Speaker of the House John Boehner is threatening to hold the debt-ceiling hostage again this coming fall in an attempt to prevent the Bush Tax Cuts from expiring.
Under the current baseline agreed to in the Budget Control Act, the debt-ceiling deal wherein Boehner claims he received “98 percent of what he wanted,” every bracket of the Bush Tax Cuts will expire at the end of fiscal 2012. The only way any bracket, whether at the low-end or high-end, will be extended beyond fiscal 2012 is through an act of congress. If congress and the president simply do nothing, they will automatically expire.
Boehner was clearly hoping that the debt-ceiling would provide him the leverage, again, to force the issue. Unfortunately for him, the Treasury has already prepared to go beyond the new year and possibly even into the next session of congress without another congressional act to increase the current limit.
Treasury officials note — and Secretary Timothy Geithner made clear Tuesday — that the administration expects to be able to manage its accounts in such a way that the true deadline for raising the debt limit won’t actually come until early next year — after the fiscal cliff on January 1, and possibly after the new Congress is sworn in. Which means it’s unclear if Boehner’s threat has any teeth to it.
Speaking in Washington Tuesday at the Peterson Foundation Fiscal Summit, Geithner acknowledged that he can delay running up against the debt limit, just as he did in the debt limit showdown last summer, when he bought the administration several additional weeks of wiggle room to continue budget negotiations. “On the current estimates — and these are going to change — you know, we’re likely to hit the debt limit sometime before the end of the year,” Geithner said in remarks delivered before Boehner’s. “But Congress has given the executive branch a set of tools that buy them some time. And those tools will probably take us into the early part of 2013, thus separating somewhat the timing of the expiry of the tax cuts and the sequester with the ultimate need for Congress to act on the debt limit.”
Somehow I doubt this devilishly clever chess-move was part of the 98 percent Boehner claims he was asking for.
This not only nullifies any and all leverage the Republicans thought they had to renew the Bush Tax Cuts, it also means the Republicans will have one less weapon to run with in the waning days of the 2012 election. And come election day, the Bush Cuts will have already expired.
I expect the first piece of legislation introduced during the next session of congress will be a new middle-class tax cut designed to replace the previous middle-income bracket of the Bush Tax Cuts. One that will leave the higher income brackets at a higher rate. And the Republicans can filibuster it if they dare.
Sorry Boehner, no brinksmanship for you.