Markets spiked Thursday morning on reports top House Republicans are pushing a move that could raise the debt ceiling in a way President Obama and enough Democrats could live with. Nobody’s so foolish as to expect Congress to come up with a long-term solution to a grave problem threatening the entire economy and every American. Please. But there is the growing possibility of something Congress does do well, the short-term bandage.
When Treasury Secretary Jack Lew testified in the Senate Thursday morning, Republicans kept asking him, well, what if we just raise the debt ceiling enough for a few weeks?
“The president made clear the he thinks dealing with this for a longer period of time would be good for the economy,” Lew said. “But he did not rule out doing something shorter if that’s what Congress does.”
Raising the debt ceiling enough to accommodate several weeks of government borrowing could buy time for a broader budget deal. That could include money-saving changes Republicans want to Medicare and Social Security, as well as modifications to the tax code. Those would still be controversial to some, but could get Democratic support that GOP Obamacare proposals can’t.
Republican Congressman Paul Ryan hinted at Republicans backing off their Obamacare demands in a Wall Street Journal op-ed earlier this week. In 1,009 words, he did not once use the one that rhymes with Mobamacare, even though Republican anger at the health care overhaul was the key cause of the fight that shut down the government and terrified markets with the possibility of a catastrophic government default.
But don’t forget about the great demon of capital U-Uncertainty, which investors loathe. A short-term debt deal doesn’t slay the Uncertainty Monster. It just returns it to its cave, perhaps only to come back stronger.