Browsing the blog archivesfor the day Tuesday, October 15th, 2013.

Oh, Please …

Obama Administration

This is the most recent update on the Great Stupid Tantrum, from Mother Jones — House GOPers Pushing for Anti-Birth-Control Measure in Debt Ceiling Deal.

Y’know, there’s no point. Send everybody home, lock the doors, roll up the sidewalks, hang a “We’re Closed” sign on the Capitol.

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Never Mind

Obama Administration

The House baggers rejected the House proposal discussed in the last post.

House Republican leaders scrambled Tuesday after conservatives criticized their new plan to avert default. Just two days away from the deadline, it quickly hit turbulence with lawmakers concerned about the lack of spending cuts and upfront debt reduction.

We really are being governed by idiot children.

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Deal or No Deal

Obama Administration

I agree with Joan Walsh:

President Obama and the Democrats certainly deserve enormous credit for hanging tough as long as they have. In the Senate deal, they “win” a relatively short time frame to have to live with the budget cuts imposed by the awful sequester deal. Republicans “win” a shorter extension of the debt ceiling than Democrats want. Additionally, by most accounts, Republicans would get two smallish tweaks to the Affordable Care Act: a tougher income verification process to make sure people are eligible for subsidies, and a one year suspension of a “reinsurance tax” that unions actually asked for, so you could arguably count that as a win for Democrats. Senate Democratic sources say they’ve conceded nothing of value, so it’s not a GOP win, while it continues to make clear that Democrats are the party of compromise and negotiation, which helps all Democrats but particularly those from red states.

So far, so good, right? I’m not sure. I worry that granting Republicans even tiny tweaks to the ACA would seem to do what the president and Democratic leaders promised they wouldn’t: reward debt-ceiling/shutdown hostage-taking, however modestly. If such a deal gets through the House in any way – and that is not a given, at all — trust Speaker John Boehner and other leaders to hype those changes as major concessions. And that’s the point of giving them anything in the first place, I presume.

But I don’t know why we’d assume that the default-denying, Confederate flag-tolerant, flat-earth caucus of the GOP would come away from this experiment in political terrorism chastened. They don’t believe the polls, which are dreadful for them. They are capable of living on bread and water and fantasy, politically. In their Fox News bubble, it’s always sunny in Tea Party land, so if they are forced to suffer this “defeat” – almost certainly with Democratic votes in the House – why would we assume they’d learn their lesson and just go away? I can imagine even Sen. Ted Cruz reassuring the rubes who are writing him checks that he’s “won” this round — and the next round will be even better.

And, sure enough, bagger cheerleader Robert Costa is certain the House will just crap on the ball and punt it back to the Senate

As of 8:30 a.m., House conservatives believe the leadership is well aware of their unhappiness, and they expect Boehner to talk up the House’s next move: another volley to the Senate, which would extend the debt ceiling, reopen the government, and set up a budget conference, plus request conservative demands that go beyond the Senate’s outline.

“What they’ll come up with in the Senate will not get the support of most House Republicans,” predicts a House conservative strategist. “And thus, after a lot of hand-wringing, it’ll be DOA. Just like with BCA in 2011, the most important question is, what can pass the House? Everything else is subordinate to that. So, while the Senate is taking the lead right now, I expect the focus will soon shift back to the House, and back to the idea of doing a six-week extension of the debt ceiling. While Obama and Reid won’t like it, they don’t want to go past October 17, either. The politics of the debt ceiling are different from the shutdown. And so, we feel they’ll reluctantly accept it as a stopgap measure.”

Dylan Scott just posted this at TPM:

Here are the details of the new House bill that the leadership presented to Republican members at a closed door meeting Tuesday morning, according to multiple House GOP sources.

  • Temporary spending bill to re-open the government until Jan. 15.
  • Increase the debt limit enough to last until Feb. 7.
  • A two-year delay of Obamacare’s medical device tax.
  • A requirement that the Obama administration verify the income of Americans receiving tax subsidies through Obamacare (specifics pending).
  • A revised version of the so-called Vitter Amendment, in this case requiring Congress members and executive department officials like President Obama — but not their staffs — to purchase insurance through the law’s marketplace without federal employer subsidies.
  • Eliminates Treasury Department’s ability to use “extraordinary measures” to avoid default.

The House is expected to vote on the bill today.

It’s effectively a counteroffer to the deal brewing between Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) in the other chamber. It has a few similarities — most importantly, the dates for funding the government and raising the debt limit appear roughly the same — but some key differences.

It adds the medical device tax delay and revised Vitter amendment. It also removes a reported element of the Senate deal, which would have delayed Obamacare’s reinsurance tax, a change that Senate Democrats sought in exchange for the income verification piece.

The delay in the “reinsurance tax” mostly benefited unions, I understand

The Dem idea was to push the deadlines for the next round of hostage-taking back as close to the 2014 midterms as possible, and dare the Republicans to make ransom demands. But I don’t think the January and February dates are close enough to the midterms to matter. At this point, we might as well pass the default date, IMO. A lot of the damage already is done, anyway.

And here’s the problem: we’re already well past the point at which that certainty has been called into question. Fidelity, for instance, has no US debt coming due in October or early November, and neither does Reich & Tang:

While he doesn’t believe the U.S. will default, Tom Nelson, chief investment officer at Reich & Tang, which oversees $35 billion including $17 billion in money-market funds, said that the firm isn’t holding any U.S. securities that pay interest at the end of October through mid-November because if a default does take place, “we’d be criticized for stepping in front of that train.”

The vaseline, in other words, already has sand in it. The global faith in US institutions has already been undermined. The mechanism by which catastrophe would arise has already been set into motion. And as a result, economic growth in both the US and the rest of the world will be lower than it should be. Unemployment will be higher. Social unrest will be more destructive. These things aren’t as bad now as they would be if we actually got to a point of payment default. But even a payment default wouldn’t cause mass overnight failures: the catastrophe would be slower and nastier than that, less visible, less spectacular. We’re not talking the final scene of Fight Club, we’re talking more about another global credit crisis — where “credit” means “trust”, and “trust” means “trust in the US government as the one institution which cannot fail”.

While debt default is undoubtedly the worst of all possible worlds, then, the bonkers level of Washington dysfunction on display right now is nearly as bad. Every day that goes past is a day where trust and faith in the US government is evaporating — and once it has evaporated, it will never return. The Republicans in the House have already managed to inflict significant, lasting damage to the US and the global economy — even if they were to pass a completely clean bill tomorrow morning, which they won’t. The default has already started, and is already causing real harm. The only question is how much worse it’s going to get.

I also think this argues for the wisdom of the President citing the 14th Amendment to raise the debt ceiling himself. If the world sees that the U.S. debt really isn’t subject to the whims of congressional extremists, maybe some of the damage can be undone

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