When the fiscal cliff was looming and it seemed as if economic doom was on the horizon, House Budget Committee Chair Paul Ryan, R-Wis., didn’t want to blink. The Wisconsin Congressman was fresh from the campaign trail of a failed vice presidential bid, and relegated to the less exciting duties of a bean counting policy wonk parsing through the federal budget. Split between placating a restless conservative base for his own 2016 presidential ambitions and having to explain why he was one of many House Republicans who allowed the cliff calamity, Ryan reluctantly voted for the deal.
But not without laying down some conditions.
“Now, we must return our attention to the real problem: out-of-control spending. Washington’s reckless spending drives the debt,” said Ryan in a statement shortly after the fantastically contentious fiscal cliff House vote. “And this debt is hurting the economy today. Unless we get at the heart of the problem, Americans will face a debt crisis — one that will threaten our most vulnerable in particular. It is our responsibility to prevent such a crisis.”
That was the tough talk then. Republicans needed to beat their chests as much as possible up to the very last minute, with some — including House Majority Leader Eric Cantor — bucking their caucus leadership and voting thumbs down just to save face. Many observers saw the problem as anxious legislators afraid of the tea party troublemakers in the back of the town hall room; but others saw it as a hardball bargaining play to push the Obama White House to the brink.
Weeks later, few on either side of the aisle seemed to take seriously President Barack Obama’s promise that he wouldn’t negotiate or compromise on the debt ceiling. Many snickered during his last official press conference of the first term, as he doubled down with the pointed finger and famous “let-me-be-clear” moments. “Every time this guy tries to go tough at a press conference, it’s a different story up here on Capitol Hill when we’re left holding the bag,” wryly commented a senior Congressional aide familiar with budget talks. “He always buckles.”
Obama’s demeanor appeared to suggest otherwise. “So I want to be clear about this: The debt ceiling is not a question of authorizing more spending,” he growled. “So to even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible. It’s absurd.”
Some observers were hoping for a breakthrough moment at the press conference, perhaps a sudden, angelic epiphany where the president finally broke down and embraced the idea of a $1 trillion platinum coin. The idea had been gaining steam for weeks: Treasury would mint a $1 trillion coin followed by a grand and well-armed Treasury Secretary motorcade in which Tim Geithner would personally deposit it with the Federal Reserve. Just enough to avoid the debt ceiling, circumvent congressional cage matches and prompt Washington to get on with the ugly business of methodically slicing fat from the federal budget.
It would seem that easy. The idea was, technically, constitutional. Experts, including prominent economists like Paul Krugman were putting a stamp of approval on the plan. A weary, graying President Obama, who typically conveys a zen-like calm, was clearly losing his patience with Republicans on the House side. House Speaker John Boehner seemed to validate all of the above when, shortly after the fiscal cliff debacle, he openly moaned behind closed doors to fellow GOP members that he was done doing “private, one-on-one’s” with Obama.
Krugman acknowledged the idea was “silly” — but no more silly than what was unfolding in Washington. “Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely,” Krugman told the New York Times. “He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous.”
“It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable — if you’ve been living in a cave for the past four years.”
Ultimately, going down the yellow brick road of sounds-too-good-to-be-true was never the president’s style. Perhaps always holding out hope for a day when legislators grew up, or simply believing in the transactional mantras of Washington and its legendary deals, Obama put the onus on Congress. “There are no magic tricks here. There are no loopholes. There are no, you know, easy outs. This is a matter of Congress authorizes spending,” said the president.
That leaves disappointed economists and some Democrats worried that the debt ceiling will hinge on the resolution of a brewing internal war within the GOP. Two camps are emerging within the House Republican Caucus, say sources. One camp, like Ryan, is looking for a short-term, kick-the-can deal that gets the country into early March and possibly sets the stage for a government shutdown showdown. The other camp, however, sees a debt ceiling hostage scenario as the only path to forcing tighter federal spending.
“While a broad deal that avoids the cliffs remains possible, for now each side will continue to float alternatives in order to show toughness ahead of a contentious negotiation,” observes Robert Kahn, a senior fellow at the Council on Foreign Relations. “The main argument for the alternatives is that, as bad as they are, a comprehensive default by the U.S. government is worse.”