Why Boehner Must Shut Down The Government
How should Republican leaders deal with the dilemma of being caught between a base that will view any budget deal with President Obama as a sellout and independent voters who are likely to turn on them if they shut down the government? Jonathan Bernstein thinks they should bite the bullet and cut the best deal they can, figuring they’ll get hit by the base no matter what:
what Boehner has to do is to convince Republican Members of the House that the hit they’re going to take from the right for compromising is inevitable. They’ll be seen as sellouts if they cut a deal before a shutdown. They’ll be seen as sellouts if they cut a deal after a six week shutdown. True believers will always be convinced that complete and total victory was just a week away if only the cowardly politicians had been willing to hang in there. They can’t win that game.
Not a bad argument. The counter is that it’s one thing to cut a deal with Obama, and another to be perceived as cutting that deal without really fighting. If Boehner shuts down the government and then cuts a deal, at least he’s demonstrated some willingness to go to the mat and fight, right? Bernstein is right that he’ll have angry Tea Partiers regardless, but I do think he needs to show that he’s fought the good fight. A deal with Obama is bad no matter what, but a deal without a shutdown looks like surrendering the fort without firing a shot.
The other quibble I have with Bernstein’s analysis is that I don’t think he’s really thinking about this the way Boehner is, or even should, be thinking about this. What is the downside to a shutdown? Republicans get less popular, have a lower chance to win the presidency in 2012, and maybe a higher chance of losing the House as well. What is the downside to cutting a deal? GOP backbenchers revolt against Boehner and depose him as Speaker of the House.
If I’m Boehner, I’m more worried about the guns pointed at my back then the guns pointed at my face. A shutdown increases the small chance that he goes from Speaker to Minority Leader in 2013, but a deal increases the chance that he goes from Speaker to (R-OH) in 2011. The right-wingers do not trust Boehner, and he has very little slack. He also lived through a series of purges and attempted purges in the late 1990s, always taking the form of purists complaining that the leadership had gone soft.
Boehner’s top priority is probably staving off internal revolt. That means shutting down the government.
By: Jonathan Chait, The New Republic, March 30, 2011
What A Government Shutdown Could Cost Us
I don’t want to start a market panic here. I’ve no desire to be known for “The Klein Crash of 2011.” But it’s safe to say that much of Washington finds the low, low yields on Treasurys — which represent the market’s serene confidence that the U.S. can handle its debts — a little baffling. Senior government officials have told me they think Treasurys are probably a bit overpriced, which is a bit like the executives of GE privately wondering why investors are so sure they won’t go bankrupt. The investors might be right, but it’s not comforting to hear.
The market isn’t totally wrong, of course. The federal government probably won’t default on its debt. But it’s actually pretty hard to explain how we get the spending line and the revenues line to match each other. And we have a really dysfunctional political system. We’ll figure it out somehow. We always do. But our low borrowing costs are an advantage we want to preserve for as long as possible. That means keeping the market from realizing that partisan polarization mixed with our weird legislative system makes insane outcomes easily imaginable.
This is why a shutdown would be so dangerous. A last-minute deal tells the market that America is a country that dithers and procrastinates and anguishes but eventually makes the necessary decisions to avert terrible consequences. We can be trusted to follow through, even if only at the last minute. A shutdown tells the market that our political system has become so dysfunctional that we actually can’t be trusted.
Asger Lau Andersen, David Dreyer Lassen and Lasse Holbøll Westh Nielsen — remember them? — have looked into how the market treats late budgets in the states — and late budgets in the states, it should be noted, are considerably less public and psychologically disruptive than a shutdown of the federal government during a weak economy. The answer is: not kindly (pdf). “We estimate that a budget delay of 30 days has a long run impact on the yield spread between 2 and 10 basis points,” they conclude. To put that in context, economists estimated that if the Federal Reserve pumped $400 billion into the economy, it’d lower yield spreads by about 20 basis points, or two-tenths of a percent. And it actually gets worse than that: “Markets also punish late budgets much more harshly if they occur during times of fiscal stress.”
I think it’d be fair to characterize this as a time of fiscal stress, don’t you?
