McConnell’s proposal: it’s not kabuki, it’s harakiri
The Wall Street Journal explains Mitch McConnell’s strategy in saying Republicans should let Obama raise the debt limit himself:
Mr. McConnell would then let the President propose three debt-limit increases adding up to $2.5 trillion over the coming months. Senate Republicans (with Majority Leader Harry Reid’s cooperation) would use a convoluted procedure to vote for three resolutions of disapproval on the bills. Mr. Obama could veto the resolutions and 34 Democrats could vote to sustain. The President would get his debt-limit increase, but without Republicans serving as his political wingmen.
The hotter precincts of the blogosphere were calling this a sellout yesterday, though they might want to think before they shout. The debt ceiling is going to be increased one way or another, and the only question has been what if anything Republicans could get in return. If Mr. Obama insists on a tax increase, and Republicans won’t vote for one, then what’s the alternative to Mr. McConnell’s maneuver?
Republicans who say they can use the debt limit to force Democrats to agree to a balanced budget amendment are dreaming. Such an amendment won’t get the two-thirds vote to pass the Senate, but it would give every Democrat running for re-election next year a chance to vote for it and claim to be a fiscal conservative.
Here’s the downside as described by Stephen F. Hayes, and it’s considerable:
The plan isolates House Republicans, it undercuts their (tentative) plan to offer an aggressive debt limit proposal of their own, it turns their principled intransigence from a possible strength to a certain liability, and it virtually ensures that, in the event of default, Republicans ”“ not the White House ”“ will be blamed…
An alternative strategy sounds as though it would have been better, although still fraught with peril:
The chances the White House would have been blamed could well have increased if House Republicans had decided to move forward with their own aggressive proposal ”“ in effect, daring Harry Reid and President Obama to choose to reject it. While this option was discussed at length, there were two main concerns: 1) an aggressive and specific plan puts Republicans once again on the record voting for things that can be easily demagogued by Democrats; and, 2) the opposition to voting to increase the debt limit in the House is strong enough that coming up with a plan that would pass the House and tempt Democrats would have been difficult, if not impossible. Had House Republicans been able to craft such a plan they would have forced a choice on Senate Democrats and the White House: austerity or default. In such a scenario, President Obama, having warned repeatedly about the catastrophic consequences of default, would have had to defend that choice if he refused to accept the House GOP plan. A high-risk strategy, to be sure, but one with at least the possibility of succeeding.
The McConnell plan may be moot, anyway, because it doesn’t have much support from other Republicans:
As one might expect, the House Republican reaction to the McConnell plan was almost uniformly negative. “The rank-and-file were ripping him today,” says one House Republican.
It seems to me that Obama has Congressional Republicans over a barrel. But I can’t say they ever had a lot of great alternatives, although I think the more aggressive approach outlined by Hayes would have been the best open to them. The Wall Street Journal piece describes the impediments to Republican goals quite succinctly:
…[B]ut the truth is that Mr. Obama has more cards to play.
The entitlement state can’t be reformed by one house of Congress in one year against a determined President and Senate held by the other party. It requires more than one election.
So I’m not sure what all those Japanese metaphors are about. A card game metaphor, as in the quote above, seems much more apt.
You got to know when to hold ’em, know when to fold ’em
Know when to walk away and know when to run
You never count your money when you’re sittin’ at the table
There’ll be time enough for countin’ when the dealing’s done
Ace has some good commentary on this, too:
http://minx.cc/?post=318748
Everybody has been waiting for my thoughts 🙂
When negotiating with an unhappy teenager for some spending money – obligations like chores must be met – but then you might say:
1) how about $20
2) ok how about $19
3) ok how about $18
4) ok how about $17
etc.
Until the teenager realizes – it aint getting any better!
House Republicans should start at the easy deal and pass a bill to the Senate every week with:
1) Debt limit increase of 100 billion and reform/cuts equalling to 100 billion nominally across the board.
2) Next week = 95 and 105
3) Next week = 90 and 110
4) Next week = 85 and 115
Then – we do it again when we reach the next bump into the debt limit.
They’ll soon realize they should grab #1 when they can.
And btw, $100 billion cut across the board nominally is less than 1%.
