The problem, of course, is that Republicans are taking an equally firm stand. House Speaker John Boehner has vowed to raise the debt ceiling – which could hit its limit as early as mid-February – only if he gets dollar-for-dollar spending cuts. Mr. Boehner reiterated this position in a statement released after the president's press conference, which read: “The American people do not support raising the debt ceiling without reducing government spending at the same time. The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved.”
No one knows how this crisis will unfold, of course, but here's our best guess: Republicans will eventually blink.
In fact, we believe Obama pretty much secured this outcome from the moment he declared that he simply would not negotiate on the matter.
True, it's a potentially risky position to take – since, if Republicans don't back down, the president will either have to go back on his pledge or allow what he himself has described as a catastrophic economic event to take place.
And it is, of course, a far less conciliatory approach than the one the president took back in 2011. That time around, Obama was already in the middle of a tough reelection campaign, and the economy was more fragile. He couldn't risk even appearing willing to risk a default. As a result, Obama and Boehner spent months trying to work out a "grand bargain" on deficit reduction, which ultimately imploded.
But the president has clearly learned some lessons from the whole ugly episode – which resulted in a credit downgrade for the United States – and the follow-up "fiscal cliff" negotiations that took place last month. One is that a grand bargain may simply be impossible right now, given the divisions between the parties. While that doesn't mean those negotiations should be shelved, it doesn't necessarily make sense to keep tying them to economic deadlines that create crises.