Playing Chicken With the Debt Ceiling

| Wed Apr. 13, 2011 9:58 AM EDT

Matt Yglesias notes that John Boehner has been asking his Wall Street pals about whether they think it's OK for him to play a high-stakes game of chicken with the debt ceiling, and the loud-and-clear answer has been "no no no no no":

Then the question becomes “do a majority of members of congress favor raising the debt ceiling?” And the fact of the matter is that the answer is yes. Boehner isn’t even asking Wall Street whether or not raising the ceiling is a good idea. He takes it for granted that it’s a good idea. He’s just asking them how much screwing around he can get away with. And they’re telling him that they don’t like screwing around. Of course these are rich people, so they’ll tolerate some screwing around if it’s done in pursuit of lower taxes on rich people. But at the end of the day if the White House simply refuses to get sucked into a negotiation, the debt ceiling will be raised.

I think the political dynamics are a little more complicated than this because (a) the Wall Street guys are almost certainly overstating the market's reaction to a small amount of screwing around (they usually do, after all), and (b) Boehner has lots of public support for playing chicken. Still, it's basically right because the debt ceiling is a different animal than a government shutdown. Government shutdowns, after all, are fundamentally fights over the federal budget: if you can't agree on a budget, the government shuts down. So blame is hard to assess because both sides have budget proposals and neither proposal is obviously the one causing the shutdown. It's just a straight-up political fight, with neither side really sure who's going to win the PR battle. 

The debt ceiling fight is different: it's not obviously tied to anything in particular, which means the side that starts festooning it with extraneous pet issues is pretty obviously the side that's preventing a debt ceiling increase. So if Boehner and the tea partiers look genuinely willing to let the United States default on its debt unless they get a bunch of goodies in return, there's not much question who gets the blame. Republicans do.

So yes: the president can safely demand a clean bill and be pretty sure that he'll win the PR battle. All the VSPs will be on his side, the public will almost certainly come around as the consequences of playing chicken are laid out in graphic detail, and Boehner will end up feeling a level of heat that he just can't stand up to. This time, Obama holds the winning hand as long as he's willing to play it.