The Government Shutdown: How This Ends?

It’s day one, and there is agreement that we don’t know where we are headed or how we get there.  Both sides are playing a long game and seem unified in their brinkmanship.  If current market and political realities are any indicator, we’re a long way off from there being enough pressure on either side to deal.  Indeed, as my colleague Ted Alden emphasizes, the areas of government hit the hardest by the shutdown don’t provide services that the hardliners value, making compromise more difficult.  This could go on for a while (the on-line betting odds look about even for the shutdown to go more than 7 days), but when we do get to making a deal, here is one idea on the way forward.

There is an agreement on

The net effect of a committee of this sort is to create two tracks: the first is the negotiation of a reform that allows Republicans out of the box they are in, a ““shiny bright object” that would not have to be paid for with cuts elsewhere.  The second track combines a negotiation over easing the sequester and a debt ceiling increase with strengthened budget enforcement rules.  It may be that agreement on chained CPI is not enough for House Republicans to agree to an automatic debt limit extension, but should be the starting point for negotiations.

Skeptics will note that this approach mirrors the failed 2011-12 “super committee” that gave us the sequester.  They are right.  As then, the challenge is choosing the appropriate “sticks” to provide the correct incentives for both sides to agree.  For Democrats, the threat could be to set spending for the remaining of the year at the sequester level.  For Republicans, it could be a clean debt limit increase without conditions or reforms.  No doubt, if we fail, we will be soon back in the brinkmanship of the current situation.  If we succeed, we have used the shutdown to overcome the really scary problem of the debt limit.

Win-win?