GOP Dynamics Still Make Early Debt Ceiling Deal Unlikely

Conservatives, after feeling betrayed by their representatives in Congress, now sense that they have a rare opportunity to get the opposition to capitulate to their demands. There's so much information and misinformation flying around about the debt ceiling debate that it's hard to know what to believe for those jumping from headline to headline. Wall Street seems especially confused, waxing and waning between "there will be a deal because there has to be a deal" and "is this really not going to happen?" It's only getting worse as we approach the soft and hard deadlines and as the ratings agencies weigh in. On Monday I wrote a piece arguing why a deal won't happen before the August 2 deadline (see

). Since then we've learned a lot as media coverage has ramped up and influencers have played their cards. As Ezra Klein of the

, we've learned that Republicans are completely opposed to higher taxes or new revenues of any sort, and President Obama is desperately committed to achieving a large deal that closes the deficit by a significant amount. There was some breaking in the ranks earlier this week as Senate Minority Leader Mitch McConnell proposed a convoluted plan that would allow President Obama to more or less unilaterally raise the debt ceiling so long as he and Congressional Democrats were forced to vote against spending cuts over and over again, with some commentators cynically noting that an additional condition be that the president be forced to sit in a dunk tank.

However, since then, it appears that the GOP is slowly closing its ranks to opposition and is becoming more and more committed to no deal before August 2, and certainly not before the July 22 soft deadline. House Majority leader Eric Cantor, increasingly becoming the most powerful person in the negotiations,

that the House will vote next week on a balanced budget amendment, so it's hard to understand how an agreement could be reached before then. The clearest sign of a prolonged delay yet was Senator McConnell reversing course today and

"Cut, Cap, and Balance Act," which says, as one of its conditions for raising the debt ceiling, that a balanced budget amendment must be added to the Constitution. Originally put forth by Tea Party Senators Mike Lee and Rand Paul, "Cut, Cap, and Balance" is now

in the Senate after six more Republican Senators, including McConnell, signed on today. Even retiring Senator Kay Bailey Hutchison, a thorn in the side of conservatives in recent years for her yes vote on TARP,

when she has no more political calculations to make. This increases the odds that 41 or more Republican Senators could filibuster any deal if need be.

And the problems with getting any deal through the House are well-known. Jonathan Chait of the New Republic

that "all but four" House Republican freshmen, during orientation, said they would vote against raising the debt ceiling under all circumstances. Speaker Boehner

that between 80 and 120 House Republicans would vote against raising the debt ceiling with or without tax increases.

former Congressional staffer and blogger Stan Collender about the dynamics of the Tea Party and the debt ceiling negotiations, who pointed out how hard the votes for the budget continuing resolutions were this spring, and how the conservative base is becoming more and more dogmatic in its ideological opposition to tax hikes, government spending, and the national debt. This is becoming even further complicated by the notice that ratings agencies Moody's and S&P have served over the past couple days threatening to downgrade the credit rating of the United States without a debt ceiling hike soon that also addresses the long-term budget deficit. S&P went so far as to

over the next decade, with one tweeter wryly noting, "A division of McGraw-Hill just tried to dictate terms to the Congress of the United States."

In the short-term it appears that the options are 1) a can-kicking deal that improbably makes its way through the House and may or may not lead to a credit rating downgrade anyway, 2) a big enough dose of austerity to satisfy Republicans and the ratings agencies that Democrats meekly accept, and could threaten a double dip recession, 3) the most likely scenario, an impasse until financial markets and/or ratings agencies put enough pressure on both sides to work something out. We all know that eventually the debt ceiling will get raised. Minnesota finally

after two long weeks, so a debt ceiling impasse probably wouldn't last past the middle of August. But at this point conservatives, after feeling betrayed by their representatives in Congress over TARP, the 2009 stimulus, the auto industry bailouts, the Bernanke reconfirmation, health-care reform, and the budget continuing resolutions, sense that they have a rare opportunity to get the opposition to capitulate to their demands, and will do everything they can to hold the government hostage for as long as possible.