The Great Economic News in the Debt-Ceiling DealBy
When Republicans first threatened to default on the national debt unless President Obama and Democrats would agree to deep spending cuts—and then pushed negotiations until the final hour—the economic toll was unexpectedly severe. Standard & Poor’s downgraded U.S. debt for the first time and consumer confidence plunged, hurting growth and slowing the recovery, as this chart makes clear:
Republican hostage-taking in 2011 won them huge cuts in discretionary spending in the form of the sequester. Since then, they’ve repeated the extortion play, each time with diminishing results. Yesterday’s decision by House Speaker John Boehner (R-Ohio) to pass a “clean” debt-ceiling bill represents an end—for now—to the extortion and a total capitulation to Obama. A lot of commentators pooh-poohed the significance of passing a clean debt-ceiling bill since it was bound to be the outcome, eventually. The only question was how much harm Republicans would inflict on themselves getting there.
Still, it’s an important development, if only because it avoided repeating the economic damage laid out in the chart above (assuming the Senate goes along, which it probably will). This outbreak of common sense isn’t likely to herald a new, productive chapter in congressional relations between the two parties. So far, it extends only to such “must-pass” bills as the debt-ceiling raise, without which the alternative would be harmful or disastrous to the Republican Party—and, in many cases, lots of people.
What this probably does herald is a return to a focus on the fight Republicans really do want to wage—the one about how terrible Obamacare is. That won’t be a productive fight, at least not in terms of the economy. But it won’t do much harm, either. By recent measures, that’s no small achievement for Congress.