Hey, Why Not a 'Short Term' Debt Limit Extension?

Someone will have to explain to me how you can simultaneously be the only adult in the room, and yet storm out of such room like a petulant teenager:

“Don’t call my bluff,” the president said. “I am not afraid to veto and I will take it to the American people.”

If Moody’s downgrades the United States, “it will be a tax increase on every American,” he said.

There needs to be a long-term debt extension, the president argued.

“This may bring my presidency down, but I will not yield on this,” he said.

Then he abruptly ended the meeting, saying, “see you tomorrow.”

Apparently the President’s outburst was in response to a suggestion by House Majority Leader Eric Cantor that a shorter-term extension be pursued, reflecting only the $1-1.5 trillion in spending cuts that both parties have more or less coalesced around. With an annual deficit running in the range of $1.5 trillion, this would be enough for an 8-10 month extension.

The President’s reaction is understandable, I suppose, given that this would result in the need for another increase in the debt ceiling during (gasp)…an election year. All things being equal, the GOP would probably prefer to avoid this scenario as well. But if the only other viable options are default, or agreeing to a deal with the President which includes tax increases, I can understand why Cantor would put this option on the table.

And why not make this an election year issue? The public is overwhelmingly against continued increases in the debt ceiling, and another debate over this next year would provide the GOP with a second chance to demonstrate that they are the only party with a serious plan for addressing our long term fiscal imbalances. At a time when a lot more people will be paying attention given the focus on the upcoming presidential race.

Furthermore, the President is really not in a good position to take a principled stand against a shorter term deal. As I posted on Verum Serum earlier this week, the President has already signed off on 3 increases in the debt ceiling since entering office (totaling almost $3 trillion), and the last 6 increases were enacted while Democrats held a majority in both houses of congress. Not only were all these deals passed without an insistence on tax increases, but as you can see from the table below, the average period of time between each of them was only about 8 months (source).

If the GOP is willing to entertain the prospect of another debate over this in an election year, it seems to me they have an extremely strong case to take before the American people that contrary to the President’s whining, an 8-10 month extension is not “short-term” by historical standards. It’s typical, and in fact two of these deals, one of them signed by the President, lasted less than 3 months! So if the President is threatening a veto over this it’s clear the only “principle” he is standing on is the importance of his own hopes for re-election.

I say…call his bluff.