This AMs papers are flush with stories about the next debt ceiling war, with R Speaker John Boehner insisting on another fight like the last one. I can’t bear to write about this yet—this NYT editorial provides a nice summary. I’ll just point out the following:
–It would obviously be best for the economy—already too shaky—to resolve this sooner than later, but Rep Boehner’s stance precludes that. We probably don’t bump up against the debt ceiling until February, so I don’t see this particular fight taking shape until after the election.
–The R’s have proved to be impossible to negotiate with over this issue. After all the self-inflicted pain of the last debacle, they finally agreed upon what became the Budget Control Act. That created a process that included the supercommittee and the auto-cuts known as sequestration, but now, by dint of their own budget, House R’s have reneged on that agreement.
–Basic game theory, well known to highly advanced academics and mobsters: when dealing with an intractable, unreliable opponent, the side with a) the most leverage, and b) the skills to use that leverage can win. The administration has such leverage in both the scheduled defense cuts and tax increases. Stand firm on both counts even if it means facing the fiscal cliff, for to cave is to walk a big step closer to permanence of the Bush tax cuts, to say bye-bye to new revs, to take defense spending off the table, and to say hello to even deeper cuts in discretionary programs to help the least advantaged.