House Speaker John Boehner’s suggestion that he’s determined to avoid a federal debt default, and that he'll pass a measure to that effect with Democratic votes, if necessary, gives both sides in the great Washington standoff a possible way out. To make it work, each will have to give a little as well as take a little. It won’t be elegant, but the prospect of lifting the threat of a ruinous default – preferably, once and for all – makes that a secondary consideration.
Boehner and the tea party Republicans who have been calling the shots up to now have all but given up trying to end or even delay the Affordable Care Act. Reports of children being turned away from federal cancer-treatment programs are aligning the public against them. Polls say that Republicans are getting more of the blame than Democrats, and hopes for big Republican wins in 2014 are diminishing. The beginnings of a backlash could turn into something vicious if the calamity of a default should come to pass in two weeks and Boehner can’t plausibly blame President Barack Obama.
That’s why Boehner is budging and House Republicans are hinting they'll bite on a “grand bargain.” For sure, the term doesn’t mean what it used to – finding $4 trillion in revenue and entitlement cuts spread over 10 years. Now, it might mean little more than lifting the debt ceiling and funding the government for another year. No matter. Boehner’s dug-in troops are looking to deal.
Democrats should seize on this opening with a zealous (and self-interested) display of reasonableness. Agreeing to repeal the $3 billion-a-year medical devices tax that partially funds Obamacare would be a relatively painless concession, even if dubious on the merits. A willingness to talk about modest tax and entitlement reforms would help, too.
Obama has already said he’s open to this. For instance, the administration could agree to let companies repatriate overseas profits at a lower tax rate, devoting most of the hundreds of billions in new revenue to a permanent reduction in corporate tax rates. The president could also agree to tweak the inflation calculation for Medicare and Social Security cost-of-living adjustments. Neither would be a stretch for the president, who has previously called for cutting corporate taxes and overhauling the inflation formula.
In return, Republicans should be asked to move quickly. The vote Boehner says he’s willing to have should happen at once, combined with a clean continuing resolution to fund and reopen the government. His party should also be asked to surrender the debt ceiling as a political weapon – not just this time, but for good. Agreement on such an arrangement isn’t as hopeless as you might think. After all, the debt-ceiling weapon is backfiring. If Republicans are allowed to say they got something out of this fight, and Obama can claim he didn’t negotiate over the debt ceiling, it serves both their interests to set the doomsday machine aside once and for all. The country would be the huge winner.
The choreography could be messy. Both sides must refrain from exulting over the defeat of the other, which is a lot to ask of politicians. It could happen nonetheless, because it’s in the interests of both parties. Deficits and the debt would come down. Some 800,000 federal employees would return to work. The nation’s creditors would know that they will always be repaid. Best of all, the full faith and credit of the United States would never again be brought into question for no good reason.
The following editorial appeared Friday on Bloomberg View.