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Debt-ceiling Showdown: The Fight Of Obama?s Life -- Daily Intelligencer

Nobody is quite sure what to make of it. A familiar Washington Kabuki dance? A white-knuckle bond market tightrope walk? A final reactionary howl at the onset of Obamacare? It may be these things, but its also something much larger: a Constitutional struggle, a kind of quasi-impeachment, that will test Obamas mettle and, next to his reelection campaign, poses the most singular threat to his presidency. The progression of events begins with a dynamic I described in a print piece at the beginning of 2012 conservatives had come to regard the 2012 race as their last chance to win an election as authentic conservatives against a rising Democratic majority. Since their crushing defeat, they have ignored the task of refurbishing the partys national appeal for its next national electoral bid, and instead have recommitted themselves to waging increasingly millenarian confrontations from their existing red state power base in Congress. Most of us expected, at some level, that the election would cool the rights apocalyptic fervor. Instead, the opposite has occurred. Paul Ryan candidly explained the calculation: "The reason this debt limit fight is different is, we don't have an election around the corner where we feel we are going to win and fix it ourselves. We are stuck with this government another three years." This is a remarkable confession. Republicans need to compel Obama to accept their agenda, not in spite of the fact that the voters rejected it at the polls but precisely for that reason. The exhaustion of electoral channels against Obama has spurred the party to seize power through non-electoral channels. Their opening demand that Obama sign Mitt Romneys entire economic plan into law in return for avoiding a debt default, while historically bizarre, followed perfectly from their legislative strategy this year. House Republicans decided back in January to boycott any negotiations with Obama over fiscal policy. They presented this at the time as a desire to return to regular order, with negotiations between the House and Senate, but eventually decided to boycott those, too . The entire House Republican strategy is premised on using threats to leverage unilateral concessions from the Democrats. Their aversion to compromise has been accepted as settled fact in Washington, reimagined not only as a new normal but as the way its always been. Republican Dana Rohrabacher defended the use of debt-ceiling threats to pry concessions from Obama like so: People have to recognize theres never any compromise until the stakes are high. In our society, thats the nature of democratic government. That http://journals.fotki.com/blackwellosmp/my-blog/entry/wsqtbtwqdwdtr/ is completely false. American political parties have forged compromises for decades without high-stakes threats to bring them to the table. Not to mention the fact that, by compromise, Rohrabacher means unilateral concessions by the president. Part of the confusion is that the debt ceiling used to be an opportunity for the opposing party to denounce the fiscal irresponsibility of the president. On occasion, but not usually , debt-ceiling hikes have been appended onto budget agreements that were negotiated on their own terms. Whats completely novel is Congress using the threat of a debt default to force the president to make unilateral policy concessions. The conventions of he-said, she-said journalism have allowed this radical development to insinuate itself into the routine backdrop of partisan squabbling. Neutral parties have likewise come to accept the hostage-taking threat of the debt ceiling as merely a normal form of political negotiation. Time reporter Zeke Miller asserts, Hostage taking by promising harm if you do not get your way has long been a standard way of doing business in Washington, pointing to Democratic threats to let the Bush tax cuts expire or to change Senate rules as an analogue. But these examples lack any of the relevant hostage-taking qualities that sets apart the debt ceiling threat. One is the scale and irreversible impact of a debt ceiling breach unlike the failure of a bill, or even a government shutdown, which can be reversed. Second, and more importantly, its normal in any negotiation for each party to have a walk-away threshold to stop something they consider objectionable. Democrats, in the cases Miller cites, were objecting to outcomes -- full extension of the Bush tax cuts, continued filibustering of executive appointments that they defined as unacceptable. House Republicans, by contrast, dont object to raising the debt ceiling. They concede its necessary to avoid disaster! The hostage dynamic of the debt-ceiling fight has created a dangerous, historically unusual set of circumstances. One aspect of it is to set up a precarious, high-stakes negotiation, the failure of which could set off large, immediate, and irreversible damage. The second is to reset the balance of power between the president and Congress, allowing the latter to compel the former to submit to its agenda without concessions. Both these changes would permanently and dangerously alter the character of American government. If outsiders have failed to grasp the motivations of the House Republicans, puzzling at their odd redoubling of ideological fervor since November, they have likewise mistaken Obama. Everything I have seen from Obama suggests he understands that he cannot repeat his blunder of 2011, when he mistook the GOPs debt-ceiling threat for an invitation to engage in normal fiscal bargaining. Obama cant tame the monster he created gradually; he has to kill it completely. Bargaining his way through this crisis would do Obama no good, even if he could get through http://washingtonaywo20.beeplog.com/359016_2150783.htm it by offering up a meager or even symbolic concession. Anything that allows Republicans to believe they can trade a debt-ceiling threat for policy concessions simply creates a new hostage crisis the next time the debt ceiling comes up. This negotiation is Obamas only chance to halt the routinization of debt-ceiling extortion. Obamas incentive structure is simple, then: Allowing Republicans to default on the debt now is better than trading something that allows them to threaten it later. His best option is to refuse to negotiate the debt ceiling and have the House raise it before October 17. His next best option is to refuse to negotiate the debt ceiling, allow default, and never have to go through it again. Bargaining merely postpones, and worsens, the next default crisis. No negotiated debt-ceiling price is small enough to be acceptable. There is therefore no circumstance under which bargaining for a debt-ceiling hike makes sense, even if the alternative is certain default. That is a frightening reality, made all the more frightening by two additional factors.