That CAN’T be demonized as draconian and extreme by anybody but liberals. 🙂
I agree in reality, but I disagree in principle: It is not harikari but corruption which results in the fact that the House cannot lead. It shows our corruption of the intent of our Constitution.
The House of Representatives is our most important body of government and should lead and be responsible for the hardest choices and laws. People, represented by their elected legislators, not Senators, Presidents, or judges, are supposed to rule. And the people are waking up and don’t want more debt.
The principle that the House should not be stymied by the Senate and the President is reflected in the manner of election of the various offices. James Wilson, urging the adoption of the Constitution, noted this:
“For this purpose, permit me to call your attention to the manner in which the President, Senate and House of Representatives are proposed to be appointed. The President is to be chosen by electors, nominated in such manner as the legislature of each State may direct; so that if there is no legislature there can be no electors, and consequently the office of President cannot be supplied.
The Senate is to be composed of two Senators from each State, chosen by the Legislature; and, therefore, if there is no Legislature, there can be no Senate. . . ”
Thus, the legislature is primary. James Wilson was speaking of the state legislatures in this case but the principle extends to the national House.
Let the chips fall. One election put them in power to undo generations of damage. If they all lose the next election because of making the right choice, then so be it. America will be forced into poverty and so will learn the hard way.
It’s actually 0.03%
whoa http://www.riehlworldview.com/carnivorous_conservative/2011/07/the-dunce-capped-jennifer-rubin-of-the-blabbering-class.html
Obama and the libs desperately need a way get out from under the poorly performing economy before the election in Nov/12. As of now Obama and the libs own the economy entirely but that is about to change.
Obama will exact a high cost for any deal but I believe his true desire is for the GOP to refuse to raise the debt ceiling so he and the MSM can hang the economy around the GOP’s neck.
It’s a win-win situation for Obama and the libs. If any deal is made and the debt ceiling is raised the GOP will gain partial ownership in the economy, providing cover for Obama and the Dems in the coming election AND will also alienate some of the GOP base — if the debt ceiling is not raised the GOP owns the economy, period; the MSM will make sure of that.
The video below is 1 minute of Ronald Reagan.
http://www.youtube.com/watch?v=OO2_49TycdE&feature=player_embedded
THIS IS WHAT WE NEED from Mitch McConnel.
Take the negotiations OUT into the sunlight and let us cheer you on.
If Obama doesn’t like the sunlight… make the invite every day.
We are paying for your service Mr. Mitch.
Do not do us disservice!!!
🙂
http://www.youtube.com/watch?v=tmfkYu4m2jA&NR=1
I like this one too. 🙂
No one ever died by falling…
They died because the planet couldn’t get out of the way fast enough and they slammed into it…
If ya got any strawberries, now is a good time to eat them, seeing as we are between two tigers and hanging from a cliff…
I’d like it if McConnell kept to the R Caucus from now on and completely stopped meeting with and engaging with Obama. He only helps Obama, and to help Obama is to harm America and his fellow citizens. Stifle, as Archie used to say.
Boehner, same thing. The meetings are over. Pass a bill with spending cuts and a debt ceiling rise. let Obama sign or veto. Period. No more words. The words are all empty and if we get in a war of words with Obama and the Media, he wins we lose.
NO COMPROMISE with him. He wins all compromises he initiates. He loses in ALL other scenarios.
According to JimDemint, the election of 2012 is actually happening between now and August 2nd. If we win now we win then; if we lose now we lose then. It’s here. This is the hill we are fighting on. Now. We take it or we die on this hill.
I think he is right. The time to fight and win or lose is right now and not later anymore.
That’s the way it is sometimes. You put things off and off and off, and then D-Day comes.
I should add that I called several Congress People this week to encourage them, and said my prayers that there are enough Americans left to save this damn place.
I urge others of us like-minded Americans to do the same or something similar.
Don’t know what else we can do now, but it’s something. It’s like starting to wait to hear how D-Day on June 4, 1944 – when it was all ready but hadn’t happened yet, but was going to and you didn’t know who would win.
WSJ above:
“The debt ceiling is going to be increased one way or another, and the only question has been what if anything Republicans could get in return. If Mr. Obama insists on a tax increase, and Republicans won’t vote for one, then what’s the alternative to Mr. McConnell’s maneuver?”
