The Debt Limit Increase Fix Is In

Don’t believe all of the public fighting by Republican and Democrat leaders over the past week on increasing the debt limit. My sources on Capitol Hill tell me that many conservatives believe that the fix may be in on a deal to increase the debt ceiling in a manner that allows both sides to save face.

Here is a theory that many believe on Capitol Hill. The walk out by Senator Jon Kyl (R-Arizona) and Rep. Eric Cantor (R-Virginia) from the Vice President’s debt limit negotiations on Thursday was staged and agreed to by both parties as a means for Republicans to look tough before they cave on increasing the debt limit.

Vice President Biden has been meeting behind closed doors with a bipartisan bicameral group of politicians for weeks in an effort to cut a deal on a package to increase the statutory $14.3 trillion debt limit. These meeting have been extremely secretive and not many specifics of the negotiations have been provided to the public. One of the few details leaked was that liberals were putting tax increases on the table as a means to balance the budget.

The Hill reports:

In announcing his intention to skip the talks on Thursday, Cantor called on Obama to “resolve the tax issue.” “Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue,” he said. “Given this impasse, I will not be participating in today’s meeting and I believe it is time for the president to speak clearly and resolve the tax issue.”

On Friday, Speaker of the House John Boehner (R-Ohio), as reported by The Hill, called on President Obama to lead if the debt limit standoff is going to be resolved.

Boehner listed three elements that he said are non-negotiable in any package to raise the $14.3 trillion borrowing limit. Any deal must include budget reforms, spending cuts that are larger than the debt-limit increase and must not include tax hikes, he said. An increase to the debt limit will only happen “via a measure that meets those tests,” Boehner said in a statement.

Immediately after Speaker Boehner announced his conditions, new negotiations were announced by the White House between President Obama, Vice President Biden, Senate Majority Leader Harry Reid (D-Nevada) and Senate Minority Leader Mitch McConnell (R-Kentucky).

Expect the Obama Administration to cut a deal with these Republicans including cuts to spending and some budget process reform. Also, expect Republicans to declare victory when tax increases are taken off the table. As the theory goes, tax increases were never actually on the table, but merely a means for the Obama Administration to provide Republicans a way to claim victory.

The whole idea that Democrats were going to raise taxes was a means by the Obama Administration to push the debt limit debate to the left. This push will allow negotatiors to later claim that, when they take tax increases off the table, the conservatives have won a small victory.

This scenario also allows President Obama to claim victory when he swoops in and cuts a deal with Republican leaders. For both Republican and Democrat leaders this scenario allows the President to claim yet another bipartisan agreement and for Republicans to play tough on tax increases. The level of cuts and specifics of budget process reform will be the only items actually being negotiated between the parties next week.

This is merely a theory, yet the secrecy of the meetings led by the Vice President and the fact that the idea of increasing taxes was inserted into the debate is circumstantial evidence that this theory is true. We shall see how the Obama led negotiations next week pan out to see if there is any truth to this theory.