The entire House Republican strategy is premised on using threats to leverage unilateral concessions from the Democrats. Their aversion to compromise has been accepted as settled fact in Washington, reimagined not only as a new normal but as the way its always been. Republican Dana Rohrabacher defended the use of debt-ceiling threats to pry concessions from Obama like so: People have to recognize theres never any compromise until the stakes are high. In our society, thats the nature of democratic government. That is completely false. American political parties have forged compromises for decades without high-stakes threats to bring them to the table. Not to mention the fact that, by compromise, Rohrabacher means unilateral concessions by the president. Part of the confusion is that the debt ceiling used to be an opportunity for the opposing party to denounce the fiscal irresponsibility of the president. On occasion, but not usually , debt-ceiling hikes have been appended onto budget agreements that were negotiated on their own terms. Whats completely novel is Congress using the threat of a debt default to force the president to make unilateral policy concessions. The conventions of he-said, she-said journalism have allowed this radical development to insinuate itself into the routine backdrop of partisan squabbling. Neutral parties have likewise come to accept the hostage-taking threat of the debt ceiling as merely a normal form of political negotiation. Time reporter Zeke Miller asserts, Hostage taking by promising harm if you do not get your way has long been a standard way of doing business in Washington, pointing to Democratic threats to let the Bush tax cuts expire or to change Senate rules as an analogue. But these examples lack any of the relevant hostage-taking qualities that sets apart the debt ceiling threat. One is the scale and irreversible impact of a debt ceiling breach unlike the failure of a bill, or even a government shutdown, which can be reversed. Second, and more importantly, its normal in any negotiation for each party to have a walk-away threshold to stop something they consider objectionable. Democrats, in the cases Miller cites, were objecting to outcomes -- full extension of the Bush tax cuts, continued filibustering of executive appointments that they defined as unacceptable. House Republicans, by contrast, dont object to raising the debt ceiling. They concede its necessary to avoid disaster! The hostage dynamic of the debt-ceiling fight has created a dangerous, historically unusual set of circumstances. One aspect of it is to set up a precarious, high-stakes negotiation, the failure of which could set off large, immediate, and irreversible damage. The second is to reset the balance of power between the president and Congress, allowing the latter to compel the former to submit to its agenda without concessions. Both these changes would permanently and dangerously alter the character of American government. If outsiders have failed to grasp the motivations of the House Republicans, puzzling at their odd redoubling of ideological fervor since November, they have likewise mistaken Obama. Everything I have seen from Obama suggests he understands that he cannot repeat his blunder of 2011, when he mistook the GOPs debt-ceiling threat for an invitation to engage in normal fiscal bargaining. Obama cant tame the monster he created gradually; he has to kill it completely. Bargaining his way through this crisis would do Obama no good, even if he could get through it by offering up a meager or even symbolic concession. Anything that allows Republicans to believe they can trade a debt-ceiling threat for policy concessions simply creates a new hostage crisis the next time the debt ceiling comes up. This negotiation is Obamas only chance to halt the routinization of debt-ceiling extortion. Obamas incentive structure is simple, then: Allowing Republicans to default on the debt now is better than trading something that allows them to threaten it later. His best option is to refuse to negotiate the debt ceiling and have the House raise it before October 17. His next best option is to refuse to negotiate the debt ceiling, allow default, and never have to go through it again. Bargaining merely postpones, and worsens, the next default crisis. No negotiated debt-ceiling price is small enough to be acceptable. There is therefore no circumstance under which bargaining for a debt-ceiling hike makes sense, even if the alternative is certain default. That is a frightening reality, made all the more frightening by two additional factors. The first is that Republicans dont believe Obamas insistence that he wont negotiate. Obama can claim he wont negotiate, but he would have an incentive to lie about this, and nobody other than Obama can really know for sure. (I believe him, but I wouldnt bet my life on it.) And one of the things Republicans truly believe about Obama they say it constantly in private is that they can make him fold. As the debt-ceiling deadline ticks toward midnight, Obama ought to be able to make his determination clear enough that House Republican leaders understand their only choices are to raise the debt ceiling or breach it. Default would risk not only economic calamity but the potential of an electoral one for the otherwise unassailable Republican majority. But history is replete with disastrous miscalculations. Theyre often made by weak, short-sighted leaders facing pressure to demonstrate toughness from internal opponents. That is to say, Boehner is exactly the kind of leader who would blunder into a calamity like a debt default.

Mark Zandi, Moodys economist, prominently highlighted that the debt limit showdown may be catastrophic for the US economy. He added that a furious political fight is expected next month over the countrys borrowing cap. His statement was testified to by John McCain (R-Ariz) at a joint congressional hearing on The Economic Costs of Debt-Ceiling Brinkmanship. The debt ceiling stands at $16.7 trillion, and the US treasury Department is entitled to spend that is already authorized by the Congress. The treasury officials alerted that they have started taking measures for paying the government bills. But in mid-October, the officials are anticipating default on some payments. According to Zandi, this default may adversely affect the US economy. Treasury Secretary, Jack Lew stated We cannot afford for Congress to gamble with the full faith and credit of the United States. Since May, Government has racked up bills against its $16.7 trillion debt limit but avoided default on bills. The US government managed its cash by employing emergency measures like suspending investments in pension funds for federal workers. Lew has already warned that Treasury may run out of borrowing options around mid-October. He added that by October, the US Treasury may be left with only $50 billion and default is predictable. The process of rolling over debt takes place every week on Thursday where the Treasury pays back about $100 billion to the investors and they immediately lend back to the government. However, the American economy seems to be in topsy turvy shape. If the situation deteriorates further, its a serious concern that investors may lose confidence in the White House and stop reinvesting in the US government debt. Lew said that if