So President Obama has reportedly given congressional leaders a menu of options in the debt ceiling talks: a small, temporary debt deal; a medium-sized "down payment"; or the big "grand bargain".
No question -- and it sounds like most of lawmakers agreed -- the motto on the debt ceiling deal must be: Go big or go home.
Well, don't go home; keep working. But by all means, go big.
The debt ceiling is forcing lawmakers -- who clearly won't take the initiative on their own or we wouldn't be in this mess in the first place -- to confront the tremendous challenge of reducing the national debt.
This is going to be bloody political battle no matter what. So why shed all that blood and not actually fix the problem?
The president and Congress have the chance to save the country from fiscal ruin.
There are political gains to be had from a big deal, despite what some pollsters or partisan strategists say. No one wins if Washington's leaders have to go to the American public and say: "We made choices many of you won't like, teetered on the brink of default and reached a deal. But, hey, it's not enough so we'll have to do it all over again soon."
So here is what we should look for in a debt ceiling deal -- and, frankly, should accept no less.
Lift the ceiling. Fast: We have to lift the debt ceiling and all this talk of not doing so, or even going up to the wire, is irresponsible.
I agree with the desire to make sure that the debt ceiling forces action on the budget. But it will ultimately require some give and take.
In the business world, for example, it is not generally considered acceptable negotiating strategy to walk into the boardroom and threaten to blow up the building if you don't get exactly what you want. Members of Congress should be able to find a negotiating strategy that doesn't threaten to take the country down as a bargaining chip.
And don't be fooled by arguments that we can prioritize our payments without roiling markets. Maybe. For a short while. Or maybe not. You know how when you touch the stove to see whether it's hot, and you think, "man, that was a dumb way to test whether the stove was hot?" We shouldn't try to test how much leeway financial markets will give us by potentially going too far.
Come up with a plan big enough to actually fix the problem: It will take a $4 trillion plan to keep the debt from growing faster than the economy. This is the minimum we should be talking about as a means to reassure credit markets and get us on the right budget path.
A $1 trillion to $2 trillion deal as part of the debt ceiling increase -- while nothing to sniff at -- is unlikely to reassure credit markets. Particularly if it fails to tackle entitlements in a real way.
Policymakers cannot continue to focus on the parts of the budget that aren't broken, such as discretionary spending, while ignoring the massive problem of entitlement spending and a disastrously inefficient tax code.
Thus, any serious large scale effort needs to include major reforms to the most out-of-control parts of the budget: Social Security, Medicare and Medicaid. A real budget deal will include real fixes for these programs, not more false promises not to touch them. Inaction only makes it harder to fix them down the road.
Do it fast -- No more political punts: I can actually see Congress coming up with a pretty good plan to save $4 trillion. My concern is that the real policy decisions will be punted until after the election.
Symbolic cuts and a flimsy mechanism to ensure that the tough policy decisions are made in 2013 opens the door for political mischief and an election season with politicians running away from those tough choices.
Nope, a real deal must contain tough, specific policy choices on cutting defense, fixing Social Security, changing health care and fundamentally reforming tax reform. If they mean it, they will do it; if they don't mean it, they will promise to, breath a sigh of relief, and head off into the never-never land of campaign promise-making.
So the bottom line is that any real deal needs to be large, specific and passed this year to be seen as credible. Out of this debt ceiling negotiation, we should expect no less.
