A longtime reader offers the following observations:
First, the president may become a marginal figure in the debt debate because if the House and Senate reach an agreement that raises the debt ceiling, he dare not veto it. Obama has some influence because Harry Reid presumably won’t agree to a proposal that hangs him completely out to dry. But this is the influence of a bit player, not a central one.
Second, left to their own devices, Reid and John Boehner probably could reach a deal. As Larry Kudlow and others have pointed out, press reports suggest that they may not be that far apart. If Reid agreed to make his spending cuts less illusory and Boehner agreed to an arrangement that avoids revisiting the issue until 2013, they might have a deal.
Third, Reid and Boehner are not left to their devices, though. Boehner, in particular, must sell any deal to enough members of a very conservative caucus to push it through the House, perhaps with some Democratic support. It won’t be easy.
Fourth, weighing significantly in favor of the likelihood of a settlement is the fact that both parties seem reasonably satisfied with where they are politically. The Republicans must like their chances of defeating Obama based on the weak economy and the justified perception that Republicans are more fiscally responsible. Republican chances don’t depend on another debt ceiling battle in 2012; nor is it in their interest to share blame with the Democrats for new economic woes that might be viewed as resulting from the absence of a debt ceiling deal, either this year or next.
The Democrats recognize their vulnerability in 2012, but probably doubt that the Republicans have a real candidate, as opposed to a “generic” one, who can defeat Obama absent a worsening of the economy. They also probably believe that they can bludgeon the Republicans on Medicare and Social Security. Under this thinking, any deal that preserves their ability to demagogue on entitlements should be politically acceptable.
Accordingly, I believe that neither party has a political incentive to bring on the kind of unpredictable fall-out that might result from the failure timely to raise the debt ceiling. The leaders of both sides have probably concluded that it makes sense, politically at least, to posture up until the last minute (whenever that actually is) and then reach an agreement.