Really, one way or another? WTF?
If Obama insists on a tax increase? WTF?
The alternative is to just say NO. The House has the power of the purse. Just use it, you wimps.
I called McConnell’s offices in DC and Louisville today. DC phone does not even ring. Louisville says “Mailbox is full.”
We’re mad as hell and we’re not going to take it anymore.
You have to respect DeMint and what he says; and the situation does seem to be sizing up like 1992. Unfortunately, we have not rid ourselves of the RINO’s who serve themselves not the people. Therefore, we just might snatch defeat from the jaws of victory.
Since the one sticking point–whether or not refusing to raise the debt ceiling is too severe a move–is an unknown, we could give that up so as to prevent a possible immediate catastrophe. But no class warfare taxes and there must be strong cuts. It’s a delay tactic until there is a greater number of real conservatives; however, here may be the dilemma. If that strategy were to produce some fiscal breathing room, then would there be a loss of momentum. Will anything but certain and dire disaster bring true fiscal sanity? Or will the threat usher in the end of America?
The idea of a “balanced budget” in or at ANY government level — state, local, federal — is positively retarded.
Unless and until you first force the government to adhere to GAAP (the initialization of which would be fraught with its own mass of issues), a balanced budget will be of no use whatsoever in solving the government’s fiscal problems.
Look at NY state. THEY have had a balanced budget amendment for decades. When they had a massive shortfall, they SOLD *Attica Prison* to a cash-infused STATE BONDING AGENCY (spun off from the official government and hence “off the books, though the State has to repay any bonds they sell). It’s now been 13 years since they did that. Last word, and that was fairly recent, is that they hadn’t payed off ANY of the principle due in the intervening 13 years.
I haven’t studied McConnell’s plan and I have developed a great respect for the insight of his critic Steve Hayes. Let’s remember, though, that McConnell had the political savvey to tie up a Democrat dominated senate and foil many of the Obamacrats plans. Perhaps the question should be “just what does McConnell have up his sleve?”
The way it looks now, the country is going to ride this plane into the ground.
My opinion, which will rile most, is that McConnell is doing the only thing that is left to the Republicans. Obama will offer only smoke and mirrors cuts along with tax increases. It is all the Repubs can get because the dems still control the Senate and he has the veto pen. Rather than do a sham deal and make it look like they approve of it, Mcconnell wants the Republicans to go on record as disowning anything the dems do and offer Obama the opportunity to show his true colors to the voters. The debt ceiling raise and his “debt reduction plan” will be something he has to own. The Repubs are openly on record that they disagree, but recognize that it would be a financial train wreck to not do some kind of debt ceiling increase.
Think about the implications of not increasing the debt limit. Yes, the Treasury could pay all the entitlements, but then they would have to decide whether to fund Education, Agriculture, Energy, etc at some low level. Most of us think that would be a good thing, but that would be a weapon in their hands just as much as cutting off SS or miltary pay.
But the really big thing is what it will do to financial markets. One day 1000 point drop on the Dow? Possible. $500 increase in the price of gold? Also possible. 10% drop in the dollar? It could happen with a concurrent jump in oil and other commodities prices. Gold jumped today as did silver. The market has been bipolar the last few months. Lots of volatility with lower than normal volume. Big money is sitting on the sidelines and watching. Traders are jumpier than cats on a hot tin roof. If Moodys lowers the debt rating on Treasuries, interest rates will jump and international bond markets will go wobbly. Just some possibillities that are based on 30 plus years of investing. None of those things would be good and I think McConnell is looking at that.
Okay, that’s my view. Now, tell me why I’m wrong.
C’mon….Roil the financial markets? That is not a good enough reason to cave to Barack. We should just dither, let the BS artist in the WH screw us some more, but Oh No! Don’t roil the markets.
If you don’t already own gold, whose fault is that? The collapse of the dollar against gold has been less than a well-kept secret for years.
Moody’s only matters to those investment houses constrained by charter to invest only in Moody’s Aaa. Moody’s is in the tank with Barack and Timmy.
This tsunami has been building for a right good
while. If you are still playing on the beach despite all the alarms, well….