There are some reasons for optimism here. Markets seem to punish fiscal mismanagement more lightly if the state has access to lots of money, which usually means reserves. The federal government has access to lots of money — though through borrowing, not reserves — so it’s possible we’d get off lightly, too. If you look back to Treasury yields in 1995, you don’t see an obvious change, but (a) perhaps yields would have been lower without the shutdown and (b) the economy is a lot weaker today than it was in 1995. At any rate, do we really want to test this? And if so, how many times? The tea party types are already promising to oppose an increase in the debt ceiling in the absence of massive entitlement cuts. Sen. Marco Rubio says he’ll oppose lifting the debt ceiling unless it’s accompanied by “a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced-budget amendment, and reforms to save Social Security, Medicare and Medicaid.” That’s quite a list of demands in order to avoid economic catastrophe.
The irony of all this comes clear if you consider why we’re afraid of deficits in the first place. If the market comes to believe our debt is too large for our political system to pay back, they’ll become more skittish about buying government debt, and that’ll send interest rates higher and the economy lower. But if we have a series of shutdowns while we argue over how much to cut and how fast, our paralysis will convince the market we can’t get our act together in time to pay off our debts and they’ll send interest rates skyrocketing anyway. We’ll have caused exactly what we sought to prevent, and done it now, when the economy is weak, rather than later, when the economy is stronger. As I said at the beginning of this piece, I’d sure hate to be known for causing an economic crash. How about you, Congress?
By: Ezra Klein, The Washington Post, March 30, 2011
The High Price Of Rigidity: The GOP Wants A Government Shutdown
House Republicans have already won so much in this year’s federal budget standoff that they could easily declare victory and put an end to the maddening and dysfunctional cycle. Previous Congresses would have noticed that millions of people are still struggling in an economic downturn and tried to help, but Republicans have succeeded in shutting off that conversation.
They have won the philosophical war, compelling Democrats to agree to tens of billions in spending cuts. Yet that does not seem to be enough for the Republicans who now control the federal steering wheel.
With a hard deadline looming, talks to prevent a government shutdown have been stymied for a week because Tea Party members of the House have demanded everything: not just some of their cuts but almost all of them, and not just a reduction in spending but a reduction only in the programs they don’t like. Many are insisting Democrats also agree to nonbudgetary riders, like ending the financing of Planned Parenthood or health care reform.
They simply will not accede to anything that looks like a compromise with President Obama. Caught in this position, Speaker John Boehner knows the public is likely to blame Republicans for the pain of a shutdown, once it sees that the Democrats offered difficult compromises that his caucus rejected. That is the price he pays for riding to power on the backs of people who don’t understand that government cannot be built out of ideological rigidity.
If Mr. Boehner cannot persuade his members that the public does not want a government shutdown and will blame them, then much of the government will close its doors on April 8, when the current stopgap funding measure runs out. So far, the Republicans have wrung $10 billion in cuts from earlier deadlines, but their bill to butcher the current year’s budget with $61 billion in radical cuts was voted down in the Senate.
Democrats have put together a package of $20 billion in cuts, on top of the $10 billion already agreed to. They have not released the details, but officials say they could include some current spending and some mandatory programs, like agriculture subsidies. This package is likely to be far more painful than the last one and will almost certainly pull back the reins much further than is prudent when the economic recovery is still sputtering. But in the split-the-difference culture of Washington, it will get them halfway toward the Republican goal line, further than imaginable just a few weeks ago.
Does that mean the House will end the week-by-week bloodletting that is already hampering many federal agencies? So far the signs do not look promising. Republicans have told Democratic negotiators that the cuts can only come from their original, rejected bill. Many are still clinging to the ideological riders that will certainly draw a presidential veto. One way or the other, Tea Party lawmakers are about to learn a lesson in how government operates; the only question is whether the public must suffer for their education.
By: Editorial, The New York Times, March 29, 2011
Stop The World, I Want To Get Off: Boehner Agonistes
Suzy Khimm on the dilemma facing House Speaker John Boehner:
The House passed yet another short-term extension of the budget on Tuesday. But John Boehner faced a revolt by 54 Republicans who voted against the bill for not going far enough to slash spending, effectively forcing the GOP Speaker to rely on Democratic votes for the stop-gap measure to pass. As Talking Points Memo’s Brian Beutler explains, the vote now puts Boehner between a rock and a hard place: either he makes concessions to Democrats to pass a final budget, risking provoking greater fury from the tea party right, or he gives in to the GOP’s right flank—risking a government shutdown, as the Democratic Senate is unlikely to pass any bill that guts spending to satisfy hard-line conservatives.
