Editore"s Note
Tilting at Windmills

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April 18, 2011

WALL STREET TO REPUBLICANS: STOP SCREWING AROUND.... Congressional Republican leaders know full well that they have to raise the debt ceiling. It's not optional -- to fail is to crash the economy again, only this time would be the result of partisan stupidity on a historic scale.

But GOP leaders also know they have some leverage, and want to see what they can get out of Democrats in the form of ransom before doing what has to be done. Indeed, we learned last week that House Speaker John Boehner (R-Ohio) has already reached out to financial industry leaders, asking how much time he has to screw around before doing lasting damage. He was told that "even pushing close to the deadline -- or talking about it -- could have grave consequences in the marketplace."

The Wall Street Journal adds some highly relevant details to this, noting that the discussions between Republicans and the financial industry have been even broader than previously reported.

During a recent series of meetings and fund-raisers, top Wall Street executives and lobbyists have urged Republicans to resolve the debt-ceiling debate quickly or risk turmoil in the bond market.

In the sessions, House Speaker John Boehner explained the politics of the vote to investors, telling them Republicans won't approve an increase in how much the U.S. can borrow without a long-term deficit-reduction plan, according to people familiar with his remarks. In turn, the executives said delaying a resolution could unnerve skittish credit markets. [...]

"Bond markets will start to get very nervous if we go beyond May 16 without a debt-ceiling agreement being reached," said Ajay Rajadhyaksha, head of fixed-income strategy at Barclays Capital.

Now, under normal circumstances, this would generate fairly swift action. Wall Street lobbyists keep Boehner on speed dial so they can tell him what to do quickly, and Republicans are nearly always inclined to do exactly what Wall Street instructs them to do.

And yet, for now, GOP leaders are proceeding with their hostage strategy. Last week, House Majority Leader Eric Cantor (R-Va.) went so far as to say publicly that he wants Republicans to push off action until after the nation reaches the debt limit in mid-May, deliberately creating a crisis situation.

Greg Sargent has a smart take on this, connecting the story to this morning's developments on Wall Street: "The S&P story seems to have given Republicans momentum today in the spin wars over the debt ceiling. And in truth, though Timothy Geithner said this weekend that GOP leaders had assured him that they understood the need to raise the debt ceiling, Dems don't seem to be drawing as hard a line on a "clean" vote as they might have. The moment for doing that convincingly may have passed. Some kind of compromise in which Dems agree to some sort of spending cut framework appears likely. But the fact that the GOP's brinkmanship is rattling the party's corporate benefactors seems kind of important, and should be part of the discussion."

Steve Benen 3:45 PM Permalink | Trackbacks | Comments (20)

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So what is the reason why Dems are caving this time? The GOP have no leverage and everybody knows it. It would have been nice if Dems behaved this way when W was in charge.

Posted by: Live Free or Die on April 18, 2011 at 3:53 PM | PERMALINK

You may think they know that.

But they vote for Republicans, so who can say?

Posted by: cld on April 18, 2011 at 3:57 PM | PERMALINK

so, based on this, the democrats should just dig in their heels and let wall street slap the republicans around.

Posted by: just bill on April 18, 2011 at 4:00 PM | PERMALINK

The Republicans are bluffing with a dead hostage, saying they will kill the hostage.

Posted by: Live Free or Die on April 18, 2011 at 4:00 PM | PERMALINK

Fuck'em (Cantor, et al..), dare them to do it!

I would love to see this happen, the banks already fucked us all "royale".. Let the Republican party implode if this is what it takes, so be it! Then we can kick the Democrats out as well. No more amatuers, no more juvenile douchebags, no more culture war sociopaths.. Bernie Sanders for Prime Minister! Fuck yes!

Posted by: Trollop on April 18, 2011 at 4:01 PM | PERMALINK

Media Bias

Obama is a socialist, illegal alien Kenyan Muslim who wants to implement Sharia=no big deal

GOP want to change Medicare and give tax brakes to the rich=offensive speech

Posted by: Live Free or Die on April 18, 2011 at 4:06 PM | PERMALINK

Why the hell would it be giving the GOP momentum? the markets are clearly signaling that the GOP's plan is a colossal cluster fuck.

And the GOP thinks "full speed ahead!!"???WTF???

Posted by: Four Legsgood on April 18, 2011 at 4:12 PM | PERMALINK

Last week I read that the president would hold out for a clean debt cieling increase. Now I see him folding his hand and saying he sees the need to agree to smoe budget cuts in order to get a debt cieling bill. What the hell is going on here????? I feel like Alice when she fell down the rabbit hole!

Posted by: davidi on April 18, 2011 at 4:13 PM | PERMALINK

I am terrified that the baggers will force the hand of Bohner and Co and make them do it. They care more about getting reelected than they do for the welfare of the country.
Traitors, Anarchists all of them.

Posted by: John R AKA Mr. Serf Man on April 18, 2011 at 4:18 PM | PERMALINK

I can see why the Obama let the GOP have 30B (or 200M) in cuts. That is puny. What I dont understand is why I dont understand if why they dont tell the GOP to pound sand. They know that the GOP has to raise the limit.

Posted by: Live Free or Die on April 18, 2011 at 4:23 PM | PERMALINK

humm... Wall street bankers sure are naive if they think the Teapublicans won't mess with the debt to make a point. And if they will mess with the debt, what won't they mess with? A few years ago the kookiness which pervades the party today was unthinkable,.. Next year of they win think Gold Standard, abolition of the Fed... the cold capitalism of the early 1900s.

