Ezra Klein writing in his blog at the Washington Post about the efforts to extend the debt ceiling -- and keep the Social Security checks coming out on a regular basis:
It's pretty clear that if it was just John Boehner and Barack Obama in a room, they could come to a deal. If it was just the Senate that had to approve a bill, they could come to a deal -- perhaps even a big one. It's the House that's the problem. They rejected the $4 trillion deal the White House offered, suggesting they can't go big, and the Tea Party is whipping against the McConnell deal, which implies they can't go small. A lot of the dealmakers are, at this point, stymied. “We want to accommodate their needs,” Sen. Benjamin L. Cardin said of the House leaders. “We just don’t understand what their needs are.”
It's not clear they do, either. One common explanation for where we are in the talks is that we're waiting for the last minute. No deal struck before the last minute will be credible as the best deal Republicans could possibly get, because in this negotiation, time is leverage, and if the clock isn't one minute from midnight, that means there's leverage Republicans chose not to use. Until we hit that point, there's just not enough incentive for the House GOP to say "yes" to anything, not enough pressure to force them to say "yes" to anything, and there's an argument, popular among some conservatives, that it would in fact be a mistake to say "yes" to anything.
Got that? Worried that you won't get your Social Security check on August 3? Watch the stock market. Nothing will happen until the stock market plummets and maybe even that won't be enough to get House of Representatives Republicans to vote for a debt ceiling hike.But what no one quite knows is what the House GOP will accept when the clock is one minute from midnight, or, in more pessimistic tellings, the Dow is 1,000 points below whatever it was at the day before. We're hearing talk that the "Big Deal" is being revived, but the bigger the deal, the tougher it is to pass quickly. And so if it is the case that we can't strike a deal until the markets are beginning to bottom out or the debt ceiling is about to cave in, it's a pretty good bet that we're not going to strike a big deal, and it's very hard to predict what sort of small deal the politics will permit at that point. Which is worrying. The political dynamics here imply a lot of uncertainty all the way to the end, but excess uncertainty is the one thing that could lead the market dynamics to turn sharply against us.
Wow, great explanation except it is exactly backwards. The Republicans want this settled as soon as possible so they can move on to the regular budget process. Obama wants it delayed until the last minute, banking on the odds that the Republicans will cave if they will be perceived as the bad guys for causing a default. That is why Obama has the poison pill in the form of a tax increase. If it were just spending cuts a deal would be way easier to get. Obama doesn't want to show leadership--he just wants to trash the Republicans.
ReplyDeleteIf either side wanted a quick deal, they could simply cave to the other side, but I wouldn't call this leadership. Higher taxes is only a poison pill because the Republicans want low taxes on the wealthy a lot more than a lower deficit (the deficit was just as high when they insisted on extending all Bush tax cuts). I think both sides (Obama and the Republicans, along with some Democrats) want highly unpopular cuts to Social Security and Medicare (because that's what the wealthy want), so they have to create a crisis to justify it. The haggling is just for show.
ReplyDeleteAs the Manger of a large SSA district-thank God for the House of Reps and let us hole they save this country before we become Greece
ReplyDeleteAgreed, great explanation but backwards.
ReplyDeleteThe Treasury and Treasury can FURTHER play with the book and extend the date past Aug. 3 -- it is all just theater.
And if the market takes a plunge, I got a few dollars on the side line, that I may want to invest. With the crowd in Washington, saving at a bank rate of 0.04% is a joke and way below the real inflation rate (using honest figures, not what has been used to twice deny RSI cost of living adjustments, or the even more fraudulent proposed chain cost of living calculation).