Formerly Jimmy J says,
“McConnell is doing the only thing that is left to the Republicans. Obama will offer only smoke and mirrors cuts along with tax increases. It is all the Repubs can get because the dems still control the Senate and he has the veto pen. Rather than do a sham deal and make it look like they approve of it, Mcconnell wants the Republicans to go on record as disowning anything the dems do and offer Obama the opportunity to show his true colors to the voters. The debt ceiling raise and his “debt reduction plan” will be something he has to own.”
I understand this approach, but it is short sighted.
“… it would be a financial train wreck to not do some kind of debt ceiling increase.”
I strongly disagree, there will be no ‘default’ if the debt ceiling is not raised. We supposedly hold nearly 150 million troy ounces of gold in Fort Knox. Sell off 50 million ounces at $1500+ per ounce and we’re flush with cash and Bernanke becomes an amusing fool. 😉
Yes, I know what that would do to the gold spot chart, but I think within a few seconds of reflection you will understand the federal government has many trillions in assets that could be sold. The feds own millions of acres of land and other assets that could be put up for auction that would bring trillions into the treasury. Bottom line, the feds have more than enough assets to solve this problem.
So instead of surrendering congressional power to this would be imperial president, force Barack to sell some gold. After all, he’s more than willing to release oil from the strategic oil reserve for short term political gain. And, forget about folding or holding or running away, call his bluff. Pass a senate resolution demanding Obama sell 1/3 of our gold reserves over the next 18 months. 😉
Refusal to raise the debt limit will cause an immediate 10-12% drop in GDP, according to Karl Denninger. GDP has been artificially propped up by government borrowing and spending for about 30 years.
In other words, it would force the government to live within its means, and acknowledge that we are in a depression right now, not a mere recession.
It needs to happen. The longer we put off the reckoning, the worse it will be.
“Moody’s is in the tank with Barack and Timmy.”
Bingo.
Okay, that’s my view. Now, tell me why I’m wrong.
Nope. I’m going to tell you why you are right. Not all the market stuff, of which I know little about except for the gold. It’s about the political aspects.
On one side is the GOP-controlled House. On the other side is the Democrat-controlled Senate, the Whitehouse and the MSM. It’s 3 against 1 and the larger force is going to win. So I think the GOP is going to lose this round. There are no good options for the GOP.
The GOP will either accept a deal of Obama’s choosing, which will give him cover on the economy during next year’s election and also stands a good chance to alienate much of the GOP base
or
the debt limit will not be raised, default will happen, all the financial perturbations by a previous commentor will occur and the GOP will then own the economy lock, stock and barrel going into next year’s election.
And the economy WILL be bad, thanks largely to Obama’s policies. I believe Obama will go for the throat: no deal, no debt ceiling raised and the default. I notice that he walked out of the negotiations today. He’ll do anything he can to assure that no deal is reached. Why? Because it almost assures his re-election. It’s the very best option for him.
And a sizeable portion of conservative voters will be so bitterly disappointed that they will not support the GOP and will stay away from the polls. Just as they did in the last Presidential election when McCain won the nomination. Many of them have spent some of the intervening time justifying their behavior by the tortuous logic of claiming McCain would have been as “bad as Obama.” I know — because I have spent a considerable amount of time debating them on this blog and elsewhere about their lack of fortitude back when the going got tough.
The going is going to get tough again. There is a slightly different cast of characters this time. The Tea Party did not exist until after Obama was elected. I fervently hope these new kids on the block have more backbone.
When Pelosi lost the House there was no real lowering of her status among the Democrats. She remains their honored leader. They seem to recognize that she did the best she could for them and that their loss of the House was due to factors mostly beyond her control. I wonder what will happen to Boehner? Will he be sacked after his drubbing by Obama? I see nothing that Boehner could have done to prevent the looming fiasco. This was all foreordained by the 3 to 1 odds I mentioned previously. We’ll see.
rickl says, “Refusal to raise the debt limit will cause an immediate 10-12% drop in GDP, according to Karl Denninger. GDP has been artificially propped up by government borrowing and spending for about 30 years.
In other words, it would force the government to live within its means, and acknowledge that we are in a depression right now, not a mere recession.
It needs to happen. The longer we put off the reckoning, the worse it will be.”
The political class, with the support of a slim majority of voters, will continue to kick the can and the inevitable contraction will be somewhere in the 30-50% range.
