Mr. Sensitive

October 11, 2013

Just Say No, Mr. President

Filed under: Uncategorized — lbej @ 14:44

The disaster that is the U.S. government in general and the House of Representatives in particular dominated the headlines this week, and the market continued its two-week selloff through Wednesday.  Then as word of a deal circulated—a six-week extension on the debt ceiling and no end to the shutdown was the apparent Republican offer—stocks rallied sharply.  The Dow gained over 300 points on Thursday, its second-best day of the year, and is extending those gains modestly today.  Here are my takeaways:

The market was starting to get spooked about the apparent willingness of the House Republicans to force a U.S. default by refusing to raise the debt ceiling, with some of the crazier Repubs making claims that there wouldn’t even be a default if the debt ceiling was breached.  The Dow was down 1000 points from its recent highs through Wednesday and large institutional investors like Fidelity began to sell their short-term Treasury holdings.

As the market deteriorated and the business community became increasingly mutinous, the long-ignored certainty in this standoff—namely, that the Republicans are not going to force a default—became inescapable.  Conservative donors like Heritage relented on the debt ceiling, and House leadership made an offer to Democrats: a six week extension of the debt ceiling.  (How does that even work?  Do they raise it then lower it?  By how much?  It’s stupid.)

Congressional Democrats hate the idea of a six-week extension of this caustic political theater (that’s all the House proposal amounts to), especially because the government would remain shut down during that time.  Obama is said to be noncommittal.

What I want to happen is simple: the President and Democrats in Congress reject this proposal as inadequate, saying that half-extortion is still extortion.  A six-week moratorium on the debt ceiling debate all but ensures that nothing will be done about the shutdown until then, and Democrats must realize that.  The Republicans have made a massive strategic error by waiting this long on the debt ceiling and allowing opposition to a default to build among their non-Tea Party supporters.  They couldn’t force default before; now they really, really can’t.  By failing to take default off the table early and focus the fight on the budget, the Republicans have allowed the two issues to become entwined in the view of the public.  People will expect both issues to be solved at once, and the Democrats—again—must realize that.  The Republicans can’t force a default—there’s not support within their caucus to do that—and now, if the Democrats hold firm, they can’t separate the shutdown and the debt ceiling.  They’re over a barrel, period.

If the President wants to make a counteroffer—probably the smart move from a tactical standpoint—he should offer the following: suspend the debt ceiling for a minimum of two years or eliminate it altogether (it’s unconstitutional anyway), and pass a six-week CR to reopen the government during budget negotiations.  That way Republicans get their six-week drama extension and the threat to the financial system posed by a Treasury default is eliminated through at least the end of the current Congress.

This is such a sensible compromise—it allows the Republican leadership to once again separate the shutdown and the default threat, a huge strategic concession at this point—that the Tea Party can’t possibly accept it.  Then it will be up to Boehner, Cantor and Ryan to decide whether to throw the teabaggers overboard or to go down with the ship.  I expect the latter two to dump the crazies.  I think Boehner has lost his mind, and will have to be deposed by Cantor or Ryan, whomever draws the short straw.  Boehner reminds me of Chief Inspector Dreyfus from the Pink Panther movies, after Inspector Clouseau’s stupidity and incompetence drove him insane.


If I were one of Boehner’s aides, I’d make sure he doesn’t have access to any projectile weapons.


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