Tuesday, July 19, 2011

Debt Ceiling Update

Short post. Almost my bedtime.

Rupert and James Murdoch stole the media show today, so not much good analysis on CNN of today's events in the debt ceiling saga. Here's my take:

The currents are moving against House Republicans. Their vote today on Cut, Cap and Balance was an embarrassment. The media is laughing at them, since the bill is DOA in the Senate and Obama has said he will veto it, if it hits his desk. The public wants a balanced approach to a debt ceiling deal - spending cuts and new revenues, in poll after poll. A new CNN poll reported tonite showed 67% of the public wants a spending/revenue combination agreement.

And today in the Senate, Sen. Tom Coburn rejoined the once again Gang of Six, and they have published their plan outline (very similar to Bowles-Simpson Deficit Commission): $3.7 - $4.0 trillion with over $1.0 trillion in new revenues. Three Republican Senators (Coburn, Chambliss and Crapo) are in the Gang. Other Republican Senators signed on today, including Kyl, the #3 Republican in the Senate. Obama called the plan a "very significant step", stepping into the White House briefing room to say that now the Senate, the White House and the American people are together in seeking a balanced deal.

What does this change? In the battle plan shaping up on the field - probably not too much. The immediate way forward is still some version of the McConnell-Reid deal. But Republicans in the House are now isolated: on the one hand, the Senate, the White House and the people want a balanced, grand bargain; on the other side House Republicans  are dead set against revenue increases and where many members seem to welcome the idea of a default. And it is not impossible that the House will not approve McConnell-Reid, and we will get to August 2 without a deal.

What then? The 14th Amendment defense, which President Clinton came out in support of today. Obama will probably have to give the markets some lead time, so my guess is that if we don't have legislation by next Friday, July 29, the President will announce that he will continue to order Treasury to issue new debt as required, in line with his duties to defend the Public Debt, as laid out in the 14th Amendment. If he does this, Republicans will have a short weekend to decide if they are going down the impeachment trail, or if they will fully cave and give him the legislation he needs to be able to raise the debt ceiling without the 14th Amendment defense, and without having to chart brand new constitutional waters.

I think Republicans have lost this one decisively, no matter what the outcome:

If McConnell-Reid passes, Republicans will be endlessly harassed about putting the John Kerry flip-flop into formal legislation, so they can be for debt ceiling increases, before they are allowed to vote against it. It is a chicken-hearted arrangement that will not give them the cover they think they are getting.

If McConnell-Reid is voted down in the House, the Republicans will be telling the American people that they don't care about default for the US, and that, as David Brooks said, they are no longer fit to govern. If they scramble and vote it in after the President announces he will not let the US default, they will show up as chickens as well as idiots. If they try to impeach Obama, they will be laughed out of Dodge.

There have been a slew of negative articles from Progressives on Obama as a leader. I will be talking more about this soon, so will only ask rhetorically now: do you really think the Gang of Six would have broken the "Republican blockade" against any deal including revenues if the President had been berating them, and drawing lines in the sand, and calling all his troops to fight against the never-ending evil of Republican hypocrisy, etc.?

No bloody way! He waited. He was patient. He signaled what he wanted. Almost got it with Boehner, and then Cantor made his move and Boehner retreated. Now Senate Republicans are saying "Screw you!" to the House Republicans, and in the interest of serving the greater country, are agreeing that we need to take a balanced approach.

Why didn't he do this sooner Progressive pundits are wailing? Why didn't he firmly embrace Bowles-Simpson? Do you really think it would have worked if he had been out there with a Grand Bargain to begin with? He would just have given his opponents a better target to shoot at. He needed to wait for Republicans to commit themselves: first the Ryan budget, and then the absolutely no new revenues approach on the debt ceiling. He needed to be patient, reasonable and optimistic - until something broke his way.

It just did. Today. Senate Republicans favor new revenues as well as spending cuts. Hooray!!!

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