The threat by congressional Republicans not to raise the debt ceiling – possibly allowing the United States to go into default – doesn't seem to be scaring President Obama, at least based on his ongoing refusal to negotiate on the matter.
But it is clearly scaring many members of their own party.
With the US likely to hit the limit on its borrowing authority as early as mid-February, more and more Republicans are publicly beseeching their party to drop the game of chicken – calling it both bad policy and bad politics – and focus instead on other, less-risky opportunities to push for spending cuts.
As the GOP begins a three-day retreat Wednesday to plot out legislative strategy, The Wall Street Journal reports that party leaders have grown "anxious" about the debt-ceiling standoff, writing that some members are worried "about the economic impact of the government's possibly missing some payments."
More important, Republican leaders are facing growing pressure from traditional allies outside of Congress, many of whom clearly view the fight as damaging for the country and suicidal for the party. Business groups like the Chamber of Commerce have been urging Republicans to back down on the debt ceiling for weeks now. As The New York Times's Jackie Calmes reports, it's creating an unusual shifting of alliances, with the White House asking business leaders directly to lobby Republicans on the matter. The piece quotes David Cote, the Republican CEO of Honeywell, as saying: "I'm agreeing with the president – you should not be using the debt limit as a bargaining chip when it comes to how you run the country."
Likewise, Tuesday, The Financial Times's Stephanie Kirchgaessner reported that the conservative activist group Americans for Prosperity – backed by the billionaire Koch brothers – also came out in favor of raising the debt ceiling, with a sharp warning that Republicans were losing the messaging battle. Tim Phillips, president of AFP told the paper: "We're saying calibrate your message. Focus on overspending instead of long-term debt."
And the conservative New Hampshire Union Leader editorial page called the debt ceiling the "right fight [at the] wrong time," writing: "The trouble with forcing that standoff is that Republicans cannot win it. Obama will stand firm, and they will have to flinch or shut down the government. Either way, Obama wins and Republicans lose more credibility, which makes it harder to force a showdown on spending on more favorable ground in the future."
The rapidly multiplying calls from conservative groups for the GOP to back down and pick a different fight may have been influenced in part by comments Tuesday from the head of a top credit-rating firm that a repeat of 2011's standoff would lead to the US rating being placed under review, with a "material risk" of being downgraded.
Politically, there are clear indications Republicans are already losing the PR war, with polls showing that the public is broadly siding with the president's position. According to a new ABC News/Washington Post poll, 58 percent of Americans believe that the debt ceiling should be handled separately from the debate over spending cuts, while only 36 percent favor linking the two, as House Speaker John Boehner has demanded. (Mr. Boehner has called for a dollar in spending cuts for every dollar in increased borrowing authority.) And only 22 percent said they'd be willing to let the government default on its debt or have the government partially shut down if an agreement can't be reached.
If party leaders haven't already figured out an escape hatch from this mess, we'd imagine they're looking for one now.