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Tags: Debt Ceiling

Washington’s More Worried About De Fault Instead of Default



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From the midweek edition of the Morning Jolt:

Obama Cares About Default! He Insists Everything Is Default of De GOP.

So here’s the problem . . . 

(Okay, here’s one of the problems. We have a lot of problems.)

Quite a few folks on the Right seemed to think that the approach of a government shutdown would increase their leverage; that faced with a shutdown, President Obama would make concessions he otherwise never would — i.e., a full repeal of Obamacare or a delay in the individual mandate.

The problem is that Obama thinks he “wins” government shutdowns — and in the sense that the public blames Republicans more than him and Congressional Democrats, he’s right. (Less damage is not the same as no damage. See below.) All evidence suggests most congressional Democrats — including red state Democrats! — feel the same way. Check out the Senate: Party line vote, party line vote, party line vote. Right now, there’s not a single Democrat in Congress who fears he’s going to lose his seat over the government shutdown OR Obamacare. They may be whistling past the graveyard, but that’s where it stands.

It’s a similar dynamic with the debt ceiling — the Democrats are totally convinced they “win” if no deal is reached. John Podhoretz is incredulous that anyone would think Obama wants a default*, asking, “What sitting president wants to preside over a fiscal panic?”

(MORNING JOLT IS INTERRUPTED BY DOZENS OF READERS YELLING AT THEIR SCREENS, “JIM, IT’S NOT REALLY A DEFAULT!“)

Yes, the federal government could avoid default for a while by moving money around and using all incoming tax money to pay creditors first, and then maybe having enough to pay for, say, Social Security. The government takes in about $10.8 billion per day and spends about $13.3 billion per day. The U.S. Treasury has about $30 billion in cash on hand.

The problem is that after a few days or weeks of moving money around, you end up not having money to pay for something important:

On Oct. 23, Treasury has to make $12 billion in Social Security payments, and then on Oct. 25 it must pay another $3 billion in federal salaries. Another $6 billion in debt interest payments is due on Oct. 31. If there’s still no deal by then — and Treasury by some miracle has any cash left — the real whammy will hit on Nov. 1. That’s when Treasury has to make a total payment of $57 billion to Social Security, Medicare, the military, and other income-support payments. Game over.

And for what it’s worth, Treasury Secretary Jack Lew suggests they physically don’t have the ability to only write some checks and not others:

We write roughly 80 million checks a month. The systems are automated to pay because for 224 years, the policy of Congress and every president has been we pay our bills. You cannot go into those systems and easily make them pay some things and not other things. They weren’t designed that way because it was never the policy of this government to be in the position that we would have to be in if we couldn’t pay all our bills.

The point is, we can’t count on Jack Lew’s budgetary juggling to stave off a default for very long. And the consequences of default are bad: It becomes more expensive for the government to borrow money, almost certainly a downgraded national credit rating, probably a dip back into recession, and possibly something resembling a run on the banks. Oh, and the markets will take a dive and your 401(k) will take a hit after its recent happy run.

As I noted to Podhoretz, the president probably doesn’t really want a default . . . but that doesn’t mean he’s willing to do much to avoid one. He’s probably confident he’ll win the blame game afterwards — he has good reason to think that! — and this scenario would undoubtedly give him a clear, concise message from here until November 2014: “House Republicans destroyed the economy.” In fact, from November 1, 2013, until January 20, 2017, President Obama would cite his built-in excuse: the U.S. government’s failure to pay money it owes did irrevocable damage to the confidence of investors around the globe, an obstacle that note even his enlightened, innovative, unprecedented, wise and munificent policies could overcome.

This is what happens when you have a bunch of elected leaders who are so convinced they can win a crisis that they aren’t that interested in preventing the crisis. Or that they seem to welcome crises, believing they’re all opportunities in disguise.

This ultimately all can be laid at the feet of the mainstream media, or whatever you like to call it these days: The New York Times, the Associated Press, Time, the network news crews, and so on. They’ve created a political environment of near-zero accountability.

We live in an atmosphere where Democrats aren’t worried about any of their decisions backfiring, because they know the mainstream coverage will always give them the better of the doubt, hammer their opponents, and gloss over or downplay their worst moments. The flip side of the coin is a “Tea Party caucus” (for lack of a better term) that has absolutely no fear of getting bad press — because they feel/suspect/know they’ll get negative coverage no matter what they do. Most of these guys shrug at the Morning Joe panel unanimously denouncing them as fools and unhinged extremists, because they think the only way that panel won’t denounce them as fools and extremists is to stop being conservatives. A lot of those House members feel they might as well vote their principles and draw the hardest line possible — because if you’re going to get bad coverage, you might as well get bad coverage while fighting for a good cause.