the US bondholders stop investment roll over and demand to be repaid, then the Treasury has to dissipate the entire cash balance. In this situation, any default can be devastating for the US economy. A single default of the US government may startle the Wall Street and adversely affect the businesses and families by fueling a sharp increase in interest rates. The situation can be a reason for a steep rise in consumer debt. This may in turn induce consumers to pay back creditors through court monitored repayment plans . In 2011, Washington invited economic devastation during a heated debate over the debt ceiling. The prompt action from the financial market as well as credit rating agency Standard & Poors was to strip America of its top-tier rating. The White House is determined to not negotiate over the debt ceiling. On the other hand, the Republicans are attempting to raise the debt ceiling as leverage for their goal to manage the government expenses. In a recent Presidents speech, addressing 100 top corporate executives, he said it is going to be important for all of you over the next several weeks to understand whats at stake and to make sure that you are using your influence in whatever way we can to get back to what used to be called regular order around here. The main speech focused on domestic budget and economic issues. However, President Obama restated his vows not to negotiate over raising the debt limit. He stated that the Republicans want to raise the debt limit to avoid spending cuts or to block Presidents signature health care program. Mr. President is willing to consider the terms of the budget, but hes vehemently against the threat of burying the health care program. The US Treasury is expected to employ emergency measure to avoid exceeding the 16.7 trillion debt limit before mid-October. On the other side, if the debt limit is not raised, the US may default on bills. In this situation, the healthcare program popularly known as the Obamacare, will be opened for public for insurance exchange sign up from 1st October, 2013 and the deadline for the program is approaching in a quick pace. The Obama and his administration have struggled hard against the political as well as operational obstacles to get the program running. According to the President, the Republicans in the House of Representative are focusing on the debt limit measure to delay the health care program. Obama has criticized this kind of manipulative tactic of the Republicans by calling it terrifying financial brinksmanship because of some ideological arguments that people are having. Some of the conservative members are pressuring the Republicans to demand government funding measures to delay the Obamacare program. However, Brendan Buck a representative of the House Speaker John Boehner, added that the Republicans are not threatening a debt default. He opined that President Obama is using this kind of threatening tricks to cover his lack of courage to deal with the national debt crisis. Buck closed his statement by saying Every major deficit deal in the last 30 years has been tied to a debt limit increase, and this time should be no different. Consequences of US Government default on average Americans Here are some of the consequences of US government default on average consumers as speculated by the economists: Interest rate may increase on the US treasury bond: One of the most serious effects of US government default is that the credit rating agencies may depreciate the value of the Treasury Bond, so US may be compelled to pay more to attract investors. Government payment may get suspended: According to Vincent Reinhart of the American Enterprise Institute, the government default may lead to delay of paychecks for government workers, vendors, state as well as local governments. Under such a circumstance, the treasury may prioritize payments. The senior citizens in America who rely on the Social Security to manage their daily living expenses may face a severe impact instantly. The shareholders along with the Social Security recipients may be among the first to realize the consequences of Government default. Stock market collapse: There may be a direct effect of government default on the stock market. Dean Baker, co-director at the Center of Economics and Policy Research stated that if the stock market drops by 10% in oneday, it may be the onset of another recession. James Horney, vice president for the Federal Fiscal Affairs at the Center on Budget Policy Priorities added that the market may get adversely affected for a long span of time. Increase in the mortgage rates: If the cost for government borrowing increases, then the effect may seep in the housing sector as well. Reinhart added that the home buyers may require to pay more on the interest rate if the US government defaults on its payment. Unemployment and job loss: During the time of great economic depression, most of the Americans suffered job loss and wage deduction each month. If the financial system freezes and increase in the interest rate haunts the companies, then the job market may suffer again. Well, the above mentioned points are speculations but its evident that a government default may have serious consequences on the US economy.

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That means Americans' savings, loans and general economic well-being could be collateral damage. Oh fine, so what's the debt ceiling again? It's a cap set by Congress on how much the federal government may have in outstanding debt . The cap applies to debt owed to the public (i.e., anyone who buys U.S. bonds) plus debt owed to federal government trust funds such as those for Social Security and Medicare. Congress has always set some kind of limit on national debt, but the first modern version of it was set in 1917. Today it's set at $16.699 trillion. How often has Congress raised the debt ceiling? So often. On average, more than once a year. Since 1940, lawmakers have effectively approved 79 increases. Sometimes they've raised it by small amounts, other times by large amounts. And sometimes they've raised it "temporarily" with provisions for a "snap-back" to a lower level. Is it true that raising the debt ceiling gives Congress a "license to spend more"? No. Raising the debt ceiling simply lets Treasury borrow the money it needs to pay all U.S. bills and other legal obligations in full and on time. Those bills are for services already performed and entitlement benefits already approved by Congress. So raising the debt ceiling is more like a license to continue paying what the country owes. And the obligations are incurred because of countless decisions made by lawmakers from both parties over the years. So, why does Congress even bother with a limit? In theory, setting a debt ceiling is supposed to help Congress control spending. In reality it doesn't. Not meaningfully anyway, although there have been times when the debate has yielded some fiscal restraint. Google+ Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer . Morningstar: 2013 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM 2013 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2013. All rights reserved. Most stock quote data provided by BATS. 2013 Cable News Network. A Time Warner Company. All Rights Reserved. Terms under which this service is provided to you.

