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Cantor announces plan for three-month debt-ceiling extension

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This afternoon, House Majority Leader Eric Cantor (R-Va.) threw in the towel on his party's entire debt-ceiling strategy -- he effectively let the hostage go -- though he's apparently adding a challenge of sorts to his new plan.

"The first step to fixing this problem is to pass a budget that reduces spending. The House has done so, and will again. The Democratic Senate has not passed a budget in almost four years, which is unfair to hardworking taxpayers who expect more from their representatives. That ends this year.

"We must pay our bills and responsibly budget for our future. Next week, we will authorize a three month temporary debt limit increase to give the Senate and House time to pass a budget. Furthermore, if the Senate or House fails to pass a budget in that time, Members of Congress will not be paid by the American people for failing to do their job. No budget, no pay."

Let's unpack this a bit. Republicans, after months of bluster, have now given up on a debt-ceiling fight. The writing was on the wall earlier, but Cantor's statement effectively makes it official. Plenty of pundits -- you know who you are -- said President Obama would cave in this fight, but those predictions were wrong. Obama drew a line in the sand, and this time, well ahead of an actual crisis point, the GOP backed down.

But what about this talk about the Senate and the budget? Cantor's charge that "the Democratic Senate has not passed a budget in almost four years" isn't actually true, and it's been debunked many, many times. Regardless, it's not altogether clear what the House Majority Leader thinks would happen if there isn't a budget agreement -- Republicans will still have to raise the debt ceiling again, and they've already assured the public that default is off the table.

For that matter, Cantor's new plan suggests lawmakers won't get paid unless they pass a budget. This isn't just incorrect; it's plainly unconstitutional.

As for passing a three-month debt-ceiling increase, this is a bad idea that fails to do Republicans any favors.

As we talked about yesterday, these debt-ceiling showdowns aren't helpful to anyone, anywhere. Having one per year is dangerous -- why anyone would consider it prudent to have two over the course of a few months is a mystery.

As for the politics, now that both sides agree that default isn't a credible option, planning a three-month increase only puts House Republicans in the position of casting an unpopular vote more than once -- and in this case, probably ignoring the "Hastert Rule" more than once, too.

It'd be vastly smarter for the GOP to shift this authority to the executive branch altogether, especially if Republicans now realize there's no utility in threatening to trash the full faith and credit of the country on purpose.

That said, putting all of that aside, Republicans giving up is a huge development. Take a look, for example, at what happened to the so-called "panic index" after Cantor's announcement.