If you thought the fiscal cliff was bad, just wait for the triple threat.
The White House and Congress are facing three critical deadlines -- the country hits its debt limit as early as mid-February, $1.2 trillion in automatic spending cuts take effect March 2, and the government runs out of money to fund operations later that month.
There is no real optimism among Republicans and Democrats that the standoff will end quickly, or painlessly. The strategy of each party rests largely on the other one folding.
President Barack Obama says he absolutely won't forfeit anything in return for an increased borrowing limit. House Speaker John Boehner (R-Ohio) says he won't permit an increased borrowing limit unless spending is sliced by the same amount. Republicans won't raise taxes any further, even as the president insists that any package is divided equally between cuts and revenue. And congressional Democrats are still hoping Obama acts unilaterally to resolve the debt standoff.
It's even unclear whether the explosive fiscal trio will be handled together or apart: Some House Republican leaders want to deal with the three deadlines separately, while others would negotiate them together. But the triple threat may hit sooner than originally thought; Treasury Secretary Timothy Geithner told Boehner in a letter Monday that the debt limit may need to be raised by mid-February, rather than the end of that month.
Here are POLITICO's five bets on how the crises could play out:
Apply a Band-Aid
When all else fails, Washington opts for short-term fixes.
So it's not surprising that Boehner's chief of staff told a gathering last week at the Republican National Committee headquarters that Congress may end up raising the debt ceiling every month or every three months.
The idea is gaining ground among Republicans as a tactic to wear down Obama and force him to cut spending, repeatedly and deeply.
But Democrats won't go for it, unless they are convinced Republicans are ready to throw the country into default. The West Wing truly believes that Boehner and Senate Minority Leader Mitch McConnell (R-Ky.) will never allow that to happen, so Republicans have no leverage, according to a source familiar with White House thinking.
The business community, Wall Street and credit-rating agencies would also oppose a month-by-month approach. Democrats see it as extraordinarily damaging to the president's second-term agenda.
"We shouldn't be doing this on a one-to-three-month time frame. Why would we do that?" Obama said at a news conference Monday. "We can't manage our affairs in such a way that we pay our bills?"
Even if Republicans cave on the debt ceiling and raise it for an extended period, they could force short-term patches for the sequester and a bill to fund government agencies as a way to extract deep spending cuts.
Steven Bell, a longtime budget aide to former Sen. Pete Domenici (R-N.M.), said he views this as the most likely scenario: extend the country's borrowing authority for three months and allow the sequester to kick in.
"Do not underestimate the number of people who are really frustrated, really unhappy, who are saying I'm not going to do this anymore," said Bell, senior director of economic policy at the Bipartisan Policy Center. In their view, the sequester "is the only way to get real cuts."
This approach, Bell said, "would probably precipitate enough pain to force Congress to do something."
Most people call this a Doomsday scenario: The debt limit isn't raised, the country defaults and many functions of government grind to a halt.
But to a growing number of Republicans, it's a perfectly appropriate way to deal with what they view as a debt Armageddon. The default idea is getting serious consideration among the House and Senate GOP, POLITICO reported Monday.
If Congress doesn't raise the debt ceiling, Obama would have to prioritize who gets paid first. The debt would jump ahead of other obligations, which is why some Republicans argue that the country wouldn't technically go into default if borrowing authority isn't extended.
Enough money would be left over to fund about 60 percent of the government's functions. Social Security payments, military salaries and Medicare may continue while other services -- tax refunds, air traffic control, road construction, federal courts, defense contracts -- are suspended. There wouldn't be enough money coming in each day to fund everything.
Republicans despondent over the $16 trillion debt say that isn't a bad thing.
In private meetings and conversations over the past week, Republican leadership officials warned that the White House, much less the broader public, doesn't understand how hard it will be to persuade conservatives to retreat. Many House Republicans believe it's far riskier to pile up new debt than it is to risk default or shuttering the government.