“”or
the debt limit will not be raised, default will happen, all the financial perturbations by a previous commentor will occur and the GOP will then own the economy lock, stock and barrel going into next year’s election.””
Grackle
I can’t say i subscribe to the theory of avoiding to do the right thing because of how it will get spun by the media. You can’t ever win by accepting the premise of a heads i win tails you lose game. Let them sell this little marxist as the victim of the mean people who demand the out of control spending cease. It won’t work. He’ll lose by the biggest landslide in modern history.
You can’t ever win by accepting the premise of a heads i win tails you lose game.
The commentor is under the illusion that the GOP can accept the situation or reject it as it wishes. The reality is that if the debt ceiling is not raised the GOP will be blamed for anything bad about the economy thereafter and will then own the economy in the minds of a considerable portion of the electorate.
Let them sell
this little marxist[Obama] as the victim of the mean people whodemand the out of control spending cease[refused to compromise].There, fixed that up for the commentor.
It won’t work. He’ll lose by the biggest landslide in modern history.
Oh, it’ll work alright. It worked before in the 1995/1996 government shutdown. As for “landslide,” it was Bill Clinton who won in 1996 by … wait for it … a landslide.
In other words, it[not raising the debt ceiling] would force the government to live within its means, and acknowledge that we are in a depression right now, not a mere recession.
Economics seems to me to be a pseudo-science like all the rest of the “social sciences,” and prone to bias inherent in the various economists’ personal viewpoints. Depression, recession, whatever, if the GOP-controlled House does not raise the debt ceiling the state of the economy afterwards will be blamed on the GOP.
It needs to happen. The longer we put off the reckoning, the worse it will be.
Maybe, maybe not. I’m wondering, does the commentor believe a “reckoning” will benefit the GOP?
Who made Moody’s the controller of the entire economic well-being of the world?
Aren’t they the very idiots who were disastrously wrong on the last financial crisis?
Did someone elect Moody’s to decide the economic fate of America?
They have no power to raise anything unless we tell them. They are not the US treasury. They are not the Fed. They are not the full faith and credit of America.
Grackle raises the very good point that the GOP is up against 3-1 odds. They cannot force Obama and the Senate dems to accept real spending cuts. That is the reality. You can argue all you want that the GOP must stand fast, but McConnell is correct. Obama will not make a deal and would profit politically from a default because the dems and the MSM would all trumpet the story that unreasonable demands by the GOP had forced the issue. And believe me, the day after the default, with the market dropping, the dollar and oil rising, the debt ceiling WILL be raised by panicked legislators. It will be too late, however. Incalcuable damage will have been done to the financial markets and the trust that has been a huge part of this country’s advantage in world affairs. That is why McConnell recognizes that not raising the ceiling would be irresponsible.
Parker says that the Senate should force Obama to sell gold or other resources to cover the income shortfall. It won’t happen because the dems control the Senate. Nice idea, but it won’t happen. At some point sales of property and gold might become a sound strategy for getting the country back on its feet. But that is an discussion for another day.
I own gold and silver and the Swiss Frank as hedges against a possible default. I think that is a sound position at this time. If the ceiling is raised with no substantial cutbacks in spending, it is, IMO, still a good place to be.
I still think McConnell is smart to let Obama do as he will at this point. Putting Obama in the spotlight buy forcing him to reveal his plans (More spending with no real cuts, which I believe will not be acceptable to a majority of Americans.) and let the Republicans make it clear that they disapprove of his plans. This puts all the responsibility on Obama and the dems. I think it will sink Obama even more. His approval ratings are pretty darn low right now.
grackle Says:
July 14th, 2011 at 11:09 am
It’s not about politics. It’s about math.
I don’t know if anyone is still reading this thread, but I just read an article by Keith Hennesy which explains McConnell’s proposal and the probable effects of it. Surprisingly, he agrees with me.
http://tinyurl.com/66fujgd
Mike Mc, you are right on! Boehner and Cantor, pass a budget bill in the House with an increase in the debt limit and big spending cuts. Let the Dems in the Senate vote it down. The MSM will have to work harder than they ever worked in their lives to foist the blame on Republicans, and I don’t think they will get away with it!