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July 23, 2011 8:00 AM With 10 days to go

By Steve Benen

For those who saw the basic outline of the “Grand Bargain” and hated it, I have good news. For those who are concerned of an economic catastrophe a week from Tuesday, the news isn’t good at all.

House Speaker John A. Boehner on Friday abandoned talks with the White House over a landmark deal to reduce the national debt, throwing into chaos efforts to raise the legal limit on government borrowing just 11 days before the U.S. Treasury is due to run out of cash.

Facing the specter of the government’s first default, President Obama summoned congressional leaders to the White House for an emergency meeting Saturday morning, and Senate leaders rushed to revive a fallback strategy for raising the debt limit before the Aug. 2 deadline.

“We have now run out of time,” a visibly angry Obama said during an impromptu White House news conference held after Boehner (R-Ohio) called to say he was walking out on the talks for the second time in two weeks — again citing differences over taxes. Now, Obama said, “one of the questions that the Republican Party is going to have to ask itself is: Can they say yes to anything?”

President Obama went into detail, for the first time publicly, about the offer he put on the table: over $1 trillion in discretionary spending cuts, including defense, and an additional $650 billion in entitlement cuts, in exchange for $1.2 trillion in additional revenue, which is far less than what even the Gang of Six and Simpson/Bowles envisioned.

The White House also said it would settle for $400 billion less in revenue if Boehner would accept fewer entitlement cuts.

But the Speaker walked away, leaving the deal on the table. He blamed Obama for the breakdown — the president “insisted on raising taxes,” he said — but the more accurate assessment is that the Speaker just doesn’t have the votes. The House Republican caucus is simply too right-wing, and too opposed to compromise, to approve any deal Boehner negotiates with the president.

And while last night was dramatic, it’s worth remembering that the breakdown basically brings us back to where we were eight days ago. The Grand Bargain was on the table, them off, then on again, and now off again, apparently never to return. This is where we found ourselves last Thursday.

The difference is, the clock is now ticking much louder, as the crisis has intensified by several degrees.

So, now what? The White House will host yet another meeting with congressional leaders in three hours. Boehner has said he intends to have no further negotiations with the administration, but will instead talk to Senate leaders. Speaking of Senate leaders, the McConnell/Reid compromise that was shelved yesterday will be taken off the shelf, dusted off, and gain considerably more attention. (House Republicans still don’t like it, but that was when it was one of several options. As of now, it may be the last option standing.)

One of the main sticking points to keep an eye on is the thresholds Obama and Boehner are hanging onto. For the president, the deal has to resolve the debt-ceiling issue until after 2012; for the Speaker, the total savings package has to be, dollar for dollar, at least as big as the amount of the debt ceiling increase ($2.5 trillion). One of these two benchmarks will not be met.

As for the big picture, Obama offered Republicans the sweetest deal they’ll ever see from a Democratic president. In the end, the GOP just wasn’t prepared to compromise, and the House Speaker just wasn’t able to lead.

And as for this morning, the president said yesterday he expects the Republican leaders “to explain to me how it is that we are going to avoid default.” I suspect they’re going to struggle to answer that question.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • SteveT on July 23, 2011 8:10 AM:

    . . . Obama offered Republicans the sweetest deal they'll ever see from a Democratic president.

    I think you are seriously underestimating the President's ability to capitulate.


    Shorter Obama Press Conference
    Posted on July 22, 2011 by Michael Froomkin

    "I tried repeatedly to surrender to the House GOP, but they wouldn't take even my most abject surrender. I have summoned them back to the White House tomorrow morning in another attempt to force them to accept it. If worst comes to worst, and they will not accept my surrender, I am prepared to accept theirs, but I really don't like it, and will use the opportunity to campaign against Democratic values in the next election."

    http://www.discourse.net/2011/07/shorter-obama-news-conference.html

  • c u n d gulag on July 23, 2011 8:12 AM:


    The problem with cornering rats is, what do you do with them when you've got them in the corner?

    Usually, a cornered rat attacks.

    But in this case, the cornered rats can do even MORE damage by doing nothing.

    I'd poke them in the eye with the 14th Amendment.
    Let them take it to the courts.
    Let them dare to threaten to impeach him.
    The Senate will put a stop to that.

    I really believe that that would be a win-win for the President and the Democratic Party.

  • Danp on July 23, 2011 8:14 AM:

    the president said yesterday he expects the Republican leaders “to explain to me how it is that we are going to avoid default.”

    It's 2 AM and he's talking to the drunk at the end of the bar, that guy's whiny child and a sleepy turtle. Good luck, Mr. President.

