No, Seriously, That Was Such A Bad Idea, WE MUST DO IT AGAIN

Another quote in this (still) excellent piece in the New York Times by Jeremy W. Peters, describing the resolution to the debt ceiling and funding showdown, stuck out at me:

The question so crucial to the Republican Party’s viability now, heading into the 2014 Congressional elections and beyond, is whether it has been so stung by the fallout that the conservatives who insisted on leading this fight will shy away in the months ahead when the government runs out of money and exhausts its borrowing authority yet again.

A key point in the compromise reached to resolve the current crisis regards the timing of the “two crises.”  The government is funded through January 15th, 2014, and the debt ceiling is extended through February 7th, 2014. Note that this compromise does two related things on this dimension:

  1. It does not put the “funding crises” on the same day, and
  2. It puts the less important one (federal government appropriations) first.

Peters appropriately asks whether the “next round” of this dynamic will be occasioned by different behavior by (say) the House Republicans.  But I want to focus on a logically prior question:

Why didn’t Congress pass something that delayed both of these past the 2014 elections?  That is, why did they simply kick the can a short way down the road?

On this question, my main argument/explanation for the delay/obstruction over the 16 days of the shutdown was one of signaling: members of the GOP (and arguably some Democrats) had an incentive to demonstrate their ideological commitments through costly (in)action.  The debt ceiling/default deadline represented arguably a Rubicon of sorts, one that allowed all members—or, at least, Boehner & Cantor—break the impasse by allowing a floor vote.  This is because the (perceived) true costs of obstructing any longer were sufficiently large that they even “true conservatives” would rather get kicked out of office than pay them, and accordingly, many stripes of conservatives (some more faithful, some less) could and would “pool” at this point and vote to end the impasse.  (This explains/is consistent with the push by some to claim that default was either not going to happen on October 17th or, even more amusingly, that default is not that big of a deal.)

To the degree that this signaling argument holds water, it also predicts that the last-minute resolution would involve just a small “kick of the can down the road,” as happened.  That is, to the degree that “the fight” was potentially a useful signal of legislators’ true ideological stances, “signing up for another one” must also be a useful signal.  This would change only if some other event intervenes to explain why ideologically pure individuals would shy away from the fight, allowing heterogeneous members to once again “pool” on agreeing to resolve the fight “permanently.”[1]

The delicious irony here is that the incentive to fight over fiscal responsibility, the latest round of which appears to have been a public approval loss for the GOP, is arguably part of the cause of the fiscal responsibility problem (at least with respect to debt ceiling and shutdown inefficiencies) itself.  This is in line with the frequently noted historical frequency with which, in spite of the fact that Congress can at any time stop having to take such “tough votes,” the debt ceiling has been increased over 90 times since World War II: these votes provide opportunities for members of various factions to attempt to “signal their true colors” by standing fast for a little while in the face of a “must pass vote.”

There’s more here, but it’s Friday.  So, I’ll signal my true type by grabbing a beer and leaving you with this.


[1] I will leave aside for now the issue of plausible such events: one example, of course, would be a “grand bargain” that (say) cuts/controls entitlement spending in the future.

2 thoughts on “No, Seriously, That Was Such A Bad Idea, WE MUST DO IT AGAIN

  1. The debt ceiling is historically a tool that they use to force a president to accept items Congress wants but the pres would not otherwise accept, such as Sens. Gramm Rudman-Hollings under Reagan and O’Neill. which cut body defense and domestic spending drastically. True, is also sent a signal such as I won’t vote for an debt ceiling se unless we agree to cut spending. The dynamics are quite different now, of course, and I am unsure of the extent to which the signaling theory is useful in explaining the game they are playing. Would be nice if it were the same game as Gramm Rudman, but it isn’t.

    • Thanks for the comment, Jeff. I definitely agree that the debt ceiling is viewed in different terms now than, say, in the 1980s.

      That said, I’m not sure that the debt ceiling/budget is being used any differently in this case. My point is only to argue why the dynamics of congressional bargaining might be emerging as they are and, particularly, why some members of the House (mostly Republicans) are using these items “to force a president to accept items [they] want but the President would not otherwise accept” when, as we have seen, (1) using these items is costly and (2) it’s unclear that their use had any chance whatsoever of getting the President to accept what they wanted (e.g., defunding/modifying the Affordable Care Act).

      Using a costly bargaining tool to get a better bargain is fairly intuitive: using a costly bargaining tool when you have no reason to expect that its use will work is less intuitive. My point in these posts has been to try and illustrate that, while it might not be intuitive, this apparently irrational/crazy behavior is in fact entirely consistent with rational behavior in some circumstances.

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