In the 1990s, when Republicans withheld money, using the power of the purse to control spending, President Clinton and the Democrats accused them of shutting down the government . The term shutdown made Republicans look as though they, not the president, were deciding which programs and offices to close. In November 1996, Republicans lost the Senate and lost seats in the House. Clinton was decisively re-elected. In the Nexis archive of news articles and political transcripts, theres no record of the words economic shutdown during those battles. The economy was strong. Two years ago, a few congressional Republicans used this phrase to describe what liberal economic policies were doing to the private sector. The first Democrat I can find who used the term in the context of the debt ceiling is former Rep. Kathy Hochul, D-N.Y. Appalled by the 2011 standoff between congressional Republicans and President Obama, Hochul accused her colleagues of playing chicken with peoples lives. She warned them that the country was on the precipice of not just a governmentshutdownbut an intentionaleconomic shutdown. Hochul didnt explicitly blame the GOP. What happens when no one blinks, no one swerves, no one comes to their senses? she asked. A week later, writing in the Atlantic, Democratic strategist Krystal Ball turned this into a partisan critique. Ball denounced the current debt-ceiling hostage situation in which Republicans, led by tea party extremists, decided to threaten not only a government shutdown but total economic shutdown. Over the next two years, the phrase was rarely uttered. Rep. Kurt Schrader, D-Ore., and Sen. Dick Durbin, D-Ill., used it to describe the 2011 debt ceiling impasse, and Durbin blamed the GOP The Tea Party of the House of Representatives and their followers in the Senate said, We're prepared to shut down the economy of America but only in retrospect. Two weeks ago, the term reappeared. The press secretary for the Democratic Congressional Campaign Committee blasted Rep. Erik Paulsen, R-Minn.: Minnesota voters want Congressman Paulsen to stop giving handouts to the ultra-wealthy and instead pay the countrys bills and prevent economic shutdown. A week later, Senate Majority Leader Harry Reid chided the GOP for dragging its feet on funding the government and raising the debt ceiling: While Republicans in Washington use these stunts to raise money and grab headlines, people in Nevada and around the country are going to feel the pain of this economic shutdown. Yesterday, in a speech outlining the Affordable Care Act , President Obama turned the volume way up. Some have threatened a government shutdown if they cant shut down this law, he charged. Others have actually threatened an economic shutdown by refusing to pay Americas bills if they cant delay the law. Obama accused the Tea Party Republicans of threatening either to shut down the government, or shut down the entire economy by refusing to let America pay its bills. No Congress before this one has evereverin history been irresponsible enough to threaten default, to threaten an economic shutdown, to suggest America not pay its bills, just to try to blackmail a president. Thats three allegations of economic shutdown in a few minutes. Obama isnt using the phrase casually. Hes making it a weapon. Economic shutdown is supposed to do for the debt ceiling what government shutdown did for failure to authorize appropriations. Its job is to draw a neat cause-and-effect line from congressional inaction to grim, complex consequences. Ratings agencies will downgrade U.S. credit, stocks will dive, people will be laid off, and all of it will be the fault of Republicans who, by failing to act, shut down the economy. Government shutdown won an election and damaged the Republican brand for years. Dont be surprised if economic shutdown does the same. TUESDAY, APRIL 20, 2010, AT 6:19 PM Tornado Kills at Least Five in Oklahoma FRIDAY, APRIL 29, 2011, AT 3:07 PM Obama Gets Firsthand Look at a Tornado Damage TUESDAY, APRIL 20, 2010, AT 6:19 PM Tornado Kills at Least Five in Oklahoma. Very long title. Long long long. Tornado Kills at Least Five in Oklahoma. Very long title. Long long long. TUESDAY, APRIL 20, 2010, AT 6:19 PM Tornado Kills at Least Five in Oklahoma. Very long title. Long long long. Tornado Kills at Least Five in Oklahoma. Very long title. Long long long. This will never be shared This will appear when you post on the site

It's a cap set by Congress on how much the federal government may have in outstanding debt . The cap applies to debt owed to the public (i.e., anyone who buys U.S. bonds) plus debt owed to federal government trust funds such as those for Social Security and Medicare. Congress has always set some kind of limit on national debt, but the first modern version of it was set in 1917. Today it's set at $16.699 trillion. How often has Congress raised the debt ceiling? So often. On average, more than once a year. Since 1940, lawmakers have effectively approved 79 increases. Sometimes they've raised it by small amounts, other times by large amounts. And sometimes they've raised it "temporarily" with provisions for a "snap-back" to a lower level. Is it true that raising the debt ceiling gives Congress a "license to spend more"? No. Raising the debt ceiling simply lets Treasury borrow the money it needs to pay all U.S. bills and other legal obligations in full and on time. Those bills are for services already performed and entitlement benefits already approved by Congress. So raising the debt ceiling is more like a license to continue paying what the country owes. And the obligations are incurred because of countless decisions made by lawmakers from both parties over the years. So, why does Congress even bother with a limit? In theory, setting a debt ceiling is supposed to help Congress control spending. In reality it doesn't. Not meaningfully anyway, although there have been times when the debate has yielded some fiscal restraint. Google+ Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer . Morningstar: 2013 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM 2013 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2013. All rights reserved. Most stock quote data provided by BATS. 2013 Cable News Network. A Time Warner Company. All Rights Reserved.

In a closed-door meeting, the leaders outlined to their members a proposal that would demand a laundry list of Republican priorities in exchange for a yearlong suspension of the nations $16.7 trillion borrowing limit. The centerpiece of the plan is a one-year delay of President Obamas signature healthcare law. But hours after the meeting, the party had yet to release the legislation formally, and conservatives complained that it lacked specific spending cuts and failed to tackle entitlement reform. We still have some challenges, said Rep. Tom Cole (Okla.), an ally of Speaker John Boehner (R-Ohio) and member of the GOP whip team. Weve got an awful lot of support, but clearly at this point we dont have a final product thats attracting the number that we need. Hopefully thatll change, and I think it could. Cole said leaders were still tinkering with the plan, which senior Republicans earlier had said would go to the House Rules Committee on Thursday. GOP Conference Chairwoman Cathy McMorris Rodgers (R-Wash.) told The Hill late Thursday that leaders are "still figuring out the timing" of a vote to increase the nation's borrowing authority. A meeting of the House GOP leadership late Thursday afternoon broke up without an announcement about the bill. Aides said the timing remained "in flux," and the Rules Committee had yet to schedule a meeting. The committee did plan to meet to approve a same-day rule allowing the debt ceiling to be brought up at any time. GOP leaders previously had argued that because many elements in the debt ceiling plan have been previously voted on by the House, a three-day layover rule could be waived. House leaders had hoped to schedule the debt-ceiling vote as early as Friday, thinking it could help them move a separate measure to fund the government. They want to focus the fight over government spending on the debt measure, where they have long believed they have more leverage with the White House. The Senate is poised to approve as early as Friday a "clean" measure to fund the government. It would not include language defunding ObamaCare, something included in a measure approved by the House last week after demands by conservatives. House Republicans will likely only have the weekend to figure out how to move forward because the government is set to shut down on Tuesday if Congress does not approve a funding measure, known as a continuing resolution (CR). GOP leaders have not put forward any clear plan for a spending measure, and someRepublicans said they wanted to see what the leadership hoped to do before they committed to supporting the debt-ceiling bill. "There's a laundry list of things I could support ... frankly I want to finish the debate on the CR before we move on to the debt ceiling," said Rep. Mark Meadows (R-N.C.), who organized the effort to defund ObamaCare through the continuing resolution. Illustrating the leadership's challenge in winning Republican votes, a member of the GOP's whip team, Rep. Tom Rooney (Fla.), said he was leaning against the debt-ceiling plan because it did not seriously tackle entitlement reform. The problem for me is it doesn't address the debt, Rooney told The Hill. He questioned how he could defend raising the limit without following through on the reforms Republicans proposed in their budget the past three years. How can I possibly justify that? Rooney asked. If every Democrat voted against the bill, which is likely, Republicans could afford only 16 defections. Rep. Walter Jones (R-N.C.), who opposes any debt-ceiling increase at all, estimated there were 10 to 15 Republicans "that feel as strongly as I do," and predicted GOP leaders did not have the votes to pass the legislation. Democrats blasted the GOP's plan, saying it would go nowhere in the Senate. The House is attaching the Republican Party platform to the debt ceiling. In a week full of absurdities, this takes the cake," Sen. Charles Schumer (D-N.Y.) said. Rep. Mike Simpson (R-Idaho) made clear that Republicans were not operating under any illusions that this initial offer would remain intact, however. He described it more as a wish list. "We're obviously going to throw out what we want. Obviously that's not going to be acceptable to the other party, most likely," he said. "It puts our marker down." But Simpson said the one-year delay of ObamaCare is a mandatory component for Republicans. "When Obama says he's not going to negotiate on the debt ceiling, that's just baloney," Simpson said. "Ultimately, he will." Other GOP lawmakers argued Obamas position is untenable. They cited polls showing voters believed that fiscal reforms should be part of any debt-ceiling deal. Obama has said that he wont negotiate over the debt ceiling because its impact on the economy would be so devastating, and most economists believe that the effects of a default would be far worse than a government shutdown. Boehner defended the debt package on Thursday against complaints from conservatives that the plan doesn't do enough on the spending side. In this bill, we have spending cuts and we have issues that will help spur more economic growth. We think the balance is correct, he said. Republicans have, for more than a week, discussed a plan that would allow a yearlong increase in the debt ceiling in exchange for a list of priorities, many of which are nonstarters among Democrats and the president.The Treasury Department this week said Congress should raise the debt ceiling by Oct. 17 to ensure the government can pay its bills. To bolster leaderships argument, Rep. Kevin Brady (R-Texas), the chairman of the Joint Economic Committee, released a study on Thursday arguing that concentrating on growing the economy would play a key role in getting Americas books in order.

Instead, the opposite has occurred. Paul Ryan candidly explained the calculation: "The reason this debt limit fight is different is, we don't have an election around the corner where we feel we are going to win and fix it ourselves. We are stuck with this government another three years." This is a remarkable confession. Republicans need to compel Obama to accept their agenda, not in spite of the fact that the voters rejected it at the polls but precisely for that reason. The exhaustion of electoral channels against Obama has spurred the party to seize power through non-electoral channels. Their opening demand that Obama sign Mitt Romneys entire economic plan into law in return for avoiding a debt default, while historically bizarre, followed perfectly from their legislative strategy this year. House Republicans decided back in January to boycott any negotiations with Obama over fiscal policy. They presented this at the time as a desire to return to regular order, with negotiations between the House and Senate, but eventually decided to boycott those, too . The entire House Republican strategy is premised on using threats to leverage unilateral concessions from the Democrats. Their aversion to compromise has been accepted as settled fact in Washington, reimagined not only as a new normal but as the way its always been. Republican Dana Rohrabacher defended the use of debt-ceiling threats to pry concessions from Obama like so: People have to recognize theres never any compromise until the stakes are high. In our society, thats the nature of democratic government. That is completely false. American political parties have forged compromises for decades without high-stakes threats to bring them to the table. Not to mention the fact that, by compromise, Rohrabacher means unilateral concessions by the president. Part of the confusion is that the debt ceiling used to be an opportunity for the opposing party to denounce the fiscal irresponsibility of the president. On occasion, but not usually , debt-ceiling hikes have been appended onto budget agreements that were negotiated on their own terms. Whats completely novel is Congress using the threat of a debt default to force the president to make unilateral policy concessions. The conventions of he-said, she-said journalism have allowed this radical development to insinuate itself into the routine backdrop of partisan squabbling. Neutral parties have likewise come to accept the hostage-taking threat of the debt ceiling as merely a normal form of political negotiation. Time reporter Zeke Miller asserts, Hostage taking by promising harm if you do not get your way has long been a standard way of doing business in Washington, pointing to Democratic threats to let the Bush tax cuts expire or to change Senate rules as an analogue. But these examples lack any of the relevant hostage-taking qualities that sets apart the debt ceiling threat. One is the scale and irreversible impact of a debt ceiling breach unlike the failure of a bill, or even a government shutdown, which can be reversed. Second, and more importantly, its normal in any negotiation for each party to have a walk-away threshold to stop something they consider objectionable. Democrats, in the cases Miller cites, were objecting to outcomes -- full extension of the Bush tax cuts, continued filibustering of executive appointments that they defined as unacceptable. House Republicans, by contrast, dont object to raising the debt ceiling. They concede its necessary to avoid disaster! The hostage dynamic of the debt-ceiling fight has created a dangerous, historically unusual set of circumstances. One aspect of it is to set up a precarious, high-stakes negotiation, the failure of which could set off large, immediate, and irreversible damage. The second is to reset the balance of power between the president and Congress, allowing the latter to compel the former to submit to its agenda without concessions. Both these changes would permanently and dangerously alter the character of American government. If outsiders have failed to grasp the motivations of the House Republicans, puzzling at their odd redoubling of ideological fervor since November, they have likewise mistaken Obama. Everything I have seen from Obama suggests he understands that he cannot repeat his blunder of 2011, when he mistook the GOPs debt-ceiling threat for an invitation to engage in normal fiscal bargaining. Obama cant tame the monster he created gradually; he has to kill it completely. Bargaining his way through this crisis would do Obama no good, even if he could get through it by offering up a meager or even symbolic concession. Anything that allows Republicans to believe they can trade a debt-ceiling threat for policy concessions simply creates a new hostage crisis the next time the debt ceiling comes up. This negotiation is Obamas only chance to halt the routinization of debt-ceiling extortion. Obamas incentive structure is simple, then: Allowing Republicans to default on the debt now is better than trading something that allows them to threaten it later. His best option is to refuse to negotiate the debt ceiling and have the House raise it before October 17. His next best option is to refuse to negotiate the debt ceiling, allow default, and never have to go through it again. Bargaining merely postpones, and worsens, the next default crisis. No negotiated debt-ceiling price is small enough to be acceptable. There is therefore no circumstance under which bargaining for a debt-ceiling hike makes sense, even if the alternative is certain default. That is a frightening reality, made all the more frightening by two additional factors. The first is that Republicans dont believe Obamas insistence that he wont negotiate. Obama can claim he wont negotiate, but he would have an incentive to lie about this, and nobody other than Obama can really know for sure.