  • Mr Serf Man on July 23, 2011 8:15 AM:

    I had to turn off the TEEVEE NOOZE this morning as they continue to frame it as a Bipartisan problem with CBS interviewing a bunch of "independent voters" who have obviously never picked up a newspaper or read anything about what is going on other than watching a glimpse on the evening news.
    America : too stupid for democracy

  • delNorte on July 23, 2011 8:20 AM:

    Here's hoping (and I know it won't happen) they broadcast this morning's meeting on CSPAN, so the entire nation can see what exactly is going on. I believe we have the right (this being a democracy and all that) to at least that much.

    - John Tabota (that's my new, captcha bequeathed psuedonymn)

  • DAY on July 23, 2011 8:20 AM:

    About a year ago, I invested heavily in torches and pitchforks. Boy, did I lose my shirt!

    I guess my fallback position will be the Gulag Solution.

  • FRP on July 23, 2011 8:23 AM:

    It is times like these when the full regalia of triumph is on display . The preening peacocks throwing sobriety and decorum out the window , going into full William of Orange marching orders .
    My goodness !
    Oh what fun it is to play in the mud !
    Soft and squishy ,
    Filled with deep dark wishies
    Where never is heard enuf
    About the kinda stuf
    That makes up the deep internal
    Place where we make up the excuses
    For the fact that as hard as we are
    All we want is Squishy cum Wishie

    This message brought to you by the

    WEEE !!!

    Committee

    Where our ideas are the same as our pleasures

    WEEEE !!!

  • hells littlest angel on July 23, 2011 8:23 AM:

    Default is not going to happen. Neither Wall Street nor the permanent government will let a bunch of Congressional dimwits pull that trigger. This battle is politics, not policy, and that's a good thing. The meaningful deadline is November 6, 2012, and the goal is to cap and cut the Republican party, and I think Obama is doing a pretty good job of exposing Republicans as anti-democracy crackpots.

  • Brutalfacts on July 23, 2011 8:26 AM:

    I think Obama has played this out about as flawlessly as possible. This process has allowed him to expose the following:

    Grover Norquist isn’t yet a household name, but he has been formerly introduced to the Americans that really don’t pay close attention. By the end of the 2012 campaign he will be a household name.

    The “govern by pledge” tactics used within the GOP
    That the Tea Party types really have no clue how government (and life) work. He allowed them to publicly expose their ignorance.

    Wall Street now knows that today’s GOP no longer cares about their interests.

    He can add the Cut, Cap and Balance legislation (and those that voted for it) to the Ryan Plan as weapons to be used to show the GOP for what it is. CCB is full of useful talking points and the Republicans signed off on it.

    Came off as the “adult in the room” knowing he could offer cuts he really did not want to be enacted as long as he insisted on tax increases. In the end he will give up very little or nothing, pivot and use the unreasonable anti-tax and proposed spending cuts against the Republicans.

    He did this all knowing that at the end of the day the GOP would have to raise the debt ceiling. And that he has the expiring Bush tax cuts in his back pocket.

    If the GOP continues to pay this out to default because the Republicans (Tea Party) continues to make it impossible to pass a raise in the debt ceiling next week he pulls the 14th amendment card. I am sure that he has some very heavy hitters ready to “ask” the President to use this tactic to avoid default as time grows short. He then goes on TV, states he is protecting the assets of “Hard Working Americans” (401Ks, etc.) and the if the Republicans feel the need to challenge this in court and force America into default or bring Impeachment proceedings they are welcome to do so.

    This is what 11 dimensional chess looks like.

  • Pat In Massachusetts on July 23, 2011 8:28 AM:

    Let's hope they all eat a "hearty" breakfast this morning!

  • troglodyte on July 23, 2011 8:40 AM:

    BrutalFacts,

    I agree with most of your assessment, but do not assume that Obama knew that it would come out this way. He would have made a deal. The key fact here is that no one on the Repub side has much of an idea of how to structure a decrease in spending. Because they dont have a clue about how government works and are too lazy to learn, they think that all the problems solve themselves by cutting a budget and letting others figure out how to implement the cut. Obama's team had to recognize that a debt-reduction package was necessary to propose and might be necessary to enact, if the politics had fallen that way. All the House Repubs had to do was say yes. Against that eventuality, a responsible executive needed to design the package himself.

    Obama remembers triangulation, though he wont use the word. If you recall all the deals that Clinton cut with the repubs, and was able to take credit for when they worked, you get the idea of the strategy. Obama wanted the deal.

  • BrklynLibrul on July 23, 2011 8:43 AM:

    I really, really hope this plays out as you predict, Brutalfacts. I suspect we'll see a deal on the table by Monday, probably a tweaked McConnell-Reid, and I suspect Boehner knows enough Republicans in swing districts will peel off to join the Dems. Meanwhile, though, the crazy caucus could threaten to depose Boehner if he even agrees to bring the bill to a vote.

  • SteveT on July 23, 2011 8:45 AM:

    Brutalfacts said:
    I think Obama has played this out about as flawlessly as possible.