I think Boehner’s problem here is pretty obvious, so there’s no point in belaboring it. The more interesting question is: which way does he jump?
My guess is that he sides with the tea partiers and forces a government shutdown. I don’t have any special insight here, just a feeling that, in the end, the hardcore right holds the whip hand in the Republican Party these days. If this is correct, though, it leads to a second question: how does this end? Obviously Republicans can’t keep the government shut down forever, and eventually this means that Obama will win some kind of compromise and it will get passed by a coalition of Democrats and moderate Republicans. The tea partiers will lose.
Given that this almost has to be the case, wouldn’t it make more sense for Boehner to compromise in the first place and avoid the humiliation of giving in down the road? In a rational world, sure. But in the tea party universe, he can’t. The forces working here will force Boehner into the worst of both worlds: he won’t assert control over the tea party faction from the start, which is bad, and then he’ll end up caving in to Democrats a few weeks or months down the road, which is worse.
But maybe I’m missing something here. Is there some other scenario for Boehner that works out better for him?
By: Kevin Drum, Mother Jones, March 16, 2011
Government by the Week: Is A Government Shutdown The End-Game For The GOP?
Parents have begun arranging alternative child care for their preschoolers, uncertain of whether their Head Start program will be there when they need it. The Social Security Administration is unable to open new hearing offices to handle a backlog of appeals. The Pentagon has had to delay equipment repairs. There is chaos throughout the federal government, as Robert Pear reported in The Times on Tuesday, because a riven Congress has forced agencies to operate on a week-by-week basis.
Yet, on Tuesday, the House passed another short-term spending bill. This one keeps things going for all of three weeks. The Senate will almost certainly join in shortly to avoid an impending shutdown on Friday, the result of the stopgap bill from two weeks ago.
These slipshod exercises in governance were choreographed by House Republicans, who knew that neither the Senate nor President Obama would ever accept their original proposal to gut nonsecurity discretionary spending with $61 billion in cuts through September, including riders to end financing for Planned Parenthood and the health care law. They had hoped to use the pressure of a potential shutdown to achieve much of their goal, but, so far, all they have accomplished is a cut of about $10 billion, mostly from earmarks or programs that the president himself proposed to cut. (The new bill cuts $6 billion.)
House Republican leaders, who say they do not want a government shutdown, have, so far, held off their more fanatical freshmen, who want to slash everything in sight. But the leadership cannot do so forever, and the evidence of that was clear on Tuesday. More than 50 Republicans refused to go along with the three-week resolution because it did not cut enough. Several specifically complained that it allowed financing for Planned Parenthood and the health care law to continue.
This is not a group that cares much for pragmatic compromise, and the three weeks are just a timeout. Representative Mike Pence of Indiana, a Republican who voted no on the new bill, spoke for many of his colleagues when he said the budget could not be resolved without a willingness to shut down government. “By giving liberals in the Senate another three weeks of negotiations,” he said, “we will only delay a confrontation that must come.”
He is absolutely right about that. If Democrats, including the president, do not draw a clear line soon, making their priorities and their limits unmistakable, they will be harried by these kinds of votes for years. Even in the unlikely case that an agreement is reached in three weeks to finance the government through September, a different vote will be necessary just a few weeks from now to raise the debt ceiling. Republicans have already vowed to vote that down — even though it could be financially disastrous — if they do not get their way. And then there is the vote for the fiscal 2012 budget, which begins Oct. 1, and then the year after that.
At some point, Mr. Pence will get his confrontation. If Republicans continue to press for cuts of tens of billions from discretionary spending, setting back the economic recovery largely for ideological purposes, Democrats will have to say no, even if that results in a short-term shutdown. The American people will be able to figure out who is at fault. Responsible governing means agreeing quickly to a deal to finish out the fiscal year, and then starting a serious talk about entitlement programs and taxes — the real causes of a soaring deficit.
By: The New York Times, Editorial, March 15, 2011
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