"The American people do not support raising the debt ceiling without reducing government spending at the same time," Boehner said Monday. "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."
Democrats don't think Republicans will ever allow the country to default. Aside from the threat of plunging the global economy into recession, the politics would be horrendous for the GOP, Democrats argue.
It would play too neatly into the hands of House Minority Leader Nancy Pelosi (D-Calif.) and campaign chief Rep. Steve Israel (D-N.Y.), who are on a mission to convince voters that all the gridlock and ills of Washington stem from intransigent Republicans.
Both sides are currently coming from a place of "no." Obama believes Republicans will cave on the debt limit, and Republicans believe Obama isn't serious about refusing to negotiate.
Boehner insists that Republicans won't raise the debt limit unless government funding is sliced by the same amount. McConnell says the same, as do most Senate and House Republicans. They're just waiting for Obama to get skittish and sit down with them.
For Republicans to agree to a $1 trillion hike in the debt limit, which would get the country through the end of the year, they say it must be matched by $1 trillion in cuts. A six-month hike worth $500 billion would require $500 billion in cuts. And so on.
But Obama said that Republicans are incapable of making good on their own threats. They can't agree on $1 trillion in cuts to replace the sequester, Obama said, so how would they ever manage to unite around another $1 trillion for the debt limit?
"They've claimed that they don't want to gut Medicare or harm the vulnerable, but the truth of the matter is, is that you can't meet their own criteria without drastically cutting Medicare, or having an impact on Medicaid, or affecting our defense spending," Obama said. "So the math just doesn't add up."
Republicans must figure out how to complete a task done by generations of lawmakers before them without threatening to crash the economy, Obama said.
"We've got to break the habit of negotiating through crisis over and over again," he said. "Because if we continue down this path, then there's really no stopping the principle."
Boehner would face stiff resistance from Republicans if he abandoned the dollar-for-dollar increase to spending cuts, but it would open the door to a deal. The debt ceiling would then become one piece of a larger deal to extend government funding and replace the sequester -- two elements that Obama would agree to negotiate.
The package could be so large that Republicans could claim they got Obama to give up cuts in exchange for the debt limit, although the White House will insist that it did not.
This scenario could hit a dead end, too.
That's because Obama would invoke his own rule: To replace the sequester, half the savings must come from new revenues and the other half from cuts, which are divided equally between defense and nondefense programs. As part of the fiscal cliff deal, Congress and the White House used this formula to pay for the two-month sequester delay.
But Republicans insist they won't raise any more taxes.
Third time is the charm? Try to go big, again
Obama would still love to get a grand bargain -- if it looked like this: raise new revenue, set up a process to streamline the Tax Code, reform entitlements and maybe even create a stimulus program such as an infrastructure bank.
Republicans might be fine with it, too, in theory.
The problem? All the details. And the lack of trust after the previous two attempts by Obama and Boehner to strike a sweeping deal. And the bitter memories. The list goes on.
The odds that Congress and the White House will ink a comprehensive deficit-reduction deal appear as long as they have been in more than two years, even though both parties acknowledge it's the only way to break the cycle of fiscal cliffs.
Republican congressional leaders and their rank and file say they won't raise taxes any further. And Obama won't make spending cuts unless they are balanced with tax hikes on the wealthy.
The president on Monday tried to revive the outlines of his last proposal to Boehner -- a $1.5 trillion deal to cut spending and raise taxes.
Nobody appeared ready during Obama's Monday news conference to take him up on the offer.
Obama goes it alone
He's ruled out two of the most talked-about options to defuse the debt-limit standoff: mint a trillion dollar coin or invoke the 14th Amendment.
Congressional Democrats are annoyed by the president's refusal to hold out either one as a real possibility, saying he's undercut his leverage.
If they were looking for any wiggle room during his Monday news conference, Obama didn't give any, saying there is "no ready, credible solution" other than Congress acting.
"Everybody here understands this," Obama said. "I mean, this is not a complicated concept."
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