This is bad for a lot of reasons, but high among them is that almost no one in Washington has any ability to persuade anyone else in Washington. Republicans can’t persuade the media that they have a point, the media can’t persuade Republicans that they’re taking an awful risk with the debt ceiling, Democrats can’t persuade anyone and they won’t listen to anyone warning them that they’re making a mistake — i.e., when the chairman of the Senate Finance Committee looks at the implementation of Obamacare in April and declares, “I just see a huge train wreck coming down.”

Tags: Government Shutdown , Barack Obama , Debt Ceiling

Desperately Seeking Republican Unity



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From the last Morning Jolt of the week:

Desperately Seeking Republican Unity

Radio talk-show host Hugh Hewitt and Representative Charlie Dent (R., Pa.) really got into it earlier this week on Hugh’s program. Charlie Dent is shopping a deal where they fund the government for six months, repeal the medical-device tax, and make up for the lost revenues of the medical-device tax through a “a pension-smoothing provision” in Dent’s words.

Hugh’s objection isn’t that Dent is offering an alternative plan; it’s that he went on CNN and criticized most of the rest of the House Republicans. Pardon the long excerpt, but I think it’s required to accurately depict the context and tone:

CD: No, I have said, well, I have not really blasted leadership. What I said is that I believe the votes are there to pass a clean continuing resolution.

HH: But that, to me, undercuts the Republicans in such a profound way, because then my friends in the media, and Jake Tapper was on last hour, and I have them all on this show, they all point to Charlie Dent and Peter, and they say there are enough votes to pass the clean CR, and that therefore, the Republicans are obstructionists. And by the way, you’re a center-right guy. I read your whole bio.

CD: Yeah.

HH: Center-right guy from a center-right district in a center-right state. You know, it’s a great line. But aren’t you destroying the Republican bargaining position by empowering the media to parrot the President’s line?

CD: Well you know, I mean, I think, Hugh, there’s a certain unfairness here. When there are some members, I’ve said repeatedly, there are 180-200 members of the House Republican conference who have an affirmative sense of governance, who really want to get things done, who are going to play up the hard votes to enact the must-pass pieces of legislation. They’re going to be there. We have a few dozen folks who don’t share that same affirmative sense of governance. And the reality of the situation in the House is we don’t have 218 votes to pass the debt limit, or frankly the continuing resolution, on our own. We simply don’t, and we have to accept that reality. And there’s going to be, require some kind of a bipartisan vote to get this done out of the House. That’s all I’m saying.

HH: But now, I actually, I think, and this is said with respect.

CD: Yeah.

HH: I’m not yelling at you.

CD: Yeah.

HH: I think that you and Congressman King, who’s been a guest on this show, are in fact wrecking the opportunity to reach a constructive conclusion by undercutting the Speaker and empowering the media to beat him up. And I think that the place to have those conversations is in the conference, not on CNN.

Drew M., over at Ace of Spades, makes these points about the Tea Party, the Establishment, and a conflict that can no longer be ignored:

I have no problem with acknowledging the failures and shortcomings of this new brand of political player but let’s not pretend the entrenched professionals have been racking up win upon win for years. The track record of the insurgents may be spotty but wins like the House in 2010, replacing Bob Bennett with Mike Lee in Utah, Ron Johnson win in Wisconsin, Rand Paul over Mitch McConnell’s choice in Kentucky, Cruz over Dewhurst in Texas, and yes even Marco Rubio over Charlie Crist in Florida.

While I like the idea of holding Republicans to feet to the fire, let’s be smart about it.

Former Congressman Joe Walsh of Illinois decided that Senator Mark Kirk, also of Illinois, needs to be primaried b/c he called for a clean CR. Now Walsh is a former Congressman because he’s, well, an idiot.

Here’s where a little discernment would go a long way for conservatives. Kirk is a moderate Republican. He’s also holding a Senate seat in ILLINOIS. That’s practically theft. Let’s not make him the problem, ok?

People like Lindsey Graham, a moderate in a deep red state are a problem. A big spender like Thad Cochran from Mississippi (a conservative but poor state that loves federal money) is a problem.

If Kirk needs to talk liberal on some issues, fine. Did I mention ILLINOIS?

What we can’t have is guys like Lamar Alexander and Bob Corker, both from Tennessee starting or joining Senate “gangs” that always move things left and cut the legs out from conservatives.

We need our “mavericks” to emulate what “moderate” and red state Democrats do . . . talk a big game back home but when push comes to shove, shut up and vote the right way.

And NEVER join a “gang”. To me, that’s open warfare and a primary is a reasonable reaction no matter the state.

That’s the long-term issue. The short-term issue is what, if anything, the Republican party can get out from this current stalemate.

Fill in the blanks:

I would vote for a bill to raise the debt ceiling another trillion or so (enough for one, perhaps two years under current spending rates) in exchange for __________.

I would vote for a Continuing Resolution that would reopen the government at pre-shutdown, Sequester-era spending levels in exchange for _______.

Earlier this week, I said that Republicans need to know what their own “red lines” are.

