The Big Debt Ceiling Stall
The entire political world right now is holding its collective breath over whether a deal will be struck between President Obama and the leadership of Congress to raise America's debt ceiling. The more honest observers of this process have noted the "Kabuki theater" nature of the proceedings, as they wisely discount the possibility that the deadline will be reached with no agreement in place. "This is all for show," the jaded pundits assure us, "there will be a deal." But this reasoning can be taken one step further: not only will there be a last-minute deal, but the deal will not happen until that last minute -- and this is by design. While duelling press conferences amuse the public, behind the scenes the name of the game Obama and the Republicans are playing could rightly be called "The Big Stall."
Stalling helps both sides in this fight, in two major ways. The first is purely political, and the second is more practical. With the clock busily ticking away, everyone involved in this struggle is scoring political points with the public (or, at the very least, trying their hardest to do so). When a deal emerges at the last minute, all the politicians in Congress will be able to go to their party's base and state: "We fought as hard as we could, and we got the best deal we possibly could have gotten." The very fact that the negotiations went down to the wire will bolster this assertion -- again, for both sides. Remember, right after this deal is struck, Congress will be going on vacation for a month, and both parties want to be able to face the voters with the claim that they didn't prematurely give in on their core party principles. If a deal is struck too early, then it will appear one side or the other caved too fast. Which means that both parties have a vested interest in pushing things to the very last instant.
Both President Obama and the leaders of Congress also have a more practical vested interest in stalling as long as they think is possible, as well. Because there is a hard and fast deadline (August 2), the longer the leadership stalls the negotiations and makes political hay over how hard they are fighting, the less time Congress is going to have to act at the end of the process.
Imagine if a deal had been agreed to by the Republicans and Obama last week, just for the sake of argument. Actually, that is the most apt phrase to describe this scenario, because argument is what would be happening right now, in a big way -- in both the House and Senate. If both houses of Congress knew that they had a leisurely three weeks or so to act, then they'd spend every minute of that time enjoying their own moment in the media spotlight, making as much political hay as they could possibly manage. Instead of seeing only John Boehner and Mitch McConnell vying with the president for the camera's attention, you would instead have the hundreds of Republicans in Congress all trying to be the loudest voice in the debate. To be fair, the same would be true on the Democratic side as well.
The longer Congress had to publicly posture and pontificate over the deal, the more time they'd have to tinker with the details. This could be a bad thing or a good thing, depending on what got tinkered with (and which perspective you saw it from, of course). But the more tinkering Congress did, the more of a possibility that the whole thing could blow up in their faces as one side or the other pushes things too far to ever actually pass both the House and the Senate. Instead of coming together at the last minute, the whole shebang could fall apart at the last minute, in other words.
Both Obama and the congressional leadership know this. Which is why they're going to continue stalling right up to the very last possible instant, and then present Congress with a "take it or leave it" deal. By leaving only the barest minimum of time for floor debate in both chambers, there will be not much opportunity for tinkering with whatever deal emerges from the negotiations. Everyone in Congress will have the opportunity to rant and rave in a floor speech that they can brag about over the August break, but there won't be time for much more than the usual grandstanding.
Of course, there will be lots of grumbling from both sides about the fact that the rank and file of Congress has been somewhat sidelined in the process, but this can easily be countered with the fact that nothing has stopped them from acting until now. Congress -- both the House and the Senate -- have done precisely nothing so far to solve the debt ceiling problem, so it's a little late for them to be complaining about the current schedule. They've had oodles of time to act on their own, and they have not done so. This won't stop them from complaining, however.
There's a rumor making the rounds that the House Republicans may actually attempt to enter the debate on their own, by bringing a bill to the floor and starting a big debate even as their own leadership is in negotiations with the White House. This could allow them to publicly make their case in detail, while the negotiators are still locked in a closed room hammering things out. The media would certainly go along for the ride, and the dynamic of the negotiations themselves might be changed as a result. But if this rumor is true, they're going to have to act extremely quickly -- and so far, they haven't shown any sign of actually doing so.
