THE BLOG
07/07/2011 03:12 pm ET | Updated Sep 06, 2011

Is Obama Bluffing?

Call it wishful thinking. But I can't help wondering whether the proposal floated by the administration in front-page New York Times and Washington Post articles today are a tactical maneuver from President Obama.

Look at the default crisis from his perspective. The debt ceiling absolutely must be raised. He knows that the consequences of American default would be wide-ranging and long-lasting. Because he actually cares about the people who live in this country, he is terrified of the impact of another recession -- possibly even a depression -- on middle-class and low-income families.

That's to say nothing of the politics, where President Obama would pay a heavy price. No matter how much the failure to raise the debt ceiling was the fault of Republican intransigence, voters will blame bad economic conditions on the current occupant of the White House. The catastrophic effects of default would almost ensure his defeat in 2012; even Michele Bachmann would be electable.

Republicans know this as well. They're less concerned about the effects on the economy because a bad economy will deliver the White House back into their hands. They are also facing an increasingly powerful, if ill-informed, base of voters who are demanding that the debt ceiling not be raised. So they have the least to lose by letting America default, even though their leadership knows perfectly well that it would be disastrous.

These circumstances have put President Obama's back to the wall. Republicans are free to make whatever demands they want, no matter how unreasonable, knowing that eventually the White House will have to cave. While Democrats continue to try to sway Republicans with offers of ever-favorable ratios of spending cuts to revenue increases, the GOP simply sticks to its guns and insists that any deal contains zero new revenue. They reject 3 to 1, they reject 6 to 1 -- they'll reject 1,000 to 1.

Why shouldn't they? Sure, polls show that a majority of Americans support raising tax rates back to what they were in the flush Clinton 90's, but it's not like they're going to punish Republicans for not raising their taxes. Declaring "no new taxes -- ever" may be economically nonsensical, but it will never be a political loser for them. It's a simple principle, easy to communicate effectively, and it gives them a ready-made excuse to say no to any deal to solve the default crisis.

So if Republicans won't budge, Obama is left with few options. He could simply give the GOP everything they want and hope they accede before the August 2nd deadline. (But recent history shows that when White House gives the Republicans what they ask for, they just move the goal posts.) He could declare negotiations over and demand that Congress pass an increase in the debt ceiling with no conditions, but he's not entirely certain if Republicans are bluffing, since they might actually be tempted to let America go into default.

It's a Gordian Knot problem. Maybe President Obama is sharpening his sword.

Suppose, just suppose, that he has decided that the executive branch may be forced to act unilaterally, without Congressional approval, to continue paying America's debts beyond the ceiling. After all, if the Treasury Department keeps selling bonds and sending checks, it's not like Tim Geithner will be taken away in handcuffs. It would be a violation of checks and balances established in the Constitution but hardly an unprecedented one (e.g., Libya).

The White House could make the argument, based on the "validity of public debt" clause of the 14th Amendment, that it has the power to act to pay our debts, whether or not the ceiling is raised. Any attempt to stop it would be tied up in courts, possibly well past the 2012 elections. And in the meantime, America would go on simply paying its bills.

This tactic would also, of course, come with no small political cost. Republicans who shirked all oversight when George W. Bush occupied the White House would talk breathlessly of the abuse of power. Mark Halperin would be allowed back on the airwaves to call President Obama a dick to his heart's content. The beltway cognoscenti would be united in their outrage.

So what if President Obama is acting now to minimize the political impact? What if he truly is attempting to give Republicans everything they've asked for, including deep cuts to Medicare and Social Security, but insisting on some new revenue because he knows they'll turn it down?

Imagine the following scenario: the White House floats the deal. (Twin A1 articles in the Post and Times don't happen by accident -- this was a planned release.) They ride out the inevitable outrage from Congressional Democrats and liberal activists -- never this administration's top concern. Republicans inevitably reject the deal, because they've painted themselves into a corner where they can't accept any tax hikes.

That's when Obama declares that negotiations are over. He says that Republicans have not negotiated in good faith, and that they are not serious about either avoiding default or addressing our long-term debt problems. He tells Congress that if it does not pass a simple, unconditional debt ceiling increase, the White House will take steps to ensure that America does not default on its debts to protect our fragile economy.

That's a strong message. That's leadership. And while it may very well be unconstitutional, it may be the best way to avoid an economic catastrophe.

Keep in mind, any deal we reach to avoid default is only a temporary one. Even if the debt ceiling is raised, eventually we'll hit the ceiling again. If he doesn't want to keep playing this same game with Republicans year after year, he needs to do more than just cut a deal. He needs to ensure that they won't threaten the nation with default in the future.

Like I said -- it's probably wishful thinking. But maybe, just maybe, our president is taking a longer-term, strategic view to a very difficult problem.