I suppose the answer to either might be, “a repeal of Obamacare!” But the Senate Democrats will never vote for that, and President Obama will never sign that. Ted Cruz’s quasi-filibuster was fine for putting Senate Democrats on the spot, but ultimately, every Democrat decided their fates are tied to Obamacare’s. Nobody on their side is giving up on it now.

The next answer might be, “a year’s delay of the individual mandate!” But President Obama and the leaders of the Democrats aren’t that dumb. If you delay the mandate a year, the young, healthy people won’t buy insurance. (Even with it, they still might not buy the insurance. The penalty fee is $95 or 1 percent of a person’s income, vs. on average at least $100 per month (and that’s presuming you qualify for subsidies). For a young person making $30,000, that’s a $300 penalty fee vs. $1200 for the insurance, and we’re not even getting into the issues of high deductibles and co-pays.) If the only people who sign up are old people with high health-care costs, and the young people with low health-care costs don’t sign up and start paying premiums, the insurance companies will enter the “death spiral” –too much money going out, not enough money coming in.

It was here that Republicans needed a Plan C. What was another concession that they saw as worth raising the debt ceiling or keeping the government open? A few possibilities:

  1. A repeal of the medical-device manufacturer tax.
  2. Require all members of Congress and their staff to purchase insurance through the exchanges.
  3. Something else.

The rest of us, outside the House Republican Conference, don’t need to know what the “red line” is. (Oh, who are we kidding, Bob Costa and Jonathan Strong will probably know it first.) But the House Republicans need to know what their minimum threshold for a deal is, and they need to unite on it. John Boehner may or may not have one. It’s probably different from what Senator Ted Cruz would want, and different from what Charlie Dent and Peter King would want, and different from what Michele Bachmann and Scott Garrett would want.

Tags: John Boehner , Government Shutdown , Debt Ceiling

Senator Announces Opposition to Raising Debt Ceiling



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Can you believe there are U.S. senators who are openly touting that they’ll oppose raising the debt limit? Can you believe that they would play politics with this, and so recklessly disregard the consequences of hitting the debt ceiling? Don’t they care about the economy? Don’t they care about the dire ramifications for the entire global economy?

Get a load of this rhetoric:

We must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours.

Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grand- children. America has a debt problem and a failure of leadership. Americans deserve better.

I therefore intend to oppose the effort to increase America’s debt limit. 

That Tea Party extremist is… is… wait, wait, that’s then-Senator Barack Obama, back in 2006.

Back then, raising the debt ceiling passed 52 to 48, with ALL Democrats voting against.

 

Tags: Barack Obama , Debt Ceiling

Stale Tricks from an Overconfident Magician



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From the Tuesday edition of the Morning Jolt:

Breaking: Obama Declares Nothing Is Ever His Fault, Especially the Debt Since 2009

Obama’s press conferences, rare as they are, are going to be even more unbearable in the second term.

It’s not like his rhetorical sleight-of-hand is all that complicated, and at this point, it feels like watching a magician perform very predictable and boring tricks. He insists that whatever he wants at that moment is “sensible” and insists that any cuts, of any program, be they discretionary spending or entitlement programs, fail to represent a “balanced approach” and “balancing the budget on the backs of the most vulnerable.” The spending he wants is always characterized as “investments we need to make.”

He says he’s open to “making modest adjustments to programs like Medicare to protect them for future generations” without going into much detail about what they are; usually they amount to declaring the federal government will pay doctors less and hoping those doctors don’t stop seeing Medicare patients, the way the Mayo Clinic did. Less than a month after getting the income-tax increases he started demanding the moment the GOP took over the House of Representatives, he’s at it again, declaring, “We need more revenue, through tax reform, by closing loopholes in our tax code for the wealthiest Americans.” He still complains about “a multimillionaire investor can pay less in tax rates than a secretary” and “tax breaks for the wealthiest Americans” as if nothing had changed on January 1.

Four years into his presidency, the problem is not of his making; he spoke about “spending that Congress has already committed to” and “debate with this Congress about whether or not they should pay the bills they’ve already racked up” as if he had nothing to do with the rate of federal spending since January 20, 2009.

Bruce McQuain:

The more I see politics of today the more I think George Orwell simply listed by about 30 years. Imagine a politician a few decades ago trying to make this argument and then calling the other guy’s argument “absurd”.

“While I’m willing to compromise and find common ground over how to reduce our deficit, America cannot afford another debate with this Congress over how to pay the bills they’ve already racked up,” Obama said in the East Room of the White House at what aides have billed as the final news conference of his first term. “To even entertain the idea of this happening, of America not paying its bills, is irresponsible. It’s absurd.”

But the problem is, thanks to both Congress and this administration, we are not paying our bills. We’re borrowing money that we don’t have and have been spending it. I find it ironic, that the president who has run up the largest deficit in history is talking about being irresponsible.