Instead, what is much more likely is The Big Stall will continue right up to the point where Congress has enough time to act -- but only enough time to act, and not enough time to tinker. Then the deal will be announced, and Congress will be on the hot seat. At this point, they'll be operating under the threat of Wall Street acting if they don't -- by downgrading the credit rating of the United States of America for the first time in history. Which Wall Street could do at any time (they're likely not going to wait until the absolute last minute to do so). Tea Party rhetoric aside, the deal is likely going to pass both houses (most likely with bipartisan votes), and such catastrophe will be averted at the last minute.
There's an old bumpersticker saying that "if it wasn't for the last minute, nothing would ever get done," which bears repeating right now. But this time around, it will be by design. Neither President Obama nor the congressional leadership is going to allow Congress any more time than the absolute minimum necessary they require to pass a law. Until then, we've got at least one more week (possibly two) to sit back and watch The Big Stall.
-- Chris Weigant
Cross-posted at Business Insider
Cross-posted at The Huffington Post
Follow Chris on Twitter: @ChrisWeigant
Do you think there's any chance this may fall apart?
The Tea Party folks seem willing to let this happen. In fact, the first thing I saw on your banner was an ad that said:
"Will John Boehner cave? Help Ron Paul fight to prevent a Debt Ceiling Betrayal."
Seems like the negotiations have broken down this week and both sides are back to beating the other up.
But ... as you mentioned ... this could just be trying to score points before the "deal" is announced.
The stock market blinked just a little for the first time today. Though it was a quick blink.
Why do I have a funny feeling that things aren't gonna work this time? Perhaps it's just the sushi ...
-David
Several factions of Republicans want a small default, to ruin the government's credit rating. It would greatly increase the flow of money from taxpayers to bondholders, and it would hamstring the government's ability to do anything positive. It fits just as well with the Starve the Beast strategy as the tax cuts and wild spending they've been pursuing for a generation.
@dsws
*sigh* It's why I can't understand why anyone would want people running the government who are against the government.
It's like electing a corporate board that wants to destroy the company and sell it off for personal profit.
The more you think about it, the less sense it makes:
1) Rail against the government
2) Get elected
3) Screw up the government (invent deficit spending, for example)
4) When the bills come, rail against the government some more
Ok, I have to go look at kitten videos or something ...
-David
Chris,
I might have bought The Big Stall with little hesitation a few years or even months ago.
But, I'm afraid - and I do mean that quite literally - that I feel the same way David does on this one.
The thing is, since Obama was elected, politics has been turned on its head and the way the Republicans (and the Democrats, for that matter ... and, certainly the progressives, without a doubt) play the game has changed, utterly. And, unfortunately, a terrible beauty has not been born. Instead, a terribly toxic and desperately dysfunctional media and political culture has been developing, largely unabated. And, nothing is predictable anymore.
Call me a cockeyed optimist ... no more. :(
David,
Do kitten videos really help?
Got any links?
Heh.
akadjian (and everyone else) -
I think something will pass, eventually. Take a look at how the budget for this year passed (a few months back) and I think that's how it's going to happen -- hardcore GOP folks will vote against it, hardcore Dems will vote against it, but enough votes will be found in the middle to pass it.
Call me optimistic, but that's how I see it playing out. I have no idea what will be in the deal, but my money (for now) is on the deal getting passed in time (or perhaps a week late, with a short bridge law to cover the gap).
100 quatloos says the debt ceiling will be raised before the scheduled monthlong congressional vacation, in other words...
-CW
dsws,
Why do you think it is that the forceful arguments you make are not made by the Democrat leadership or by President Obama, for that matter.
Why will they not call out the nonsense emanating from the Republican cult of economic failure ... for God's sake!!!???
