Jul 25 2011

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At the Edge of the Abyss


With the collapse of all debt negotiations, President Obama huddled with congressional Democratic leaders yesterday to plot strategy.

Their plan?

 If Republicans follow through on Speaker John Boehner’s strategy for a short-term debt ceiling increase that would provide breathing room until January, the President and congressional Democrats will oppose it.

 “Speaker Boehner’s plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the President.” said Senate Majority Leader Reid.

To reinforce the point, speaking on the Sunday talk show rodeo, White House Chief of Staff Bill Daley said  that the President would veto any  short term increase in the debt ceiling.


Set the sordid and disappointing history of the debt ceiling negotiations aside for a moment and look at the hard facts at present.

– We are 192 hours away (and ticking) from defaulting on our national debt.

– Default will unleash a cascade of catastrophic consequences rippling through the US economy and the global financial system, undermining any marginal recovery we have enjoyed since 2008, and potentially throwing millions more into financial uncertainty and economic misery.

– No deal to raise the debt can occur without House Republicans on board.

– Of the 242 Republicans in the House, 39 have signed a pledge promising to vote against any debt ceiling increase unless the “Cut, Cap and Balance” plan – killed in the Senate last week – is the basis for a deal.

– Any deal that will attract conservative votes will further alienate Democrats, making the climb to the 218 votes needed to pass a bill all the more difficult.

Those facts are ugly, and the closer you look, the worse it gets.

With 39 Republicans holding out for a debt deal that can’t pass the Senate, Boehner is 15 votes short of a majority to move any legislation. And these are only the Republicans who have publicly committed to opposing a debt ceiling increase.

Consider the activity of the  Tea Party Patriots – fresh in their new and unlikely role as proxy economic saboteurs – who were busy meeting freshman Republicans – the Frosh-87 – warning against raising the debt ceiling under any circumstances.

That creates yet more uncertainty over how many Democratic votes will be needed to pass a debt ceiling bill.

But those are the facts, and they are not in dispute.

However, from a bitter and frustrating political situation comes a fairly straight forward choice for President Obama.

If the Boehner plan can win first stage approval for a short term debt ceiling increase, given the obvious hurdles in the House, can POTUS really veto it and allow the US to default because the plan is not ideal?

Granted, a two-step debt ceiling deal that forces a second vote in the winter of 2012 is a formidable political challenge for the President.  It places POTUS on defense, focuses on his weakest hand, distracts the Obama campaign from focusing on the Republican presidential field, and creates enormous political uncertainty as the contours of a new debt deal come into alignment….or don’t.

But as it turns out, this is ultimately central to the debt debate.

Make no mistake, the politics, not concern over “continued market uncertainty,” is the driving force behind the Administration’s opposition to a short term deal.

Honestly, if the President was truly concerned about “market uncertainty” he would never have proposed most of his agenda for the past two years. The Administration is a late arrival to the school of the bond market.

 Thus far, the “Ignoramus Caucus” has been  populated by Republicans who would rather sink the American economy than agree to a deal that is less than they demand.

That position was and remains unconscionable. And make no mistake, if the House can’t pass a deal, no one is going to forget who the purists were in 2012.

But by threatening to veto a short term debt limit bill, the President not only joins this caucus, he becomes its de facto leader.

The indifference of congressional Republicans to the consequences of their actions on the debt are apalling and deplorable, but it is at least rooted in a semblence of principle.  And they will be held to account.

In contrast, President Obama knows what default entails. He has articulated it in almost every public appearance on the topic since April, as have senior members of his Administration.

If the only way to avoid default is a short term extension, and the POTUS vetoes that plan, then default is rooted in the President’s personal political fortunes.

That alone disqualifies him for a second term.



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  2. Marina

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