Conn Carroll:

As this American Action Forum table going back to 1993 shows, the debt limit is almost always raised in the context of some other deficit reduction/budget process legislation. No one likes to sign off on borrowing more money without getting at least some measure of fiscal responsibility in return. In 2010, for example, Blue Dog Democrats forced then-Speaker Nancy Pelosi to pass PAYGO rules in exchange for their votes to raise the debt limit. Demanding a price for a debt limit hike vote is absolutely business as normal in Washington.

Which is why it is virtually guaranteed that Speaker John Boehner will get at least something in return for moving a debt hike through the House.

Paul Mirengoff:

Plainly, Obama cannot reconcile his votes as a Senator with his present position that the debt ceiling must be raised no matter what. Instead, he creates a straw man — the notion that the Republicans won’t raise the debt ceiling unless they get “100 percent” of what they want.

To my knowledge, that is not the Republicans position. In any case, Obama has made an argument only for not giving Republicans 100 percent of what they want, not for refusing to negotiate.

The president’s apparent confidence that he’s holding a winning hand politically may be justified. But given the public’s desire (abstract though it is) for debt reduction and given Obama’s votes on this issue as Senator, it’s also possible that he is over-confident.

Sometimes it feels like Obama is dodging questions from the press. Then every few months we watch him filibuster and get persnickety about having any of his positions challenged, and then we wonder why we wanted to see more of this.

This morning, the editors of NR declare:

The House should pass a bill to redefine the debt limit so that it constrains primary spending but not debt service. Under this reform, a Treasury that had hit the statutory borrowing limit could continue to borrow what it needed exclusively for paying interest on the national debt and to roll over existing debt obligations, but it could not borrow for any other government spending until the limit had been increased. This would take default entirely off the table.”

Tags: Barack Obama , Debt Ceiling

Obama: We Must Borrow More to Pay Our Debts!



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Obama’s press conference today confirmed that he believes the only way the U.S. government can reassure the world about its ability to repay its debts is to raise the debt ceiling more, so they can borrow more.

America, you cannot complain about “partisan divisions” when you have two parties who assess our finances in such a diametrically opposed manner. To hear Obama and some Democrats tell it, there just isn’t any spending that can be cut outside of the Pentagon.

Fresh off raising income taxes on the rich and a payroll-tax hike (expiration of a cut, really) that hit everyone, Obama also framed the coming debt-ceiling debate as “tax breaks for the rich” and spending on “roads and bridges.” Either the January tax hike didn’t happen in his mind, or he was on rhetorical autopilot.

“I don’t think anyone would find my position unreasonable,” said the man who, as senator, voted against raising the debt ceiling.

After several prickly answers, Obama dismissed the idea that partisan divisions are exacerbated by how rarely he interacts with the opposition socially: “I’m a pretty friendly guy,” he declared.

Tags: Barack Obama , Debt Ceiling

Fiscal Insanity Is Now the Coin of the Realm



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The Tuesday edition of the Morning Jolt features a look at how Chuck Hagel is the president’s “self-esteem pick” for the Pentagon, how the president compares his performance to that of a major actress, and then this bit of unreal reality…

Fiscal Insanity Is Now the Coin of the Realm

I’ll let Stephen Green get you up to speed:

In case you missed it, yes, there have been calls for the Treasury to mint itself a platinum coin, stamp a one and a dozen zeroes on it, and call it money. Yes, Tim Geithner has the Constitutional authority to do so. Yes, he’d be removing a trillion dollars from productive use by the stealth tax of inflation.

To date, most of the idiots and vile progs (but I repeat myself) hopping on this particular bandwagon have been low-level blogger types. Like me, but viler and even dumber. Now they have Paul Krugman on their side, which will drum up big support in Blue States where political idiocy is what people have with their coffee every morning.

I’ll give you a moment for your head to stop spinning. Now, our Dan Foster lays out a couple reasons why this is a bad idea:

Of course, there’s a hitch or two in the plan to mint The Coin. For one thing, numismatizing the debt by striking trillion-dollar debt discs is not exactly what former representative Mike Castle (R., Del.) had in mind in 1995 when he introduced the legislation that turned into the provision in public law 104-208. Dylan Matthews of theWashington Post tracked down this “unsuspecting godfather” of the platinum gambit, and Castle confirmed as much. “That was never the intent of anything that I drafted or that anyone who worked with me drafted,” Castle told Matthews. Indeed, the legislation was designed to give the Treasury flexibility to create more affordable platinum coins for collectors. To use that authority to backdoor the 17th and 18th trillion dollars of the national debt would be, according to Castle, “so far-fetched and so black helicopter-ish a type of methodology of trying to resolve something like this that I think the public would totally scoff at it.”

Some on the left understand this. Take, for instance, Kevin Drum of Mother Jones, who flatly titles a post on the subject “No, a $1 Trillion Platinum Coin Is Not Legal.” Drum, doubting there is enough of the requisite straitjacket brand of strict constructionism in the U.S. court system to uphold such a tortured reading of the statute, dismisses the ploy as “the kind of thing that Herman Cain would come up with” (the dread reductio ad Hermanum, a conversation-stopper in progressive circles).