Remember younger warned... as for me..

I would rather have the Postal Service run my health insurance than have EXXON, AT&T, or GE run it, wouldn't you? But that's what Republicans want with their new budget proposals to privatize Medicaid and Medicare.

It's all very fine if you are a member of the upper class who can afford health costs out of pocket, but for the rest of us who deal with health insurance companies we know they do not have the public interest in mind, only the short term profit of their shareholders.

Work against the public interest? Corporations? You say.

Well, my young Randian apprentice let's look at the record, which shows many companies cut corners which proved disastrous to the public interest.  Union Carbide in India, BP in the Gulf of Mexico, EXXON In Alaska. There is no reason to think that health companies do any different given they continually raised premiums IN A RECESSION.

Remember, we had pass laws to reign in corporations' greed 100 years ago. 

So to the idealogue Republicans, I say not only NO, but HELL NO!

 America and the world was never more prosperous than during those times when people paid their fair share, this means we must tax the rich and use the money to build infrastructure paying good wages for good work to good people while protecting those who cannot protect themselves.

My cartoon showing Mega Corporations, the uber rich, and the ultra hard right wing dancing on the middle class, poor and elderly expresses my feelings ( Celebrating Paul Ryan's Budget Gutting Medicaid and Medicare )  on the subject. Phaëthon makes an appearance with a story about scorpions and mice in which he explains that while squashing those who support your culture may be counter intuitive, like the scorpion stinging the mouse as they cross a stream causing both to drown, it is useless to blame the sxorpion as it is his nature to sting anything in his vicinity. In general I rather like it although the kooky consecrative caucus may not.

Posted by: KurtRex1453 on April 18, 2011 at 4:24 PM | PERMALINK

The reason Republicans are playing chicken on this is that Democrats are well-known for making unilateral concessions. They will keep it up for a while, hoping for frightened, timid Democrats to give them gifts. To get them to stop, Democrats must make clear that they will get absolutely nothing, nothing at all, in exchange for a vote to raise the debt ceiling. Not only that, but Democrats should do what they did in 1995 and force a majority of House Republicans to vote for it, by withholding their own votes until they do.

Posted by: Joe Buck on April 18, 2011 at 4:27 PM | PERMALINK

I guess the GOPers figure that sometimes you have to kill capitalism to save it...

Posted by: bmoodie on April 18, 2011 at 4:33 PM | PERMALINK

In a world where Nancy Pelosi were running the Democratic Party, everyone would be talking about how the uncertainty surrounding the debt limit is hurting the business climate, and wouldn't it be nice if the wingnuts would pass it right now so business could stop worrying about a global financial apocalypse and get back to jobs.

Unfortunately, that would be too smart for the people in charge.

Posted by: Woodorw L. Goode, IV on April 18, 2011 at 4:49 PM | PERMALINK

the markets are already reacting..news alert from NYTimes...our rating, the USA, was just lowered by uncertainity over the debt ceiling.

Posted by: S. Holland on April 18, 2011 at 4:53 PM | PERMALINK

Where are the Dems, who should be -- calmly but implacably -- saying "Clean bill. Clean bill. Clean bill. We will only accept a clean bill"?

Posted by: exlibra on April 18, 2011 at 5:16 PM | PERMALINK

Tea Partiers want to take their country back again -- to the days of Herbert Hoover after the crash and try to fix the depression -- a second chance that's all they want.

Posted by: Ray Waldren on April 18, 2011 at 5:34 PM | PERMALINK

I don't think S&P's report only helps Republican/Teabagger spin on further cutting the budget. I've read one report on the internet (BBC) and seen two interviews on cable TV and ALL simply noted the necessity of getting the deficit under control was what caused the rating change - no mention of any preferred method of doing so. Certainly the Republican/Teabaggers are going to say "SEE!", but that doesn't mean they can't be countered.
Democrats and independents don't want any further cuts in the budget; nearly half of the Republicans don't want further cuts. It's the Republican/Teabaggers, I think, that will have to sell the idea of further cuts and they won't have much time to do it in.
As to Mr. Sargent's "...Dem's don't seem to be drawing as hard a line on a 'clean' vote as they might have.", it appears to be a reference to the All-powerful "Gang of Six" proposals. If so, then I'm not worried; apparently some politicians, Democrats included, think that what matters is to APPEAR to be doing something, whether it contributes to a solution or not.
Of course, what really matters is how they vote...

Posted by: Doug on April 18, 2011 at 9:34 PM | PERMALINK

Pity the poor banksters, on one hand they have a party that usually does their bidding, but must be seen to make periodic attempts at watered down reform when the excesses become to obvious, and on the other they have a party that reliably works to weaken or abolish any controls on those excesses, but is willing to put their livelyhood in jeopardy to score political points. Wall Street must long for the days when if you bought somebody, they stayed bought.

Posted by: Rip on April 19, 2011 at 1:31 AM | PERMALINK

"The S&P story seems to have given Republicans momentum today in the spin wars over the debt ceiling"

In fact, it was a political gesture by S&P (participants in the home mortgage bond frauds) in behalf of the Republicans.

Posted by: bob h on April 19, 2011 at 6:34 AM | PERMALINK
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