Expect Much More Budget Crises

Hoping the fiscal cliff will be resolved by Christmas? By New Years? You’re out of luck, or so I argue in a new column, because it ends up tied in with the debt ceiling issue that will result a few months later.

A key issue is that I think a lot of players in Washington are currently underestimating the administration’s resolve to not make any further concessions over the debt ceiling. Obama doesn’t have a reputation in DC for driving a hard bargain or for standing firm, so he’s having some trouble being credible on this. But to the best of my ability to ascertain, I’m quite certain they’re not going to fold on this point. The little gnomes who work in the government and study such things very sincerely believe that the 2011 debt ceiling crisis has a large negative impact on the economy, and therefore very sincerely believe that there’s no point in a budget deal that doesn’t take the debt ceiling weapon off the table. The debate Republicans are having right now is just about whether to try to punt on the fiscal cliff and move forward to the debt ceiling where they think they have more leverage. In a sense they do, but while the White House is happy to make substantial concessions in pursuit of a fiscal cliff grand bargain that also eliminates the debt ceiling they are really truly firmly opposed to a replay of the 2011 debt ceiling experience.

So this fight is going to keep going on for a while.