They say that because the coin isn’t meant for general circulation – “hey, can anybody make change for a trillion?” – it won’t be inflationary. Yet like a lot of folks with a lot more financial savvy than myself, I’m a bit wary of telling the world financial markets, “hey, don’t worry about the U.S. federal government’s ability to pay for everything that it wants to buy and to pay back the unimaginable sums it has borrowed; we’ve got a magic trillion dollar coin now, so we’ve got a trillion bucks more than we did a little while ago.”

And Dan explains why he thinks this idea is going nowhere: “If the president minted The Coin, it might win him a few cheers from the same folks on the professional left who have called him a wuss for four years. But it would convince just about everybody else that he’s back on the Choom Gang. That’s why it won’t ever happen unless the luck of the GOP is as good in 2013 as it was bad in 2012.”

For what it’s worth, at least one Republican congressman wants to make such a move illegal:

U.S. Rep. Greg Walden (R-Ore.) today announced plans to introduce a bill to stop a proposal to mint high-value platinum coins to pay the federal government’s bills.

“Some people are in denial about the need to reduce spending and balance the budget. This scheme to mint trillion dollar platinum coins is absurd and dangerous, and would be laughable if the proponents weren’t so serious about it as a solution. I’m introducing a bill to stop it in its tracks,” Rep. Walden said.

“My wife and I have owned and operated a small business since 1986. When it came time to pay the bills, we couldn’t just mint a coin to create more money out of thin air. We sat down and figured out how to balance the books. That’s what Washington needs to do as well. My bill will take the coin scheme off the table by disallowing the Treasury to mint platinum coins as a way to pay down the debt. We must reduce spending and get our fiscal house in order,” Rep. Walden said.

Frank J.: “If you put a trillion dollar coin into a soda vending machine, you now own all soda manufacturers.”

Tags: Barack Obama , Debt Ceiling , Paul Krugman

Does Anybody Besides Boehner Know What Boehner Is Doing?



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From the Tuesday edition of the Morning Jolt:

Remember, there’s just ten shopping days until the Mayan apocalypse!

Does Anybody Besides Boehner Know What Boehner Is Doing?

Everybody’s got advice for House Speaker John Boehner. I suspect Marc Thiessen represents a new level of urgency and frustration within the GOP grassroots, as they see days slipping by, the fiscal cliff approaching, and few if any good options for the party:

Go on the offensive. Immediately put forward a plan to fundamentally reform the tax code. You will be able to outbid Obama and the Democrats in any tax-cut fight. And the intellectual groundwork has already been done. During the supercommittee negotiations last year, Sen. Pat Toomey (R-Pa.) put forward a plan to lower rates, raise revenue and limit deductions. Sen. Rob Portman (R-Ohio) has a revenue-neutral corporate tax reform plan that lowers the rate to 25 percent and moves to a territorial system.

On the spending side, “soak the rich” by getting rid of the billions of dollars in government benefits, taxpayer subsidies and corporate welfare the wealthy receive each year and don’t need, and by means-testing government programs from unemployment benefits to farm subsidies.

On entitlements, put forward a plan to save Social Security and Medicare through structural reforms and by reducing benefits for well-off retirees and eliminating them entirely for the wealthiest seniors. Propose a “Buffett Rule” of your own: Warren Buffett does not need taxpayers to subsidize his retirement and health care.

On his radio program Monday, Sean Hannity was grinding his teeth over this aspect, arguing that it amounted to theft of wealthy people who had spent their lives paying into entitlement programs.

I suppose you could see it that way, but perhaps it’s good to go back and figure out the purpose of these programs in the first place. Why do we have Social Security? To provide income for retirees who can’t take care of themselves. Why do we have Medicare? To provide health care for retirees who can’t take care of themselves. Once you have a sufficiently high net worth, you can take care of yourself. So why shouldn’t Social Security benefits be eliminated for the wealthiest retirees? The left has always resisted this, fearing that if some citizens didn’t collect their benefits, they might not see it as a universal system and the public might be more amenable to additional reforms of the system.

Why yes, they would, wouldn’t they?

Anyway, back to Theissen:

STEP THREE: Pass your plans. If the president refuses to negotiate and no progress is made by February, inform him that you will attach all or part of your plan to legislation raising the debt limit and pass it in the House. Then do so. Obama will sign it. Here is why:

Unlike with the fiscal cliff, Republicans have all the leverage when it comes to the debt limit. Today, Obama is perfectly willing to go over the fiscal cliff and blame the GOP for the resulting tax increases on the middle class. But when it comes to the debt limit, he does not have that luxury. He can’t default on our debt — the consequences are too catastrophic. So in the end he will cave.

Raise your hand if you think you’ve spotted a flaw in the strategy here. Wow, lots of hands. Yes, you in the back.

