ANALYST: It Looks Like This Is 'Unilateral Disarmament' By The GOP On The Debt Ceiling

white flag surrender

Eurasia Group analyst Sean West comments on the news that the GOP is willing to offer a 3-month debt ceiling hike in exchange for the Senate passing a budget:This seems like unilateral disarmament on the debt ceiling in the short-term on [the] behalf [of] the GOP. Democrats aren’t going to like it and the next few weeks will be noisy. But I suspect the debt limit gets pushed out beyond the sequester and the continuing resolution, and those become the real fights.

This seems to be the market’s read as well. Volatility is collapsing.

The writing’s been on the wall that the GOP would likely fold on the debt ceiling.

Outside pressure is coming from all kinds of conservatives (the Koch brothers, Charles Krauthammer, Newt, etc.) who are saying that the debt ceiling is not the place to take a stand on this issue.

Meanwhile, even Larry Kudlow is using the word “retreat.”

Greg Sargent at The Washington Post, who has been early in predicting that the GOP would not go to the mat on the debt ceiling, explains the significance of today’s move.

On the debt ceiling, at least, this is a complete cave. As noted below, the mere willingness to raise the debt ceiling temporarily was itself an acknowledgment by Republicans that the threat of default gave them no leverage and that they had essentially lost this fight. Now the three month extension means that in practical terms, it’s essentially been removed from the talks entirely.

The reason it’s been removed from the talks entirely is that before that three months is up there’s going to be a sequester and a budget shutdown fight. So those are where the battles will be: the Continuing Resolution and the sequester.

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