Grave Consequences: Wall Street Tells John Boehner To Back Off The Debt Ceiling
Republicans are growing increasingly concerned about the impact a bruising fight over raising the nation’s $14.29 trillion debt ceiling could have on U.S. financial markets.
House Speaker John Boehner (R-Ohio) has had conversations with top Wall Street executives, asking how close Congress could push to the debt limit deadline without sending interests rates soaring and causing stock prices to go lower, people familiar with the matter said. Boehner spokesman Michael Steel said Tuesday night that he was not aware of any such conversations.
Treasury Secretary Timothy Geithner has warned Congress that without new borrowing authority, the federal government could hit the statutory debt limit by May 16.
Treasury could then implement emergency measures to continuing making interest payments on existing debt until around July 8. After that, the U.S. risks going into default, an unthinkable idea to many economists and market participants who say such an event could drive scores of large banks into failure, send interest rates skyrocketing as foreign investors abandon U.S. securities and crush the already slow-going economic recovery.
Republicans and even some fiscally conservative Democrats want to use the debt limit fight as leverage to wring more significant spending cuts out of the White House. Politicians of all stripes are worried about how independents will react to a vote — or multiple stop-gap votes — to raise the debt ceiling. Many executives on Wall Street believe Washington is playing an enormously dangerous game with what is typically a non-controversial vote.
Sen. Chuck Schumer (D-N.Y.), who leads the Senate Democrats’ messaging efforts, expressed anger that Boehner was searching for leeway on the debt limit.
“The speaker seems to be testing out how far he can venture onto a frozen lake before the ice breaks. He should listen to business leaders who are telling him to watch his step. Messing around with the debt ceiling just to satisfy the tea party will lead to higher interest rates and an economic cataclysm.”
The Wall Street executives say even pushing close to the deadline — or talking about it — could have grave consequences in the marketplace.
“They don’t seem to understand that you can’t put everything back in the box. Once that fear of default is in the markets, it doesn’t just go away. We’ll be paying the price for years in higher rates,” said one executive.
Another said that “anyone interested in ‘testing’ the debt ceiling should understand the U.S. debt traded wider [with a higher yield] than Greek debt roughly five years ago. Then go ask CBO what happens to our deficits/public debt to GDP, if the 10-year [Treasury bond] goes from 3.5 percent to 5.5 percent to 7.5 percent.” The executive said such an increase would result in a downgrade of U.S. debt by ratings agencies and an end to the dollar as the standard global reserve currency.
By: Ben White, Politico, April 13, 2011
Speaker Boehner In The Temple Of Tea Party Doom
Speaker of the House John Boehner looked as tanned and dashing as Indiana Jones escaping the Temple of Doom last week. He came out alive. He captured some treasure in the form of budget cuts. His friends shake their heads in amazement.
But the worried look on our hero’s face is a sly clue that he knows this is not the end of the movie. It is the start. And the worst is yet to come.
When the Speaker told ABC last week that there is no “daylight” between him and the Tea Party Caucus it was because they are wrapped around his neck like an albatross.
The Tea Party’s tremendous success in the mid-term elections elevated him to the speaker’s chair. But the Tea Party freshmen are all about talk radio rhetoric, campaign slogans and reveling in the widespread discontent with American politics. They have yet to display any capacity to govern.
By forcing the nation to wait on a last-minute deal, the Speaker was able to go back to his Tea Party freshmen and claim he got the best deal possible from the Democratic majority in the Senate and the President. But what he demonstrated to moderate and independent voters, as well as Republicans not entranced by the Tea Party, is that the least experienced, most extreme elements of the party are now defining the Republican brand with hysterical stunt governing.
The Speaker has been around long enough to know Republicans got blamed in the last government shutdown and he told his caucus they likely faced the same fate if there was a shutdown this time. But with widespread doubts among the freshmen as to whether Boehner is sufficiently conservative because he is willing to negotiate with Democrats the Speaker had to pretend he was not compromising. After his long, steady climb to power in Congress it is incredible and sad Boehner now finds himself unable to present himself as a trustworthy, responsible steward of the American government.
That is not the image the Tea Party freshmen want from the Speaker. They want him pulling stunts. They want to hear him attacking the President and calling out the Democrats in Congress as big spenders. And the Tea Party had veto power over the deal.