“President Obama doesn’t fear catastrophic consequences, he embraces them! Because economic instability increases the general public’s dependency upon government, in a variation of the Cloward-Piven strategy to shift America to a more socialist system of economics!”

Yup, something like that. I don’t know just how committed Obama is to policies that undermine America’s economic health, but we know he doesn’t blink upon running up more than $5 trillion in debt in less than four years, $3.4 billion to $4 billion per day. We know he loves, loves, loves blaming Republicans for everything. We know he will blame Republicans for failure to pass immigration reform, bad jobs numbers, the deficit, the continuing housing crisis, gridlock in Washington, the debt panel’s failure to reach a deal, the difficulty of life for the unemployed, and the inability to build the Keystone Pipeline.

Now at some point, the public may get really tired of his “it’s never my fault” routine, and Obama might find himself in deep doo-doo. But so far, that hasn’t happened.

So if the House Republicans dig in their heels on a debt-ceiling fight, all the way up to the deadline, Obama might be okay with default and the ability to use them as a scapegoat for the remainder of his presidency, or embrace the various theories that there need not be a congressionally controlled debt limit at all:

If Obama should fail to secure a long-term solution to the debt ceiling in the context of the current fiscal-cliff negotiations, there is another way out –invoking the US Constitution.

In the wake of the Civil War, the government wanted to make clear that loans to the US government were still good (while Confederate debt would not be honored). Accordingly, the 14th Amendment includes the following provision: “The validity of the public debt of the United States, authorized by law . . . shall not be questioned.”

In a 1935 case (Perry v. US) the Supreme Court determined that Congress does not have the authority to renege on its obligations to its lenders. The president, then, could declare as unconstitutional the current debt-ceiling law — which requires congressional approval to raise the limit — or at least use such a threat as leverage.

Maybe I’m not privy to some sort of really brilliant strategy on the part of Speaker Boehner. But right now, doesn’t it look like . . . nothing’s happening?

I thought Guy Benson had a good idea with his Hail Mary pass of having the GOP adopt Simpson-Bowles.

(Leave it to Ezra Klein to spell out all the reasons conservatives might not want to do that, such as $2.6 trillion in tax increases over ten years and $1.4 trillion in defense cuts, worse than would be enacted under sequester. Still, as far as optics and negotiation leverage goes, this would probably do the most to blow up the “stubborn uncompromising Republicans” argument.)

So Boehner offered “the Bowles plan” and . . . Obama rejected it, with no discernible consequence.

Shouldn’t House Republicans be in session, and holding votes, one after the other, on all of these options? Would that be doing more to add to the argument that they’re taking actions to avert going over the fiscal cliff, and that Obama’s the one being unreasonable and stubborn and refusing to compromise?

Tags: Barack Obama , Debt Ceiling , Fiscal Armageddon , John Boehner

The Hero vs. Hero Battle You Haven’t Been Waiting For, True Believers!



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Perhaps when you write a Morning Jolt late enough, and a weekend is looming, the mind begins to see strange comparisons…

The Conservative Civil War Multi-Issue Crossover Event!

I think a lot of the discussion among conservatives Thursday can be summarized in one Twitter exchange:

Guy Benson: It would be awesome if people on our side would stop angrily questioning each other’s motives.

John Tabin: WHO’S PAYING YOU TO SAY THAT?

(John’s kidding.)

This isn’t the Civil War of Conservatism in the context of the Union vs. the Confederacy. No, that conflict looks simple and clear in its divisions: North vs. South, slave-holding and non-slave-holding, secessionist vs. unionist, etc.

No, this is messy, with lots of longtime allies and friends surprised to find themselves in opposition. This is the conservative version of the Marvel Civil War, a comic book storyline in which all of the publisher’s most prominent heroes took sides on the institution of a “Super Hero Registration Act,” in which any person in the United States with superhuman abilities register with the federal government as a “human weapon of mass destruction,” reveal their true identity to the authorities, and undergo proper training. Those who sign also have the option of working for a government agency, earning a salary and benefits such as those earned by other American civil servants. 

(Perhaps young powered Americans have been listening to Derb’s “get a government job” lectures!)

Iron Man and Mr. Fantastic of the Fantastic Four supported the act; Captain America and Daredevil opposed, and the storyline tossed away the familiar story of heroes fighting villains to the surprising, unpredictable, and incongruous sight of popular, noble heroes fighting other popular, noble heroes, each convinced that their view is the right one and the best way to protect their values.

Not as outlandish a metaphor as it seemed two paragraphs ago, huh?