Would someone please refresh my memory as to how the Republicans forced the coupling of a simple vote to raise the debt ceiling with a complicated set of negotiations on how to fix years of failed tax and fiscal policy and how the definition of what the Republicans will do to compromise and sacrifice on these negotiations evolved into nothing more than voting yea on raising the debt ceiling.
And, why is it again that no one calls them out on this nonsense!?
Liz -
Part of it (not all of it by any means) was the GOP senators pushing a "clean" debt ceiling raise bill vote to prove that Dems didn't have 60 votes for it. It's a lot more complicated, but I probably should have mentioned that in one of these articles....
-CW
Chris,
Right ... how could I forget about the super-majority in the Senate. :(
But, why does no one call the Republicans out on their nonsense and what they are really up to. I mean, when did Republicans become so enamoured with reducing deficits ... oh, wait ...
David,
*sigh* It's why I can't understand why anyone would want people running the government who are against the government.
It's like electing a corporate board that wants to destroy the company and sell it off for personal profit.
Try looking at it without the prism of partisan politics..
To Republicans, they are SAVING the country and it's the Democrats who are hell-bent on destroying this land with an orgasm of spending and programs we can't afford...
I saids it befores and I'll says it agains..
When in a financial hole, you must STOP DIGGING. Not bring in heavy equipment to dig faster and deeper...
Liz,
Why will they not call out the nonsense emanating from the Republican cult of economic failure ... for God's sake!!!???
I think it is the limited memory retention of your average American..
They vaguely remember the bad economic stewardship of the Republicans of 3+ years ago..
But fresh in their memories is the gross and much worse economic stewardship of the last 3 years.
And THAT is what Americans are basing their opinions on...
To be fair to the Bush years, 9/11 had a much bigger impact on our economy than most people realize...
The only excuse Obama has is Bush and such an excuse ran out of steam a while back..
To be fair to Obama, it is to his credit that he doesn't trot out THAT dead horse as much as he used to...
Ya gotta admire the Republicans, though. They are sticking to their NO TAXES mandate given to them by the 2010 mid-terms...
If the roles had been reversed, Democrats would be falling all over themselves to compromise the farm away...
I'm just sayin'.... :D
Michale.....
And, why is it again that no one calls them out on this nonsense!?
If you call your opponents what they are, it looks like name-calling.
If you call your opponents what they are, it looks like name-calling.
A truism that definitely works both ways... :D
Michale.....
"I cannot guarantee that those {Social Security} checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it,"
-President Obama
WOW...
Fear monger much????
Michale.....
And, why is it again that no one calls them out on this nonsense!?
The best explanation I've seen for this Liz is that it's one thing to get elected, quite another to run the country.
In order to run the country, you need the support of what I'll call "the establishment"- business owners, politicians, agency heads, the chamber of commerce, etc, etc.
And Republicans right now seem to have more influence at this level. They basically are the establishment. So Dems try to play nice.
Now what they might consider more of is what Republicans have done for years- have your politicians play nice, but work through other groups to be more honest about Republican plans.
I think there's a market for it. There's so much BS going around that we could use some honest opinions.
-David
David,
Sorry, but I just don't buy that explanation for one New York second.
When the Republican leadership says something of an asinine nature regarding anything remotely resembling tax and fiscal policy - like the latest version of why you can't raise the tax by a lousy 3 percentage points on the top 2 percent of the wealthiest Americans which is to say that you can't tax the job-creators - somebody has to help Geithner set the record straight. I mean, the treasury secretary can't be expected to do this all by himself, all the time.
I dont' think I'll ever understand what it is that Democrats find so difficult about calling a spade a spade, especially when the nonsense coming out of the Republican cult of economic failure is so transparently idiotic and otherwise completely devoid of any factual basis and totally detached from reality.
why you can't raise the tax by a lousy 3 percentage points on the top 2 percent of the wealthiest Americans which is to say that you can't tax the job-creators -
Probably because the top 2% are paying 80% of the taxes already... Actually, I just throw that out as a fer instance..