It is no wonder the Speaker reportedly complained to the Tea Party Caucus early last week that he felt they “abandoned” him when 54 of them voted against him on a continuing resolution.
This is the Tea Party that delighted in the theatrics surrounding a possible shutdown even after Democrats met the GOP’s original demand for more than $30 billion in budget cuts.
And that was before Tea Party freshmen made the Speaker and their own party look shallow and hysterical by turning a serious fight over cutting the deficit into a sideshow on abortion when spending federal money on abortion is already banned.
The polls that once showed Democrats and Republicans sharing blame over a shutdown began to shift against the Republicans. Self-identified Tea Party members made up the lone group open to a shutdown. And in a key shift brought on by the Republican hard-line, the independents who voted with Republicans last fall and said government was too intrusive now tell pollsters they want government to do more.
In a column for the National Journal last week, ace political handicapper Charlie Cook wrote: “Among the worries the party now has is that a government shutdown could get blamed on the GOP.” Looking ahead to debates about major cuts to entitlement spending, such as Medicare, in the 2012 budget, the Republicans now seem to have squandered credibility. Cook concluded that “these party insiders believe that taking on entitlements, specifically Medicare, could jeopardize the party’s hold on the House, its strong chances of taking the Senate and the stronghold that the party has established with older, white voters — not coincidentally, Medicare recipients.”
But the Speaker apparently felt he had no choice but to dance to the tune set by the Tea Party freshmen because he is leery of the ambitious young guns on his leadership team, Majority Leader Eric Cantor (R-Va.) and Budget Committee Chairman Paul Ryan (R-Wis.). They are developing their own lines of loyalty among the Tea Party freshmen.
Boehner has seen this movie before. He was a freshman in 1997 when a member of Speaker Newt Gingrich’s team, Rep. Bill Paxon of New York, launched a coup against Gingrich. In addition, elements of the Tea Party are already looking for a candidate to run against Boehner on the charge he is too willing to compromise with Democrats.
Democrats are happy with a weakened Boehner because every public stumble gives middle-of-the road swing voters more faith in President Obama and Senate Majority Leader Harry Reid (D-Nev.). With more budget battles coming soon, the Democrats are looking like steady hands, sensible statesmen as opposed to the reckless and political Republicans.
That leaves Boehner with little running room as the next series of battles over the debt ceiling and next year’s budget comes. At the last hour he survived last week’s fight. But the future does not look good for our hero.
By: Juan Williams, Opinion Writer, The Hill, April 11, 2011
GOP DeathWish?: Republicans Pushing To Revamp Medicare Could Find Themselves Voted Out Of Office In The Next Election
One of the biggest and most frequent mistakes in politics is for a party to misread its mandate. When it happens, independent and swing voters get angry and punish a candidate or a party on Election Day. Because American politics is a zero-sum game, punishing one party means rewarding the other party—even when the latter is not necessarily deserving of support. Frequently, the party that benefits from the spanking mistakenly interprets it to mean that the public is embracing every aspect of its agenda. Republicans shouldn’t forget that their party had dismal favorable/unfavorable poll ratings last fall. They won because they weren’t Democrats.
There is no question that the Republican base, conservatives, and supporters of the tea party want to take a meat ax to government spending. When Republican congressional members return home and meet with their constituents, they are encouraged to vote against continuing resolutions and for deep spending cuts. These supporters have intensity, and they adamantly oppose any compromise with Democrats.
It would be a blunder, however, to think that such views drove the election. Republicans, conservatives, and tea partiers did not throw Republicans out of their House and Senate majorities in 2006, and they did not vote to increase the size of the Democratic majorities and elect Barack Obama president in 2008.
Independent voters were the ones who cast their ballots for Democrats by an 18-point margin in 2006 because they were mad at President Bush and upset about the war in Iraq, not to mention Republican scandals and the general performance of the GOP Congress. Two years later, these same voters were still angry at the president, were afraid of the financial crisis, and didn’t care for GOP presidential nominee John McCain.