    What would have been "flawless" would have been if Obama had used his bully pulpit to explain to Americans why deficit reduction isn't even among the top three economic problems that need immediate attention.

    And on the off chance that Obama really is playing 11th dimensional chess, I think it is extremely dangerous to try to agitate a delusional, irrational hostage taker in the hopes that he will make a mistake.

    I also think that it is wishful thinking to expect that the average American voter will know which of the shiny objects being waived in front of him is the most important -- especially since the shiny object that the Republicans want the voter to focus on will get about five times the air time from the corporate-controlled media.

  • hells littlest angel on July 23, 2011 8:51 AM:

    "...if Obama had used his bully pulpit to explain to Americans...
    "...it is wishful thinking to expect that the average American voter will know..."

    Make up your mind, man.

  • Goldilocks on July 23, 2011 8:56 AM:

    Bonehead's two weakest points:

    1) He disingenuously refers to tax revenue as "a tax increase on the American people". No - it's a proposed tax increase on the wealthiest Americans who can best afford it.

    2) "The $400bn extra tax increases would have to come from the very people we expect to invest in our economy and create jobs."

    These are both deceptive and provably false.

    He must think two Achilles heels are better than one.

  • Kathryn on July 23, 2011 8:56 AM:

    I think Brutalfacts has nailed it. The turtle will do all he can to avoid the final act, remains to be seen if he has the clout. Still disconcerting press reports; however, even if the media were in the room, the false equivalency crap would still be printed. I do think though that the general perception makes Obama look good and Boehner like the stooge he is.

    David Brooks performance on the News Hour was revolting, I gather a black president is not allowed to get angry (in his controlled way) or issue ultimatums even in the face of default on his watch, borderline racist comment in my opinion. The fall back position of commentators to condemn Obama if he acts human is as troubling as it is reflexive.

  • delNorte on July 23, 2011 8:58 AM:

    The meaningful deadline is November 6, 2012, and the goal is to cap and cut the Republican party...

    Agree. The only way we are going to go forward in this country in the near future is for Obama to be re-elected, the Senate remain in the hands of the Democrats, and the Republicans get flushed out of the House with a big ass-kicking in 2012. If Republicans retain the House, it will be more of what we have right now (gridlock and dysfunction). If we get a Republican President (not gonna happen), an R. Senate, and an R. House in 2012, we're all screwed.

    I think Obama is fully aware of this - so the political game is to "poke the Republicans in the eye" and encourage them to show their true colors for all Americans to see.

  • Danp on July 23, 2011 8:58 AM:

    Eventually most voters do distinguish glitter from gold, in spite of absurd journalism.

    The problem for Obama (and real people) is that merely raising the debt ceiling doesn't solve much, and isn't really an issue even to posturing Republicans. A compromise would allow for enough revenue to fix some of the problems most needed. Republicans don't want those problems solved on Obama's watch, and they don't want regulators interfering with corrupt practices associated with their donors. I think that is even more of an issue for them than actual tax increases.

    From Obama's perspective, if they merely raise the ceiling, the Republican House and the Senate Minority still control all spending. How do you fix problems when people elect a Congress that is opposed to fixing them? You have to expose them for what they are, and the longer this negotiatiom goes on, the more transparent the silliness becomes.

  • troglodyte on July 23, 2011 9:03 AM:

    Interesting that Steve's post has been up a full hour and no trolls have appeared, even the concern trolls. Their paymasters must be confused, now that Obama has drawn a curtain on the hostage drama. Remember, a game of chicken can go on only as long as both drivers are straddling the divider line. Obama has returned to his lane.

    (Some younger readers might not have had experience playing chicken -- its a hard game to play with a Prius. See the movie American Graffitti for the most satisfying dramatization.)

    There is no flawlessness in Obama's strategy. He had to prepare for a complicated set of contingencies, and not all of the outcomes would be satisfactory. A skilled player tries to take care of all of them. The Repubs have a coherent strategy, but they are lousy at contingency planning -- this is the hallmark of their governance style. When their starting assumptions fail, they have no serious plan B. The McConnell Plan B is so cynical that it is laughable. Probably brainstormed by a desperate staffer.


  • SteveT on July 23, 2011 9:16 AM:

    hells littlest angel said:

    "...if Obama had used his bully pulpit to explain to Americans...
    "...it is wishful thinking to expect that the average American voter will know..."

    Make up your mind, man.

    Good point. The trick is for Obama to make the Democratic point of view the shiniest object being dangled in front of the average American voter. To do that he has to:

    - Embrace the idea that he controls the loudest megaphone in the world.
    - Accept the idea that Republicans aren't going to like him and aren't going to cooperate, no matter how nice he is to them
    - Remember exit polls from 2004 that said Americans want leaders with strong beliefs -- ANY beliefs -- and show some genuine passion for Democratic Party principles
    - Quit using euphemisms like "disingenuous" and use everyday words like "lying"
    - Enter the age of multi-media and put easy-to-understand pictures in front of the American voters, like Steve's "bikini" employment chart and Offthechart's debt drivers chart.