Now we have Rush Limbaugh vs. Thomas Sowell!…

…In the next issue, we have Sean Hannity vs. Ann Coulter! Mediaite gives a rundown: “It’s a rare episode of Hannity that includes a segment where the show’s host exclaims “you are dead wrong!” indignantly at Ann Coulter. This is one of those gems. Sean Hannity could not understand the argument that Republicans were in jeopardy should Cut, Cap, and Balance pass the House but not the Senate, and Coulter attempted to explain that the spin would be unfavorable to them… This came after an extensive talk on the perception of the debt debate from the average American’s perspective who wasn’t following the whole debate. “Republicans will be blamed,” she argued, even though they were playing “a game of chicken with the Democrats offering nothing.” As “Cut, Cap and Balance” is expected to fail, Coulter argued, “that will fit into the counterfactual narrative of Tea Partiers refusing to compromise.” Hannity didn’t buy this line of thinking at all. “Why don’t they pass Cut, Cap and Balance, cross their hands, and say ‘your move’?” Coulter replied that the problem was that the casual observer would know only that a Republican bill failed– “some stories are big enough,” she argued, using as an example that she had no power over the fact that she was aware of the existence of Snooki. Should Cut, Cap, and Balance fail in the House, too– especially if the Tea Party representatives are the deciding vote, she concluded, “the narrative is going to be ‘These crazy Tea Party Republicans shut down the government.”

But wait, this special double-issue of Hannity features an explosive showdown of Pat Caddell vs. Hugh Hewitt! The Right Scoop has the video, summarizing, “Okay, it wasn’t like a pop in the jaw, but in a contentious debate Caddell gets so frustrated at Hewitt interrupting him that in the heat of the moment he strikes him on the arm which kinda surprised Hugh.”

To be continued in the next spine-tingling issue!

Tags: Conservatism , Debt Ceiling , Republicans , Rush Limbaugh

What if Obama Is Incapable of Folding a Losing Hand?



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Sigh… today is the day the debt ceiling debate ate up all three of the Morning Jolt’s topics…

I can hear the gears turning in readers’ minds now, right? “So Jim quoted two righties backing the Boehner plan, he must be on board with it, huh?” Eh, heck if I know the right strategy here. It’s possible the Boehner plan passes the House, Reid vetoes it – okay, he gets his Senate Democrats to oppose it and then it ‘dies’ and then we hit the ceiling, the credit rating takes a hit, and Obama blames Republicans for that and all successive economic problems. Or maybe it passes, Reid folds, Obama signs it – and then the credit rating goes down anyway, because the rating agencies think the Boehner plan is too modest and the real problem is the debt, not the debt ceiling. Maybe Obama then starts saying that the dip is because we didn’t follow his plan – you know, the one written down by his finger on air – and demagogues the issue to victory in 2012.

Maybe the hold-the-line crowd is right; maybe within the White House, Obama’s advisors are popping prescription-strength stress relievers, on the verge of panic, and when the calendar flips from July to August, they’ll send a message to Boehner and McConnell they’ll sign anything. But at this point, are we even sure if Obama could tell if he has a losing hand? (This is, in fact, the same poker player who apparently warns opponents not to call his bluff.) I’ve been remarking throughout this process that  the parties’ behavior defies the conventional wisdom and polling evidence: Republicans generally aren’t acting like they’re losing or afraid that they’re losing* and Democrats don’t seem all that confident in victory. Think about it, if Obama’s message of, “I’m King Moderate Sensible Compromise, and if only the rest of the world were as wise and noble as me,” is working so effectively, why does he keep needing to come out and repeat it in ever-more-irritated tones? Why is his approval rating underwater again? Why is he losing ground in head-to-head matchups against the GOP?

So here’s the complication: Forcing your opponent to capitulate requires him to realize that he’s got a lot to lose and further brinksmanship will cost him more, and what if Obama… just isn’t capable of doing that? What if he’s always convinced that he’ll come out the winner, no matter how big and ugly and consequential the confrontation gets?

*Some disagree, like Tabitha Hale, who I always listen to: “Severely disappointed in Boehner and Cantor. They’re panicking and it’s obvious. Gives the ball back to the Dems.”

Some might argue that if Obama holds a weak hand, doesn’t realize that he holds a weak hand, and plays anyway, then the consequences will be worse for him. But I suppose I’m worried about what else happens along the way, to the economy, to the national reputation, etc. …

Tags: Barack Obama , Debt Ceiling

Debt Deal Doldrums



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In the midweek Morning Jolt, a look at the White House’s reluctance to write down its budget plan, a suggestion that Obama’s base is crumbling, and, of course, the Byzantine debt negotiations and strategies.

We Need Some of Harry Potter’s Debt Eaters… Oh, What? They’re Not Called That?

Somehow the debt ceiling has turned me into Socrates; the more I learn, the less I know. I’ve heard from smart, qualified minds in the financial world argue, forcefully and seemingly informed, that the net effect to the economy will be much, much less than the doomsday talk suggests.

(Forget tying a game; awesome off-the-record discussions are like kissing your sister.)