In 2010, these independent voters were unimpressed by the economic-stimulus package, didn’t like cap-and-trade environmental regulation, and really didn’t like the Democratic health care package. Those over or approaching 65 years of age also feared that health care reform would erode Medicare benefits. Even those unaffected by the reforms rallied to defend Medicare.
Polling is very clear. Most voters want to see the federal budget balanced and spending cut. However, they don’t want Social Security, Medicare, or Medicaid touched, and, oh yes, they don’t want taxes increased. Now, anyone with an IQ over room temperature knows that all of this is impossible. Spending on Social Security, Medicare, and Medicaid, along with interest on the national debt, amounts to approximately half the federal budget.
There is no doubt that significant budget cutting is necessary and that Medicare and Medicaid must be reformed. No one can doubt the courage or sincerity of House Budget Committee Chairman Paul Ryan, R-Wis. But it’s little short of suicidal to drop a Medicare reform package—even a voucher plan that would be optional for those currently older than 55—into tough budget negotiations stymied over Republican demands for deep spending cuts. Democrats have some experience with older voters going ballistic, even with changes that wouldn’t affect them.
For many seniors, doing anything to Medicare that can’t be portrayed as an increase is essentially a cut, and they will fight it to their last breath. From a political standpoint, Medicare reform is very dangerous territory. House Republicans are not just pushing the envelope—they are soaking it with lighter fluid and waving a match at it.
One can understand why Republicans are pushing so hard. Their base is demanding that they do so. And if congressional Republicans resist, many of them can look forward to primary opposition next year. But it seems that GOP members of Congress have become so consumed with pleasing their base that they are ignoring general-election voters and the independents who drive the wild gyrations in American politics.
Congressional Republicans would be well advised to pay attention to the results of the latest Pew Research Center poll (conducted March 30 to April 3 among 1,057 adults) that asked Americans whether they would prefer that their lawmakers stand by their principles even if it meant that the government would shut down, or whether they would rather have their lawmakers compromise on a budget even if they didn’t agree with it. Among Republicans and Republican-leaning independents who agree with the tea party movement, 68 percent said they would rather have a lawmaker who stands by his or her principles. But among all Republicans, only 50 percent said stand by their principles, while 43 percent said compromise. Among all adults, 55 percent said compromise; among independents, 53 percent said compromise, with 36 percent siding with the principles option.
The bottom line: GOP primary voters are very different from general-election voters. It would be a very shortsighted strategy for Republican members—especially those in swing districts—to focus too much on primary voters. A lot of Democrats did the same thing in 2009 and 2010. Many are now former members of Congress.
By: Charlie Cook, National Journal, April 7, 2011
Mad Men and Mad Women: Republicans And Social Engineering
Republicans hate social engineering, unless they’re doing it.
Wishing they had the power to repeal the repeal of “don’t ask, don’t tell” and get back to the repressed “Mad Men” world they crave, some conservative lawmakers grumpily quizzed upbeat military brass on Friday.
“We’re starting to try to conform the military to a behavior, and I remember going through the military, we took behaviors and we formed it to the military,” said Representative Allen West of Florida, warning ominously (and weirdly) that “this could be the camel getting his nose under the tent.”
The House Armed Services subcommittee hearing was led by Joe Wilson, the oh-so-subtle Republican congressman from South Carolina famous for yelling “You lie!” at President Obama. Wilson started off the hearing by saying that the legislation to let gays stop lying while they risk dying was rushed through in an “undemocratic” lame-duck session.
Two top Pentagon officials testified that the transition was going swimmingly, yet Republicans scoffed. Representative Austin Scott of Georgia demanded the price tag. Clifford Stanley, an under secretary of defense, replied that the training materials cost only $10,000.
Scott harrumphed, “If something was done at D.O.D. for $10,000, I would like to know what it was.” He said that hundreds of thousands had been spent training a soldier in his district to disarm I.E.D.’s, but the soldier wouldn’t re-enlist because of the “social policy.”
The Democrat Chellie Pingree of Maine jumped in to note that the cost of purging gays between 2004 and 2009 was $193.3 million: “It’s not only unconscionable … but the costs are horrendous.”
Scott persisted in looking for trouble, even after Vice Adm. William Gortney, director of the joint staff, said the Pentagon had seen no problems so far.
