I'm not sure why so many people are doing the happy dance in response to Eric Cantor's offer of a three-month extension of the debt ceiling in return for a full budget agreement on the part of the Senate. Hell, even the usually dour Paul Krugman is pleased.
We're told that this will really take the debt ceiling off he table for much longer than three months, because a couple of other deadlines are coming up in the next three months, and surely the resolution of those problems will deal with this one as well. Jonathan Cohn:
And while their proposal would extend the government's borrowing authority for only another three months, two other fiscal policy deadlines would come first -- March 1, when the automatic spending cuts of the budget sequester are set to take effect, and March 27, when the Continuing Resolution that funds the government expires. Not everybody agrees on the implications, and the agreement would come with a few conditions attached, but the emerging consensus is that Republicans would probably add another, longer extension to whatever deal those debates produce.Oh, so we just have to come up with a way around the sequester that's satisfactory to both Democrats and Republicans by March 1, and mollify Republicans so they don't shut the government down after March 27. A mere formality!
As Cohn says,
To be sure, Republicans are still determined to fight for their priorities -- namely, massive spending cuts and, where possible, new tax breaks for the rich. They might even shut down the government if they don't get their way. The expiration of the Continuing Resolution offers an opportunity for that.So the terrorist tactic that would rattle the markets -- a default threat -- seems to be off the table. The terrorist tactic that specifically targets ordinary people -- holding massive spending cuts and entitlement reforms in one hand, and a government shutdown in the other, and saying, "Choose one" -- is very much on the table.
But refusing to give the government new borrowing authority, so that it defaults? Wreaking all sorts of havoc on the economy? Republicans seem to have lost enthusiasm for that tactic.
So we're still hostages. The fat cats have been released. Forgive me if I'm not dancing.