Leave a comment I have to be honest: Ive been putting off writing about this for the past couple of days, for both good and bad reasons. One good reason is that, really, there hasnt been much news. Congress is playing games, everyone is shouting at each other, and nothing is getting done. The other good reason is that theres not much we can do to prepare, given the level of uncertainty that prevails. No news, no action items, no need to comment. The bad reason I have for putting this off is that, quite frankly, its depressing. Weve been through this before, in both 2011 and 2012, and the fact that were going through it once again is just ridiculous. Be that as it may, though, here we are, so lets deal with it. First, the frame. We have two pending deadlines here. The first, at the end of September, is the expiration of the U.S. governments funding authority. If Congress does not pass, and the President does not sign, some form of budget or continuing spending authorization, all nonessential services of the federal government will be shut down as of the end of September 30. The Washington Post offers a good guide to the details of the shutdown . Big picture, what does this mean? Economically, the effects would be similar in type, if not necessarily in magnitude, to those of the sequester. Federal spending cuts slow the economy by diminishing overall spending. With 800,000 workers losing their paychecks for a period of time, consumer spending would get hit, any projects that require the government to cut checks would get hit, and the economy overall would take a hit. Beyond that, the damage would depend on the length of the shutdownthe longer, the worse. There would be other damaging effects, of course, but the direct economic impact would likely be relatively modest unless the shutdown lasted for months. In 19951996, a shutdown lasted for five days in November and 21 days in December and January; the furloughed workers were awarded back pay afterward, which limited the ultimate damage. A shutdown itself, if resolved quickly, doesnt seem to demand a great deal of concern at this point. Looking back again to 19951996, the markets seemed to agree, with only a small hit during the second phase of the shutdown. The government funding showdown, though, is just the preview of the main attractionthe debt ceiling debate. Here, the confrontation is much more bitter and the potential consequences much more severe. The state of play right now is that the U.S. hit the debt ceiling months ago, back in May. Since then, the Treasury has been using the usual extraordinary measures to shuffle cash around and pay the bills. Were now approaching the point where the accounting tricks will run out, probably in mid-October. At that point, the Treasury will have to decide whom to payand whom not to pay. The difference between the shutdown and the debt ceiling is this: the shutdown is based on a decision not to spend money we presumably have. The debt ceiling is based on not spending money we dont have. The fact that, without additional borrowing, we wont have the money to pay all our bills is what makes the debt ceiling much more consequential. For the U.S. government to run out of money is unprecedented. We came closest in 2011. In July of that year, when it looked like the government was about to default, the S&P 500 dropped more than 16 percent. Interestingly, interest rates on Treasury bonds actually dropped, from about 3.25 percent to about 2.5 percent. What drove those changes was uncertainty. As I said, although the government has never actually run out of money, the consequences could be extreme, including higher interest rates indefinitely, as U.S. bonds get rerated for the possible risk of default. The stock market dropped in July 2011 to reflect the risk of those consequences. The fact that interest rates dropped, though, suggests that markets expected bond coupons to continue to be paid even when the government couldnt pay all the bills. In this, in the short run, I think the markets were right then and would be right now. The government will attempt to minimize the damage of any technical default, to include not actually stopping payments on existing debtat least for a while.

Leadership sources told HuffPost that such reports were "premature," but acknowledged they were "still talking to members, still listening to concerns." "I'd guess we need more votes," one said. But they also contended that news that the debt bill was being delayed was inaccurate, since a vote had never been scheduled in the first place. Still, earlier in the day, rank-and-file members seemed to believe that a bill would be put forth quickly. They acknowledged that using the debt limit as leverage was risky, but said it was a worthwhile plan . Part of the problem could be that the House is still waiting for the Senate to pass the continuing resolution, or bill to keep the government funded, that has been tied up in the upper chamber by Sen. Ted Cruz (R-Texas) and several other tea party darlings. The House is using the bill to try and defund Obamacare, but the Senate is set to remove all such provisions. That leaves House Republicans unable to decide whether to try and kill the health care law again via the continuing resolution -- with the money currently funding the government running out Monday -- or put all their chips in the debt measure. There are also Republicans who question the wisdom of taking the debt limit hostage, since the consequences are predicted to be dire. House leaders said Thursday night that the House would be in session throughout the weekend to deal with the fiscal showdowns. If the House plan disintegrates, it wouldn't be the first time. House Speaker John Boehner (R-Ohio) has had to walk a tightrope for more than two years now, balancing more moderate members against his determined tea party contingent and resulting in several false starts on major bills. Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook. Also on HuffPost: (AP Photo/J. Scott Applewhite, File) Sen. Marco Rubio (R-Fla.) (center) (Photo by Justin Sullivan/Getty Images) Former Sen. Jon Kyl (R-Ariz.) (Andrew Harrer/Bloomberg via Getty Images) Sen. Mike Lee (R-Utah) (Photo By Bill Clark/Roll Call) Senate Minority Leader Mitch McConnell (R-Ky.) (Photo by Alex Wong/Getty Images) Sen. Rand Paul (R-Ky.) (Photo by Alex Wong/Getty Images) Sen. Marco Rubio (R-Fla.) (Photo by Mark Wilson/Getty Images) Sen. Pat Toomey (R-Pa.) (Photo by Allison Shelley/Getty Images) Rep. Michele Bachmann (R-Minn.) (Photo by Chip Somodevilla/Getty Images) Rep. Marsha Blackburn (R-Tenn.) (Photo by Mark Wilson/Getty Images) Sen. Jeff Flake (R-Ariz.) (AP Photo/J. Scott Applewhite, File) Rep. Jeff Duncan (R-S.C.) (Photo By Bill Clark/CQ Roll Call) Rep. John Fleming (R-La.) (Right) (Photo by Scott J. Ferrell/Congressional Quarterly/Getty Images) Rep. Scott Garrett (R-N.J.) (Photo by Chip Somodevilla/Getty Images) Rep. Tom Graves (R-Ga.) (Photo By Chris Maddaloni/CQ Roll Call) Rep. Wally Herger (R-Calif.) (Bottom Right) (Photo by Scott J. Ferrell/Congressional Quarterly/Getty Images) Rep. Jim Jordan (R-Ohio) (Photo by Alex Wong/Getty Images) Rep. Jeff Landry (R-La.) (Photo by Chip Somodevilla/Getty Images) Rep. Randy Neugebauer (R-Texas) Rep. Neugebauer points his pencil... (Andrew Harrer/Bloomberg via Getty Images) Rep. Tom Price (R-Ga.) (Photo By Bill Clark/Roll Call/Getty Images) Rep. Steve Scalise (R-La.) (Photo by Chip Somodevilla/Getty Images) Rep. Cliff Stearns (R-Fla.) (Photo By Chris Maddaloni/CQ Roll Call) Arizona Gov. Jan Brewer (R) (AP Photo/Paul Connors) New Jersey Gov. Chris Christie (R) (AP Photo/Mel Evans, File) New Jersey Gov. Chris Christie (R) (AP Photo/Mel Evans, File) Wisconsin Gov. Scott Walker (R) (AP Photo/Andy Wong, Pool) Florida Gov.

