Back from the debt-ceiling brink

The House GOP seems to have extricated itself from a bind that could have damaged both the American economy and its own political future. Frustrated by Democrats’ opposition, many House Republicans wanted to use the debt ceiling as leverage to force the Senate and the White House to accept deeper spending cuts. But after three days at an annual retreat, party leaders said Friday that they’re willing to move the fight over spending to more appropriate times — including the looming debate over funding the federal government after March 27, when the money for most operations runs out.

That’s a good decision for everyone involved. President Obama has said repeatedly that he won’t negotiate over the debt limit again, arguing — correctly — that refusing to raise it is irresponsible. It’s not like cutting up the federal credit card, as Republicans have suggested; it’s refusing to pay the bill. If Republicans had insisted on holding the debt limit hostage to deeper cuts, they could have triggered at least a partial default that would have shaken global financial markets, raising interest rates and exacerbating Washington’s budget mess. The political fallout for the GOP could also have been significant.

Rather than finding out the hard way whether the president is bluffing, House GOP leaders appear to have persuaded their members to support a bill that would effectively waive the debt limit until May 19. Their goal is to win deep spending cuts before that as part of the negotiations over two other looming legislative battles: funding government for the rest of the fiscal year and reshaping the across-the-board spending cuts due to go into effect March 1.

What’s often lost in the debate over deficits and the debt ceiling is the fact that Congress holds the federal purse strings, with the president limited to vetoing the measures he doesn’t like. If Congress wants to staunch the flow of red ink, it needs to trim the annual spending bills and adjust the tax and entitlement laws responsible for the imbalance. That’s far easier said than done — even the House Republicans’ belt-tightening budget proposals in 2011 and 2012 still called for trillions of dollars in new borrowing over the coming decade. And any dramatic shift toward austerity through spending cuts or tax increases threatens to scuttle the fragile economic recovery.

Even if Congress agrees to take the possibility of a default off the table, the stakes in the budget battle remain high. If the past is any guide, the public won’t respond well to the House GOP if it forces a government-wide shutdown in late March. But at least the party seems ready to stop threatening to put the entire economy at risk.