The congressman asked the admiral if he had ever dismissed anyone. Gortney said he had dismissed a young sailor who acknowledged being gay after “don’t ask, don’t tell” first passed.
“Did you discharge him from the service because he was gay?” Scott asked. “Or because he violated the standard of conduct?”
“Because he was gay,” Gortney said.
“He did not violate the standard of conduct before he was dismissed?” Scott pressed.
“He did not,” Gortney said.
“Well,” Scott said, once more at a loss, “that’s not the answer I thought you would give, to be honest with you.”
Gortney assured him there were “very few cases” of gays’ being dismissed for violating the standard of conduct.
After the Republican rout in November, the story line took hold that because of the recession and Tea Partiers’ fervent focus on the debt as a moral matter, divisive social issues were going on the back burner. But lo and behold, social issues have roared back. Many in the Tea Party have joined that chain-smoking, cocktail-quaffing Mad Man John Boehner in the martini party to put a retro focus on wedge issues, from gays to abortion.
Like Boehner, who complained that Democratic leaders were “snuffing out the America that I grew up in,” some Tea Partiers are jumping in a time machine. They can’t stop themselves from linking social issues to the budget.
“This pulls the mask back a little bit on the Tea Party movement,” said Representative Chris Van Hollen, a Democrat from Maryland. “Adding riders against Planned Parenthood and gutting the environmental laws indicate that the Tea Party is focused on imposing a right-wing ideological agenda on the country and using the budget as a vehicle.”
Whether it’s upholding the Defense of Marriage Act, trying to defund Planned Parenthood, or aiming cuts at the Environmental Protection Agency, the National Endowment for the Arts, NPR and even AARP, House Republicans are in a lather that occludes their pledges to monomaniacally work on the economy.
When Mitch Daniels, the Indiana governor and Republican presidential aspirant, dared to urge his party to “mute” social issues, he was smacked.
“We cannot repair the economy without addressing the deep cultural issues that are tearing apart the family and society,” said Andy Blom of the American Principles Project. The presidential hopeful Rick Santorum even posited last week that abortions might be breaking the bank on Social Security.
The snowball of social rage will speed up as we head toward 2012, given that the Iowa caucuses are dominated by social conservatives. Pawlenty, Barbour and Huckabee have already talked about vitiating the repeal of “don’t ask, don’t tell.”
Because independent voters considered President Obama too partisan in his debut, they shifted their loyalties — and swept in one of the most ideological and partisan Republican caucuses in history. Now Obama will get back some of the independents because he seems reasonable by comparison.
One thing independents like to be independent of is government meddling in their personal lives.
By: Maureen Dowd, Op-Ed Columnist, The New York Times, April 2, 2011
Swing Voters Swing Because They’re Uninformed
One of my hobbyhorses is to track the movements of the Oscillating Low-Information Voter .
He is not a bad person. He may be hard-working and incredibly brilliant. He may be rich or poor or, more likely, somewhere in between. He may, in fact, be a she.
What Oscillating Low-Information Voters have in common is they pay very little attention to politics. Again, this does not imply stupidity—only ignorance. The Low-Information Voter is thus a different animal than the rational non-voter , who may keep up with the news but concludes his vote is statistically meaningless.
For whatever reason, the Low-Information Voter is simply uninformed.
His ideological preferences are transactional, and thus fluid: “What have the guys I just put in charge done for me lately?”
So what is this highly-prized, “independent” bloc of voters up to now?
A recent ABC News/Washington Post poll reveals exactly what I always expect. The Oscillating Low-Information Voter is oscillating! Polling analyst Gary Langer explains:
The drop in trust to handle the economy has occurred chiefly among independents, now drawing away from the GOP after rallying to its side. As recently as January, 42 percent of independents preferred the Republicans in Congress over Obama to handle the economy. Today just 29 percent say the same, and there’s been a rise in the number who volunteer that they don’t trust either side.
The “bottom line,” according to online political tipsheet The Note, is that “voters want results, not rhetoric.”
That would be the charitable way of putting it.
I think it’s more accurate to say that such voters are all-too-easily swayed by political rhetoric.
This is precisely the quality that makes “swing voters” swingable.
By: Scott Galupo, U.S. News and World Report, March 15, 2011
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