Here are the facts...
All figures are for 2000 and 2006 respectively.
The bottom 20% of Americans actually get money back from taxes, to the tune of (-)2.8% Incidentally, this "rose" from (-)1.6%
The next 20% tier also gets money back. At (-).8% This also "rose" from 2000 when this 20% of Americans actually paid 1.1% of the taxes...
The next 20% of Americans also saw their tax liability shrink. It was 5.7% in 2000 but went down to 4.4% in 2006..
The next to the top 20% of Americans ALSO saw their taxes go down. Their tax percentage was 13.5% in 2000 and it went down to 12.9% in 2006..
The top 20% of Americans by income saw a tax INCREASE... Their taxes were 81.2% in 2000 and that went up to 86.3% in 2006.
In short, 20% of the top earners pay over 86% of the taxes..
And Democrats think they should be taxed MORE!!????
I guess the Left won't be happy until the top 20% is paying 100% of all the taxes and entitlements etc etc and the bottom 80% just get a free ride..
Yea, THAT will insure a productive economy, eh?? :D
Read up about the College Sociology professor who did a socialism experiment in this vein. It's an eye opener...
Oh, and just for the record... The reason why the bottom 80% of Americans' taxes went down from 2000 to 2006 and the top 20% of Americans' taxes went up is due to the Bush Tax Cuts...
..... And now you know the REST of the story... :D
Michale.....
A commenter over at TM put it perfectly...
Our economy is based on Wimpynomics..
"I will gladly pay you on Tuesday for a hamburger today."
:D
Michale.....
I dont' think I'll ever understand what it is that Democrats find so difficult about calling a spade a spade
Don't get me wrong- I'm with 'ya, Liz.
I don't think they should try to walk the fine line. Even if it means significant short-term losses.
I believe that, as a party, the Democrats are very soon going to need to make some hard decisions.
The decision they're facing is: 1) develop a set of principles and stick to them and risk losing corporate donor money and loses in the short term or, 2) keep trying to tread the fine line.
I'm a firm believer and advocate in #1. Sounds like you are too!
-David
To take things just a tiny step further, Liz, I think Democrats need to change their modus operandi.
You describe the typical Democratic operating procedure. Republicans say something. Democrats respond.
Where Democrats need to be is out there first with their beliefs.
You easily described the Republican principle of supply-side economics. Everyone can because Republicans have done such a good job of preaching it. (NOTE: this says nothing about how good a principle it is, just that at its core its simple and well-known)
What is the principle that guides progressive economics?
I bet if you asked 5 different people, they'd give you 5 different answers. Oh, and by the way, I bet at least 2 of these answers would be variations of the conservative definition of "big government".
So to summarize, I'd say that Democrats should be more comfortable with "calling a spade a spade" but if they want to be really effective, they'd be talking about diamonds :)
-David
For example, here is the stump speech I believe every Democrat in the country should be using:
What creates jobs?
Put yourself in the position of a business owner for a second.
Let’s say you’re given a sum of money in the form of a tax. What determines whether you use this money to create a job?
The answer is: You hire more people if there is more demand. Otherwise, you save the money or invest it somewhere else.
Maybe you spend it trying to achieve some cost savings (which by the way, might help you eliminate jobs). But you don’t hire more people unless there is more demand.
To summarize: Demand creates jobs.
It’s Economics 101.
So why the #@^)*&$#% are we spending so much time arguing about reducing taxes?
We’ve tried supply-side economics for the past 30 years and we’ve gone too far in that direction. What we need now is “demand-side economics“.
(Cross posted to TheReckoner.com)
--
Sorry for so much commentary, Liz, but you bring up a most excellent point (and got me riled) :)
-David
To summarize: Demand creates jobs.
And what creates demand??
Disposable income...
With the economic uncertainties created by the Obama Administration, no one knows if their income is disposable or not..
So, they hold on to it....
Therefore, no demand is created....