The progression of events begins with a dynamic I described in a print piece at the beginning of 2012 conservatives had come to regard the 2012 race as their last chance to win an election as authentic conservatives against a rising Democratic majority. Since their crushing defeat, they have ignored the task of refurbishing the partys national appeal for its next national electoral bid, and instead have recommitted themselves to waging increasingly millenarian confrontations from their existing red state power base in Congress. Most of us expected, at some level, that the election would cool the rights apocalyptic fervor. Instead, the opposite has occurred. Paul Ryan candidly explained the calculation: "The reason this debt limit fight is different is, we don't have an election around the corner where we feel we are going to win and fix it ourselves. We are stuck with this government another three years." This is a remarkable confession. Republicans need to compel Obama to accept their agenda, not in spite of the fact that the voters rejected it at the polls but precisely for that reason. The exhaustion of electoral channels against Obama has spurred the party to seize power through non-electoral channels. Their opening demand that Obama sign Mitt Romneys entire economic plan into law in return for avoiding a debt default, while historically bizarre, followed perfectly from their legislative strategy this year. House Republicans decided back in January to boycott any negotiations with Obama over fiscal policy. They presented this at the time as a desire to return to regular order, with negotiations between the House and Senate, but eventually decided to boycott those, too . The entire House Republican strategy is premised on using threats to leverage unilateral concessions from the Democrats. Their aversion to compromise has been accepted as settled fact in Washington, reimagined not only as a new normal but as the way its always been. Republican Dana Rohrabacher defended the use of debt-ceiling threats to pry concessions from Obama like so: People have to recognize theres never any compromise until the stakes are high. In our society, thats the nature of democratic government. That is completely false. American political parties have forged compromises for decades without high-stakes threats to bring them to the table. Not to mention the fact that, by compromise, Rohrabacher means unilateral concessions by the president. Part of the confusion is that the debt ceiling used to be an opportunity for the opposing party to denounce the fiscal irresponsibility of the president. On occasion, but not usually , debt-ceiling hikes have been appended onto budget agreements that were negotiated on their own terms. Whats completely novel is Congress using the threat of a debt default to force the president to make unilateral policy concessions. The conventions of he-said, she-said journalism have allowed this radical development to insinuate itself into the routine backdrop of partisan squabbling. Neutral parties have likewise come to accept the hostage-taking threat of the debt ceiling as merely a normal form of political negotiation. Time reporter Zeke Miller asserts, Hostage taking by promising harm if you do not get your way has long been a standard way of doing business in Washington, pointing to Democratic threats to let the Bush tax cuts expire or to change Senate rules as an analogue. But these examples lack any of the relevant hostage-taking qualities that sets apart the debt ceiling threat. One is the scale and irreversible impact of a debt ceiling breach unlike the failure of a bill, or even a government shutdown, which can be reversed. Second, and more importantly, its normal in any negotiation for each party to have a walk-away threshold to stop something they consider objectionable. Democrats, in the cases Miller cites, were objecting to outcomes -- full extension of the Bush tax cuts, continued filibustering of executive appointments that they defined as unacceptable. House Republicans, by contrast, dont object to raising the debt ceiling. They concede its necessary to avoid disaster! The hostage dynamic of the debt-ceiling fight has created a dangerous, historically unusual set of circumstances. One aspect of it is to set up a precarious, high-stakes negotiation, the failure of which could set off large, immediate, and irreversible damage. The second is to reset the balance of power between the president and Congress, allowing the latter to compel the former to submit to its agenda without concessions. Both these changes would permanently and dangerously alter the character of American government. If outsiders have failed to grasp the motivations of the House Republicans, puzzling at their odd redoubling of ideological fervor since November, they have likewise mistaken Obama. Everything I have seen from Obama suggests he understands that he cannot repeat his blunder of 2011, when he mistook the GOPs debt-ceiling threat for an invitation to engage in normal fiscal bargaining. Obama cant tame the monster he created gradually; he has to kill it completely. Bargaining his way through this crisis would do Obama no good, even if he could get through it by offering up a meager or even symbolic concession. Anything that allows Republicans to believe they can trade a debt-ceiling threat for policy concessions simply creates a new hostage crisis the next time the debt ceiling comes up. This negotiation is Obamas only chance to halt the routinization of debt-ceiling extortion. Obamas incentive structure is simple, then: Allowing Republicans to default on the debt now is better than trading something that allows them to threaten it later. His best option is to refuse to negotiate the debt ceiling and have the House raise it before October 17. His next best option is to refuse to negotiate the debt ceiling, allow default, and never have to go through it again. Bargaining merely postpones, and worsens, the next default crisis. No negotiated debt-ceiling price is small enough to be acceptable. There is therefore no circumstance under which bargaining for a debt-ceiling hike makes sense, even if the alternative is certain default. That is a frightening reality, made all the more frightening by two additional factors. The first is that Republicans dont believe Obamas insistence that he wont negotiate. Obama can claim he wont negotiate, but he would have an incentive to lie about this, and nobody other than Obama can really know for sure. (I believe him, but I wouldnt bet my life on it.) And one of the things Republicans truly believe about Obama they say it constantly in private is that they can make him fold. As the debt-ceiling deadline ticks toward midnight, Obama ought to be able to make his determination clear enough that House Republican leaders understand their only choices are to raise the debt ceiling or breach it. Default would risk not only economic calamity but the potential of an electoral one for the otherwise unassailable Republican majority.

