First it was House Budget Committee Chairman Paul Ryan
saying that Republicans will insist on yet another debt-limit hostage crisis:
We don't want 'nothing' out of the debt limit. We’re going to decide what it is we can accomplish out of this debt limit fight.
Then,
yesterday, it was Senate Minority Leader Mitch McConnell (emphasis added):
“All I can tell you about the debt ceiling is, I doubt if the House or, for that matter, the Senate is willing to give the president a clean debt ceiling increase,” McConnell said. “Every time the president asks us to raise the debt ceiling is a good time to try to achieve something important for the country. … I can’t imagine it being done clean. We’ll have to see what the House insists on adding to it as a condition for passing it.”
And then it was a group of Republican senators including Jeff Flake, Ron Johnson, Terry Moran, and—you guessed it—Ted Cruz,
who said:
I am hopeful that we will use every leverage point available to try and turn this country around and pull back from the fiscal and economic cliff we find ourselves in.
But while each of these guys agree that there should be a ransom note, none of them were sure what should be in. Ryan came closest to naming his price,
floating the idea of linking approval the Keystone XL pipeline to the debt limit.
My assumption is that they are bluffing, just like they were in October, and just like they were in February, but who knows? Maybe this time Republicans are actually serious about forcing the U.S. into default unless their (as yet undetermined) ransom demands are met, thereby shutting down not just the government but the entire global economy. But whichever the case may be, their shakedown isn't going to succeed because the Obama administration isn't going to negotiate with hostage-takers:
Obama won’t “bargain on the full faith and credit of the United States,” Jason Furman, chairman of the Council of Economic Advisers, said today at a Washington event. “If you went up to the wire on the debt limit, certainly if you went beyond the wire on the debt limit, that would be a major threat to the economy.”
It's hard to imagine Republicans following through on their bluff given how bad things got for them during their government shutdown in October, but if they do, even under the best case scenario, their actions will be responsible for a severe disruption of the economy. That best case scenario would involve the president getting around the debt limit, either by citing the Fourteenth Amendment to ignore it or by using his coin seignorage powers. But even though those moves would be preferable to a full-on default, they would reflect serious political instability and would no doubt deal a severe blow to economic confidence.
But despite the risks, it remains clear that the one thing the administration cannot do is negotiate over whether to raise the debt limit. It's not that other things can't be done at the same time as the debt limit, it's that the debt limit can't be turned into a political weapon used by Republicans to achieve otherwise unobtainable political concessions. Everyone who understands and cares about the American and global economies knows the debt limit must be increased; threatening to block its increase is nothing more than a threat to harm the American economy. And no matter how loudly Republicans issue those threats, Democrats cannot—and in their own words will not—blink.