Ergo, the Obama 'economic team' (such as it is) needs to get their shit together and create some stability...
Taxing everyone left and right is NOT the way to do that...
Michale.....
More audio ads...
"Solantic Baptist Urgent Care"
and
"Market News Video" (whatever the hell THAT is...)
I am beginning to think Banter Line has changed it's policy on audio ads....
Michale.....
"I dont' think I'll ever understand what it is that Democrats find so difficult about calling a spade a spade"
I'd rather see that idiom just drop out of the language. Yes, the phrase pre-dates the offensive usage of the word, but it's too easily associated. And it's not as though "shovel" is such a five-dollar word anyway. It would make more sense if the expression called for the making fine distinctions, like that between a shovel with a straight edge and a spade with a rounded tip, but the meaning that actually makes sense is the only one that's completely out of the running.
I'd rather see that idiom just drop out of the language. Yes, the phrase pre-dates the offensive usage of the word, but it's too easily associated. And it's not as though "shovel" is such a five-dollar word anyway. It would make more sense if the expression called for the making fine distinctions, like that between a shovel with a straight edge and a spade with a rounded tip, but the meaning that actually makes sense is the only one that's completely out of the running.
I always thought that the "spade" referred to the Ace Of Spades...
Hmmmmmm
Learned something new today... :D
Thanx, dsws
Michale....
I used to post once in a while on HuffPo, before it was dressed up for, and then sold to, AOL, by turning preferred comments into avitar- and color- coded brain burps. I always enjoyed, and continued to follow, your work, however.
You're right, of course, about "the last minute" ("tLM", here).
Votes are events that are viewed by many Members through lenses of partisan correctness and political self interest. The time up until tLM is the time for bluff, bluster and pander to their supporters, if not their constituents.
It's whip counts that both assure outcomes and give members bound to two masters the luxury of choice without effect on the outcomes. By tLM, of course, there's generally a high degree of certainty as to the outcome, even if that outcome is not publicly known at the minute hand's penultimate tick.
What's different in this is that ratings agencies don't, and can't, play by that particular set of rules. They are creatures of probability. They are also creatures that, when they get it wrong, are exposed after the fact to charges of malfeasance and neglect. They're still living in a cloud of fallout from the mortgage backed meltdown. This might make them particularly cautious this time.
Their timetable is different than Washington's. Their clock runs faster. And therein is the risk. A rating downgrade could unleash seismic forces in the world's currency, debt, and equity markets that the (probably, inevitable) vote outcome is too late to contain.
If you haven't seen it already, to get a flavor of this risk, look at S & P: America Could Default Even if Debt Ceiling is Raised.
The bottom line is: while I, as most of us, hope that all is going to be well, this could turn out to be a pivotal moment for both the course of the American empire as well as American prosperity.
David,
I always enjoy reading your commentary, the longer the better.
So, don't ever apologize for it - just keep it coming!
Michale [17] -
Yeah, but the top 1% of America now owns like 90% of the country's assets, so even by your figures, they're undertaxed right now.
Republicans make a lot of hay over statistics, but they ignore the one that shows that Americans are paying the LOWEST taxes they've paid in 50 years -- around 18% of GDP, as opposed to the usual 20% or higher. We don't have a spending problem (or not "only" a spending problem), we also have a taxing problem (too little taxes collected).
[18] -
OK, bonus points for "Wimpynomics," as that was indeed funny. Heh.
David [20] -
See my Friday column, FTP [173] for my feelings on how Obama's getting out in front of the framing... for once....
Michale [22] -
Your blood-KoolAid levels are getting dangerously high. Think about the "stability" talking point for half a second. If "stability" is the ultimate goal for Republicans and the business community, then why are we even having the debt ceiling fight? "Stable" would dictate this fight not even happen, and yet the Republicans seem willing to push it to the edge. It just doesn't pass the laugh test, sorry. See further comments in FTP [173]...