It may be these things, but its also something much larger: a Constitutional struggle, a kind of quasi-impeachment, that will test Obamas mettle and, next to his reelection campaign, poses the most singular threat to his presidency. The progression of events begins with a dynamic I described in a print piece at the beginning of 2012 conservatives had come to regard the 2012 race as their last chance to win an election as authentic conservatives against a rising Democratic majority. Since their crushing defeat, they have ignored the task of refurbishing the partys national appeal for its next national electoral bid, and instead have recommitted themselves to waging increasingly millenarian confrontations from their existing red state power base in Congress. Most of us expected, at some level, that the election would cool the rights apocalyptic fervor. Instead, the opposite has occurred. Paul Ryan candidly explained the calculation: "The reason this debt limit fight is different is, we don't have an election around the corner where we feel we are going to win and fix it ourselves. We are stuck with this government another three years." This is a remarkable confession. Republicans need to compel Obama to accept their agenda, not in spite of the fact that the voters rejected it at the polls but precisely for that reason. The exhaustion of electoral channels against Obama has spurred the party to seize power through non-electoral channels. Their opening demand that Obama sign Mitt Romneys entire economic plan into law in return for avoiding a debt default, while historically bizarre, followed perfectly from their legislative strategy this year. House Republicans decided back in January to boycott any negotiations with Obama over fiscal policy. They presented this at the time as a desire to return to regular order, with negotiations between the House and Senate, but eventually decided to boycott those, too . The entire House Republican strategy is premised on using threats to leverage unilateral concessions from the Democrats. Their aversion to compromise has been accepted as settled fact in Washington, reimagined not only as a new normal but as the way its always been. Republican Dana Rohrabacher defended the use of debt-ceiling threats to pry concessions from Obama like so: People have to recognize theres never any compromise until the stakes are high. In our society, thats the nature of democratic government. That is completely false. American political parties have forged compromises for decades without high-stakes threats to bring them to the table. Not to mention the fact that, by compromise, Rohrabacher means unilateral concessions by the president. Part of the confusion is that the debt ceiling used to be an opportunity for the opposing party to denounce the fiscal irresponsibility of the president. On occasion, but not usually , debt-ceiling hikes have been appended onto budget agreements that were negotiated on their own terms. Whats completely novel is Congress using the threat of a debt default to force the president to make unilateral policy concessions. The conventions of he-said, she-said journalism have allowed this radical development to insinuate itself into the routine backdrop of partisan squabbling. Neutral parties have likewise come to accept the hostage-taking threat of the debt ceiling as merely a normal form of political negotiation. Time reporter Zeke Miller asserts, Hostage taking by promising harm if you do not get your way has long been a standard way of doing business in Washington, pointing to Democratic threats to let the Bush tax cuts expire or to change Senate rules as an analogue. But these examples lack any of the relevant hostage-taking qualities that sets apart the debt ceiling threat. One is the scale and irreversible impact of a debt ceiling breach unlike the failure of a bill, or even a government shutdown, which can be reversed. Second, and more importantly, its normal in any negotiation for each party to have a walk-away threshold to stop something they consider objectionable. Democrats, in the cases Miller cites, were objecting to outcomes -- full extension of the Bush tax cuts, continued filibustering of executive appointments that they defined as unacceptable. House Republicans, by contrast, dont object to raising the debt ceiling. They concede its necessary to avoid disaster! The hostage dynamic of the debt-ceiling fight has created a dangerous, historically unusual set of circumstances. One aspect of it is to set up a precarious, high-stakes negotiation, the failure of which could set off large, immediate, and irreversible damage. The second is to reset the balance of power between the president and Congress, allowing the latter to compel the former to submit to its agenda without concessions. Both these changes would permanently and dangerously alter the character of American government. If outsiders have failed to grasp the motivations of the House Republicans, puzzling at their odd redoubling of ideological fervor since November, they have likewise mistaken Obama. Everything I have seen from Obama suggests he understands that he cannot repeat his blunder of 2011, when he mistook the GOPs debt-ceiling threat for an invitation to engage in normal fiscal bargaining. Obama cant tame the monster he created gradually; he has to kill it completely. Bargaining his way through this crisis would do Obama no good, even if he could get through it by offering up a meager or even symbolic concession. Anything that allows Republicans to believe they can trade a debt-ceiling threat for policy concessions simply creates a new hostage crisis the next time the debt ceiling comes up. This negotiation is Obamas only chance to halt the routinization of debt-ceiling extortion. Obamas incentive structure is simple, then: Allowing Republicans to default on the debt now is better than trading something that allows them to threaten it later. His best option is to refuse to negotiate the debt ceiling and have the House raise it before October 17. His next best option is to refuse to negotiate the debt ceiling, allow default, and never have to go through it again. Bargaining merely postpones, and worsens, the next default crisis.

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