I’ve also heard the quite compelling argument that because the real issue for America’s credit rating is not the debt ceiling but the size of the debt itself, that it’s effectively already too late, and that we will lose our AAA credit rating sometime in the near future even if we do enact the Boehner plan or the Reid plan. (I don’t say the Obama plan even though Jay Carney insists it’s the most brilliant plan ever never committed to paper.) In this line of thinking, it is argued the best move for Congressional Republicans is to lose the fight and let Obama and the Democrats pass a version as close to their ideal as possible, to demonstrate that their approach can only hurt the country’s credit rating and let Obama reap the whirlwind in 2012.

A bit of evidence for this argument: “Only seven days stand between the U.S. and the effects of a credit default. But a downgrade of the nation’s stellar AAA credit rating seems a lot more likely, and a lot sooner. The White House had been alerted repeatedly over the past month by rating agencies that without a strong, long-term plan to restructure the country’s debt, they would lower America’s credit rating as soon as this Friday, according to two officials familiar with the process. The White House was warned that the deal would have to be significant—and not a short-term fix over the next few days to avoid a credit drop.”

Then again, I’ve also heard a strong argument that even if Obama “wins” this showdown, it will be moot in six months – Americans will know that their government is still spending and borrowing with reckless abandon, and they’ll know that their own households and small businesses and institutions have to demonstrate credit-worthiness before getting a loan. (I’m told that credit for small businesses has simply not recovered from 2008, and no one expects it to anytime soon.) Congress is the only institution that when it maxes out its credit cards can just create more credit by voting itself a hike in the limit, an act that, at some point, can only run into the laws of supply and demand. At some point, fewer institutions and people will want to lend the federal government money, and then the reckoning hits.

At Hot Air, Allahpundit assembles the scorecard for the Boehner plan, which looks like “PRO” and “CON” were assembled by selecting prominent righty lawmakers, institutions and columnists randomly from a hat: “In addition to [Paul] Ryan and Allen West, Cantor’s supporting the bill on grounds that it’s time to stop whining and take what the party can get. Haley Barbour agrees, as apparently does the Chamber of Commerce. Meanwhile, Fred ThompsonYuval Levin, and James Pethokoukis argue that Boehner’s plan isn’t half bad under these awfully unfavorable circumstances… Opposed to the bill are influential House conservatives like Jim Jordan and Louie Gohmert and influential Senate conservatives like DeMint and, er … Lindsey Graham. The Club for Growth is also a no, which will make incumbents worried about a primary challenge think twice.”

Hey, in light of this bizarre patchwork, can we skip the traditional RINO-accusations, branding, posse-organizing and public pillorying that are now pro forma of every intra-Republican debate?

Put another way… you tell Allen West he’s a RINO squish.

Yet the editors of the Wall Street Journal are getting a bit snippy with Boehner deal opponents: “What none of these critics have is an alternative strategy for achieving anything nearly as fiscally or politically beneficial as Mr. Boehner’s plan. The idea seems to be that if the House GOP refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue, and the public will turn en masse against . . . Barack Obama. The Republican House that failed to raise the debt ceiling would somehow escape all blame. Then Democrats would have no choice but to pass a balanced-budget amendment and reform entitlements, and the tea-party Hobbits could return to Middle Earth having defeated Mordor. This is the kind of crack political thinking that turned Sharron Angle and Christine O’Donnell into GOP Senate nominees. The reality is that the debt limit will be raised one way or another, and the only issue now is with how much fiscal reform and what political fallout.”

Tags: Barack Obama , Debt Ceiling , John Boehner

Voters to Washington: Don’t Raise the Debt Ceiling Without Spending Cuts!



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Over in the Corner, James Pethokoukis reports on House Speaker John Boehner’s comments to the Economic Club of New York, and how the Wall Street crowd would generally prefer a quick vote to raise the debt ceiling, followed by tax increases to balance the budget. Boehner indicated he would oppose both moves, and that serious spending cuts were a requirement for raising the debt ceiling.

The good folks at Resurgent Republic recently conducted a survey of 1000 registered voters April 17-20, indicating that public opinion is strongly on Boehner’s side. They found:

  • 89 percent of voters oppose President Obama’s call to raise the debt limit without limiting spending (ie, a “clean” debt limit).
  • Only 11 percent of voters – including 18 percent of Democrats – support increasing the debt limit without preconditions.
  • The preferred option, drawing support from a plurality of voters (47 percent), is “raising the debt limit, but only in exchange for substantial spending cuts and a commitment to reduce the deficit.”
  • The second-ranking option (35 percent) is “not raising the debt limit under any circumstances.”
  • A majority of voters (56 percent) are more likely to support a debt limit increase if changes are made to make entitlement programs financially solvent for the future.
  • Nearly half of voters (49 percent) are more likely to support a debt limit increase if substantial spending cuts are included to prevent the country from having to increase the debt limit in the future.
  • By greater than 2-to-1, voters believe “any increase in the federal debt limit should be tied to specific cuts in federal spending” rather than “Congress needs to raise the debt ceiling because it is the only responsible thing to do.”

The details of the survey can be found here.

Tags: Debt Ceiling , John Boehner

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