. He makes this move in the hope that the other driver is ratonal and will swerve.
The trouble is that it's hard to operationalize this strategy in real life. You have to find a way of transparently and credibly signaling that you not only won't--but literally can't--swerve. It's hard to see such a signal in the debt limit game.
In some cases, it is possible to solve the chicken game by appointing a mediator whose actions give both players a face saving way of swerving. It's hard to see such a mediator in this context, however.
Playing chicken is dumb and irresponsible. The truly responsible thing to do is to simply not play. The negotiators need to change the nature of the game so that there is a single focal point that is win-win for all sides. I'm pretty confident that'll be the outcome here and I'm quite confident that Pelosi will bear much of the blame if it doesn't.