Raising the debt ceiling is a hoary Washington ritual. We've done it every year since my grandfather's days, except for a few years of surpluses during Clinton's presidency. For the national debt to, per the 14th Amendment, "not be questioned," it must be enacted "by law." In other words, by Congress.
Most years, Congress does it as quietly as possible, at the last moment, with little debate and less suspense. Raising the debt ceiling is a tacit acknowledgement that once more, Congress failed to balance the budget. Congress can try to rope the President into the circle of blame, but the Constitution brings it back to Capitol Hill, and specifically to the House of Representatives.
Occasionally, a freshman senator or representative voted against any given year's debt ceiling resolution, hoping to score political points with the folks back home. Even junior Illinois Senator Barack Obama indulged one time, before the leadership made the pragmatic point that it's not wise to mess with the dire consequences of failing to raise the debt limit, or to call attention to yourself in connection with them.
So why is this year different from all other years? -- to paraphrase the question the youngest literate child asks at the Passover Seder.
The first point is that to Wall Street, it is no different from any other year. The investment world is more concerned with default by Greece and trouble in Italy, which would be Richter scale 5 or 6 earthquakes, if they happen. Nothing in the 222 years since Alexander Hamilton became our first Treasury Secretary has really called the "full faith and credit of the United States" into question. But if something did, it would make the Sendai earthquake and tsunami, with the attendant Fukushima nuclear disaster, look like a Sunday in the park.
If the investment world believed there was the slightest actual risk of such a dire scenario, there is no way the Dow would be over 12,500 this morning. The markets behave on the assumption, probably entirely correct, that Congress will, as always, raise the debt ceiling at the last minute, and do nothing else of consequence.
So while the economics haven't changed, clearly the politics have. We are seeing the consequences of the 2010 midterm elections in action. As I wrote at the time, both parties lost towards the center. The GOP saw more conservative candidates win primaries, even over party favorites, and often go on to win the seat. On the Democratic side, while 94% of Progressives kept their seats, 54% of "Blue Dogs" lost theirs to Republicans. The net effect, particularly in the House, was a sharp move to the Right.
Perhaps, like in the 1946 midterm elections, Congress moved not just to the right of the overall electorate, but even to the right of the mainstream of the Republican Party. If not in actual votes, then certainly in rhetoric.
In the 80th Congress (January, 1947, to January, 1949), there was much talk of using the GOP majorities in both houses to "repeal the New Deal". But there was no action, because the GOP leadership knew that their majority was still not enough to break a Democratic filibuster in the Senate or override a veto by President Truman. The GOP gains were more a resurgence of the pre-Depression, old-school GOP, so party discipline held. Plus, it was clear all along that the GOP had a very strong Presidential candidate for 1948 in New York governor Thomas E. Dewey. Dewey had been the GOP standard-bearer in 1944, and did far better than any Republican who opposed FDR in four tries.
The current 112th Congress resembles the 80th Congress in talking to the right of the country and the mainstream of the Republican Party. But there are key differences. The GOP does not have a clear, strong candidate for President in 2012. Obama is far more popular at this stage of his Presidency than Truman, matching Reagan in the polls. Freshmen Tea-Party-leaning Representatives want to dictate strategy to Speaker Boehner, not follow the guidance of his years of experience.
Truman found his opportunity to turn the over-reach of the 80th Congress to his advantage in the "Turnip Day" special session of Congress. Basically, he dared the GOP to enact the more moderate parts of its platform. The GOP-directed Congress obliged Truman by doing exactly nothing, which is exactly what Truman expected, and wanted. Truman positioned the GOP and the "Do Nothing 80th Congress" as out of touch not just with America but also as out of touch with Republicans. He won re-election in 1948 by a decisive margin, even though the press counted him out.
Truman also won substantial majorities in the House and the Senate, setting up the Fair Deal legislative era (1949-1953). While the New Deal set directions, the Fair Deal really built out such Progressive bulwarks as Social Security, housing, college education funding, financial regulation, civil rights, and support for veterans. The Fair Deal was far broader than the New Deal, and was the largest set of Progressive legislation until LBJ's Great Society.
Obama senses that the debt ceiling debate is his best opportunity to position the 112th Congress and with it the GOP as a whole as too far right for either the electorate or the Republican Party. Like Truman in 1946, Obama can let the GOP do most of the damage - to itself. Obama won't bite on Mitch McConnell's stunning retreat offer, because he knows that in the short run, it is a non-starter in the House and the GOP intra-murals show their positioning to the public more clearly than any statement from any Democrat, including the President. Scolding House Majority Leader Cantor, Obama said, "Don't call my bluff." I'll take the case to the people. Except that Obama doesn't have to work hard to do that: the GOP and the news media are doing it for him.
Obama picked this battle because he thinks he will win. Winning has little to do with the deal cut, because all the implementation and most of the details will be punted into the future. They will start to change even before the ink is dry. Winning is about positioning the opposition party in 2012.
July 15 is the 63rd anniversary of the day President Truman called the special session of Congress. Obama hopes his Turnip Day will come a year sooner in the cycle. And given how protracted our election cycles have become, he may get his wish.