Fifty plus One

Recent commentary on the current government shutdown and the fast-approaching debt ceiling crisis have often cited gerrymandering as the proximate cause for the rise of a bloc of conservative congressmen pushing the Republican conference to confrontation. As often, the media conventional wisdom badly misses the mark.

Sizable Republican gains in the 2010 midterms at the state level paved the way for Republican redistricting in swings states like Ohio, Michigan and Pennsylvania. Despite Obama winning each of these states by varying margins, the House delegations are overwhelmingly Republican (12-4 in Ohio, 9-5 in Michigan, and 13-5 in Pennsylvania). In 2012, total votes cast in House elections for Democrats exceeded Republicans by 1.7 million, yet Republicans held the House 234-201.

While gerrymandering in these and other states limited Democratic gains in the House, demographics and sorting are largely to blame for the differences between the overall vote totals and the division of seats in the House. Democratic voters are increasingly concentrated in urban areas, and, therefore, even under a "fair" redistricting, Republicans would likely outperform their overall vote totals given that Republican votes are more geographically diffuse (see this blog post from John Sides).

However, the gerrymander has very little to do with the dynamics driving the current standoff in Washington. Indeed, since the object of a gerrymander is to spread your voters across several districts, a gerrymander should generate more marginal districts with lawmakers who have stronger incentives to appeal to moderates and members of the opposite party. Many of the Republican House members expressing reservations about the shutdown hail from gerrymandered districts (see this roll call).

Much of the analysis surrounding the shutdown has also suggested that because of increased polarization of congressional districts, political pressure this time is less likely to force a resolution compared with the last government shutdown in the 1990s (see this article from National Journal). As economists like to emphasize, think marginal not average. That the average Republican district has become redder matters less than the number of marginal Republican districts. To the extent that a government shutdown benefits Democrats in 2014, these gerrymandered districts may give Democrats a better chance to take control of the House. In a less gerrymandered world, Republicans majority would likely be narrower but more durable. By broadening the playing field, a gerrymander gives Democrats a better opportunity to exploit any backlash and retake the House. Their prospective majority (like the 2008 majority) would be precarious, but all it takes is 50 + 1 to run the House.

See this blog post by Nate Cohn making a similar point.

Whither the Debt Ceiling?

Though this blog has mostly featured excerpts from my cross-country bike trip earlier this summer, I promised sundry other topics and, aside from the odd post about Tottenham Hotspur, future posts will probably be more heavily geared to economic policy and politics.

The threatened shutdown of the federal government in less than four days is currently occupying much of the media's attention but just weeks later a much more problematic threshold awaits: the debt limit. The debt limit restricts the total borrowing of the US Treasury, and after October 17th, absent Congressional action, the Treasury would no longer be able to pay all the bills of the government.

This clip from the West Wing pretty well captures the political norms around the debt ceiling under previous presidents - in particular, using the debt ceiling as leverage to achieve other policy ends was considered far too dangerous. However, in the 2011 debt ceiling fight, this norm was violated as President Obama and House Speaker John Boehner negotiated deficit reduction linked to raising the debt ceiling. As discussed in this post by Matthew Yglesias and echoed by Jonathan Chait, Ezra Klein and others, this decision to allow the weaponization the debt ceiling may prove to be the costliest in Obama's presidency.

Given the threat posed by using the debt ceiling as political leverage, Obama has pledged not to negotiate again over raising the debt ceiling. Speaker Boehner, in an effort to get past the immediate government shutdown deadline, has pledged to his caucus that he will extract significant concessions from the president in exchange for raising the debt ceiling. Moreover, a fraction of the House Republican caucus has expressed the view that breaching the debt ceiling would not be interpreted as a default since incoming cash flows more than cover interest payments on the debt.

So how does this game end? Each party appears to have backed itself into a corner, and it certainly would be the case that clean debt ceiling increase (Obama's preferred outcome) would have the votes to pass the House (and Senate) if brought to the floor. However, such a capitulation would likely cost Boehner his job.

One option might be to make a token concession to Boehner, but it's hard to imagine what such a concession might be that would still preserve the Obama's credibility. Paradoxically, the best way to resolve the debt ceiling may be a government shutdown next week. The shutdown would build political pressure for a resolution without risking a default and financial crisis. Concessions won on the budget would allow Boehner to claim victory while Obama could argue that he compromised over the budget, not the debt ceiling.

However, a shutdown averted this week while leaving the debt ceiling unaddressed increases the possibility of a debt ceiling breach. It's difficult to know the consequences of a default (which in the immediate days following Oct. 17 would result in delayed payments) - certainly financial markets would sell off, but a commitment by Obama to fully pay interest on the debt could be enough to head off a sharp rise in borrowing rates. A week of airports closed, soldiers and Social Security recipients going unpaid, and agencies shuttered would force Congress to raise the debt ceiling.