[23] -
I'll get on the Banter folks, I promise. Anyone else seeing (hearing) audio or video ads? Let me know immediately.
dsws [24] and Michale [25] -
This is interesting, to me, on a semantic level. I don't know the history behind "call a spade a spade" therefore don't have any informed opinion on the matter, but you do bring up an interesting point. I remember a DC politician who was forced out of office for saying "niggaradly" even though it came from a different root as "the N-word." It was deemed politically incorrect enough that he was forced from office. The one that gets me (because I was personally warned about it, while using it to talk to someone from New Orleans) was "I haven't seen you in a coon's age!" which has always had the connotations of "in a raccoon's age" as far as I was concerned. But I do understand sensibilities and inordinately causing offense, so like I said, I'm interested in the subject. Is "call a spade a spade" inherently offensive? Inquiring minds want to know.
And, finally,
Leaning Blue -
First off, welcome to the site! I will repost this welcome on today's comment thread, because I have been slack in answering comments for the past week and so you might miss it here. Your first comment was held automatically for review, but all further comments you will be able to post immediately (as long as they don't contain multiple links -- which is auto-screened to cut down on comment spam).
As for HuffPost, well, we have a different sort of community here. For instance, you have no word limits on your comments, so feel free to let loose. In addition, we virtually NEVER edit or remove comments here, so say whatever you feel -- always keeping in mind our guidelines.
Your last few paragraphs were astute. I didn't mention the fact that the credit agencies could act at any time here, and you're right -- this fact is mostly ignored by the media when it shouldn't be. And you raise a good point about them being a bit "once bitten, twice shy" right now. But I do feel strongly that if they truly do get jittery, that they'll pick up the phone and call up their Republican Representatives and Senators and lay down the law (so to speak) and tell them in no uncertain terms to hike the debt ceiling. Or else no further campaign contributions will be forthcoming.
We'll see how it all turns out, but a warm welcome to the site in the meantime.
-CW
CW,
Yeah, but the top 1% of America now owns like 90% of the country's assets, so even by your figures, they're undertaxed right now.
And THOSE are the people that SHOULD be taxed..
But the Americans making over $250K also include struggling small businesses...
And taxing THEM would be devastating...
OK, bonus points for "Wimpynomics," as that was indeed funny. Heh.
Can't take credit for that. It was a commenter over at Taylor Marsh.. But it's nice to know we share the same sense of humor... :D
Your blood-KoolAid levels are getting dangerously high. Think about the "stability" talking point for half a second. If "stability" is the ultimate goal for Republicans and the business community, then why are we even having the debt ceiling fight? "Stable" would dictate this fight not even happen, and yet the Republicans seem willing to push it to the edge. It just doesn't pass the laugh test, sorry. See further comments in FTP [173]...
Republicans are playing politics over the Debt Ceiling issue.
Just like Democrats are...
How do I know this??
Simple... In 2006, when we had a GOP president, every Democrat was against raising the Debt Ceiling, including our current President. Every Republican was for raising the Debt Ceiling.
Now that we have a 'Crat president, every Democrats is FOR raising the Debt Ceiling and every GOP'er is against it.
THAT's why I just can't buy into all the gloom and doom and armageddon predictions coming from this Administration.. Because 5 years ago, they were saying just the opposite.
They're hypocrites, pure and simple...
Hell, with this Administration's track record of honesty and integrity, I wouldn't believe them if they said that ice is cold, water is wet and the sky is blue..
As for the corporations and business interests, they DO want stability. They must HAVE stability if they are going to bring this economy back...
But, I fear, the kind of stability that raising the Debt Ceiling will bring will be, at BEST, a temporary respite.
As I have said before, the patient is dying. Putting a band-aid on it buys us a little time. That is all...
Is "call a spade a spade" inherently offensive? Inquiring minds want to know.
I was once called racist for using that term... Which pretty much cemented my belief that the Hysterical Left is indeed, completely around the bend...
Michale.....