Thursday, July 14, 2011

Contemplating The Other Side

Following the Senate Minority Leader's regular Wednesday meeting with his caucus, Politico's Manu Raju observed "it's unclear whether McConnell can win over his troops, considering strong comments from Republicans."

He may not have to- at least on his initial proposal, which would cede control (and responsibility) for raising the debt to President Obama. While the President is mulling McConnell's offer, Bloomberg News' Paul Kane and Lori Montgomery report

Senate Majority Leader Harry M. Reid (D-Nev.) is working with McConnell on this approach. Aides said the two are discussing a strategy that would pair McConnell’s debt-limit proposal with at least $1.5 trillion in spending cuts identified through bipartisan talks that Vice President Biden has led in recent weeks.

The deal also could create a committee of 12 lawmakers who would be assigned with identifying trillions of dollars in additional savings. The panel’s recommendations would be fast-tracked to votes in the House and the Senate and would not be subject to amendment, a process similar to the one Congress uses for closing military bases.

The Republican leader in the Senate offers a clean bill which would result in the debt ceiling being lifted- and the Democratic President (through his Vice-President) begins to negotiate short-term spending cuts and, alarmingly, a process to "fast-track" future spending cuts. With the popularity of Social Security and Medicare (and, to a lesser extent, Medicaid), that may be the only path to slashing those dreaded entitlements so loathed by the media and Washington establishment. And that may be the only way (in a second term) of, as presidential candidate Obama once threatened promised, "fundamentally transforming the United States of America." (Remember these heady days?)

McConnell's original proposal, which the MSNBC stable of prime-time liberals were convinced amounted to a surrender by the GOP, apparently threatens Barack Obama's plans to run in 2012 as America's Great Deficit Hawk, as Jane Hamsher argues. But if House Repub leaders, most of whose members would reject the McConnell scheme, wish to satisfy a) the GOP's popular base, which wants to see spending cut and thinks it wants government immolated; b) the GOP's corporate base, which is eager for the debt limit to be raised; and c) its desire to derail Barack Obama's re-election hopes, they should heed Jon Walker:

I don’t see why Eric Cantor won’t try to call President Obama bluff over threatening to veto a short term deal.

As I have explain in more detail Obama threat to veto any short term increase has created a serious credibility problem for the President. You can’t both say default would be a huge problem and that you will single-handily cause a default simply because you won’t grant the GOP request for a short term increase so they can have a few more days to negotiate.

The Republicans are already trying to shift the responsibility for the debt ceiling unto Obama. From their perspective I see no reason why on July 29th the GOP shouldn’t bring to the floor a 30 day increase paired with a small amount of some of the most politically palatable cuts. They could message such a move with something like, “we need more time but we are unwilling to risk the full faith of the US credit.”

If Obama rejects the short term increase Republican will wash their hands and claim whatever bad happens to the economy because of a default is now totally Obama’s fault for unreasonably rejection their modest request for more time.

Either Obama will be forced to break his veto promise, forced to prove he lied about August 2nd being the drop dead date, or risk allowing the GOP to have a believable story for why Obama should be solely blamed for the bad economic consequences of default.

Putting Barack Obama in the position of considering a veto of anything would be awfully discomfiting to a President who values bipartisanship over loyalty and pragmatism over principle. Intrinsic to President Obama's brand is the ability to 'get it done,' which can be packaged to independents as making Washington work and changing the dynamic of government. Alternatively, Obama could wield the veto pen- as he has threatened- and be blamed for risking default, which would be unpleasant for the moderates, whose vote he treasures, and Wall Street, whose campaign contributions he has proven adept at eliciting.

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