Washington Post: Dangerous dealings with the Default Caucus
By DanaMilbank,
The Washington Post
TwentyRepublican lawmakers crowded the Senate TV studio last week to issue a threat:Meet their demands, or they will force the United States todefault.
The onlyway to prevent the catastrophe, these Tea Party faithful said, was for theSenate to pass, and the president to sign, their plan to permanently capspending at levels last seen in 1966, before Medicare made the nation soft.
"We want tomake very clear: This is not just the best plan on the table for addressing thedebt limit — this is the only plan," first-term Sen. Mike Lee (Utah) said,vowing that "we're otherwise going to be blowing past the debt-limitdeadline."
"We have asolution," said Sen. Jim DeMint (S.C.). "It's the only one that can be passedbefore the August 2nd deadline."
This is thelanguage of gangster films: Do as we say — or the girl gets it.
Yetlistening to the 20 House and Senate Republicans recite their demands, it wasclear they were deadly serious. And that's why, even though a large majority oflawmakers want to avoid default, it could stillhappen.
ARepublican leadership aide has taken to calling them the "Default Caucus": auniverse of Republicans who would sooner see the federal government default thanreach a compromise with President Obama. In the House, they may well have enoughclout to block a deal.
Accordingto negotiation "game theory," the Default Caucus has boosted Republicans'leverage. "Your hand is greatly strengthened if you can convince the other sidethat you're crazy," said James Miller, an economist at Smith College. It has enabled House Speaker JohnBoehner to tell the president: The Tea Party has locked our steering wheel andwe can't swerve — so you have to.
Reports ofnegotiations between Boehner and Obama suggest that the president has indeedswerved, offering Republicans $3trillion in spending cuts in exchange for future increases in taxes. Yeteven that offer, which liberals would regard as surrender, wouldn't necessarilysatisfy the Default Caucus.
Obama seemsto have made the rational assumption that after the Tea Party Republicans getmost of what they want, they will strike a deal. But what if they aren'tbluffing and they really won't settle for anything less than a constitutionalamendment returning us to 1966? What if they aren't merely pretending to becrazy enough to tank the economy but actually are?
"That couldbe happening now, if the Democrats think the Republicans are willing to swervebut they're really not," Miller said. "The worst scenario is you're a madman andyou can't convince the other person of that, because then youcrash."
Thispossibility cannot be dismissed. So far, the Default Caucus is disregarding theadvice of the WallStreet Journal editorial board, warningsfrom Standard & Poor's, the recordof Ronald Reagan and even the permissionof Grover Norquist, the conservative loyalty enforcer who said that endingthe Bush-era tax cuts would not violate lawmakers' anti-taxpledges.
The DefaultCaucus has dismissed all compromises. Obama and Boehner's "Grand Bargain"? The"Gang of Six" proposal? Senate Republican leader Mitch McConnell's plan? No,nay, never. Even Tom Coburn's plan to shave deficits by $9 trillion wasdisparaged as a "$1 trillion tax hike."
"You have alot of members who don't like the idea of a compromise," CBS News's Nancy Cordespointed out to Boehner at his weekly news conference, "or who don't even want toraise the debt ceiling. Have you told them that any deal is going to have toinvolve some compromise?"
"I have,"the speaker said.
"How?"Cordes asked.
Boehnerignored her and solicited a different question.
Fox News'sChad Pergram asked the speaker if he has a "sense that some of your members arelocked in and that they cannot compromise?"
"I do notbelieve that would be anywhere close to the majority," Boehnerreplied.
No? A PewResearch Center poll last week found that 53 percent of Republicans, and 65percent of Tea Party faithful, believe that the Aug. 2 default deadline can beignored without major problems.
At theirtelevised session listing their demands, the Tea Party lawmakers chuckled whenCNN's Kate Bolduan asked if they were concerned about being blamed fordefault.
DeMintexplained that Obama "manufactured this crisis."
It's aproblem game theorists recognize. "You're essentially empowering minorities soyou can extract more," said Daniel Diermeier of Northwestern University's Kellogg School of Management."But once you do that, if they are radical and don't want to agree, you'restuck, and the deal falls through."