  • Obee on July 23, 2011 9:29 AM:

    Dean Baker has praised a suggestion by Ron Paul concerning a solution to the debt ceiling. Congress should order the Fed to destroy the $1.6 trillion in bonds it holds. These bonds are part of the deficit, but all it amounts to is the government paying itself back. This would buy plenty of time to deal with all the other headaches, and the ceiling wouldn't have to be raised at all.

  • James M on July 23, 2011 9:30 AM:

    Terrible but maybe OK

    I would never have believed it even a week ago, but I now believe default is a real option. The GOP has painted itself into such a Tea Party enforced corner that I am not sure they can get out. Ever play Hearts? Sometimes you let someone run the table (Win all hearts and the Queen of Spades), causing you and all the players get a 26 point penalty, because you do not want to be the one to 'eat' (take) the Queen of Spades (a 13 point penalty).

    It could be that each individual GOP rep will accept systemic catastrophe (default) to prevent personal castastrophe (the certain loss of his/her own seat). However, as terrible as default will no doubt be, it will almost certainly destroy the GOP for generations, if not forever.

  • DAY on July 23, 2011 9:39 AM:

    Some good, measured thinking, above.

    Let me add an additional "11 Dimensional Chess" move.

    The Stimulus Package that followed the big Bank Bailout resulted in the Dog that Didn't Bark.
    There was no "proof" -for the unwashed masses- that we avoided a depression.

    Today, by allowing the nation to approach the brink, even have a toe, a foot, hell, an entire leg dangling in the abyss, folks will understand when the Adult in the Room dons his cape and rescues us with Excalibur (AKA the 14th Amendment).

    (I hope brutalfacts is right. . .)

  • dsimon on July 23, 2011 9:45 AM:

    I may be a wild-eyed optimist, but I think there's little chance of default. Some version of Reid-McConnell will obviously pass the Senate. If Boehner doesn't bring it to a vote, he single-handedly takes responsibility for trashing the national, if not global, economy. House Republicans take responsibility for the devastation, and all because they wouldn't consider meaningful revenue increases--a position supported by less than 30% of the public in all the recent polls. Any way Republicans hold the House under that scenario?

    If Boehner brings Reid-McConnell to a vote, I'd think (and I admit this is pure speculation) that there are enough votes to get it through. The business community for once will be using its considerable leverage on anyone who isn't a stark raving Tea Party ideologue (and even those folks aren't a majority of Boehner's caucus, though others may fear a Tea Party primary). I think Boehner and Pelosi are already talking about how many votes each side can deliver so they can figure out which members can get a pass and vote no while allowing the measure to squeak through, which will make it look closer than it really is.

    Boehner is faced with pissing off the Tea Party faction or pissing off most of the country. While neither option is a good one for him, I think it's clear that his chances for surviving as Speaker are far better by doing the former, and he'll do what's in his (and his party's) best interest in the end. But he has to drag this out to mollify his Tea Partiers to the extent possible.

  • dsimon on July 23, 2011 9:47 AM:

    I may be a wild-eyed optimist, but I think there's little chance of default. Some version of Reid-McConnell will obviously pass the Senate. If Boehner doesn't bring it to a vote, he single-handedly takes responsibility for trashing the national, if not global, economy. House Republicans take responsibility for the devastation, and all because they wouldn't consider meaningful revenue increases--a position supported by less than 30% of the public in all the recent polls. Any way Republicans hold the House under that scenario?

    If Boehner brings Reid-McConnell to a vote, I'd think (and I admit this is pure speculation) that there are enough votes to get it through. The business community for once will be using its considerable leverage on anyone who isn't a stark raving Tea Party ideologue (and even those folks aren't a majority of Boehner's caucus, though others may fear a Tea Party primary). I think Boehner and Pelosi are already talking about how many votes each side can deliver so they can figure out which members can get a pass and vote no while allowing the measure to squeak through, which will make it look closer than it really is.

    Boehner is faced with pissing off the Tea Party faction or pissing off most of the country. While neither option is a good one for him, I think it's clear that his chances for surviving as Speaker are far better by doing the former, and he'll do what's in his (and his party's) best interest in the end. But he has to drag this out to mollify his Tea Partiers to the extent possible.

  • bigtuna on July 23, 2011 9:51 AM:

    I think a number of people saw this coming - Boner was in a corner, and the only two ways out were for him to lead, and likely lose his leadership job after a vote that consistented of a compromise with house Dems., or Obama would cave.

    I think a good plan would be for the administration is to start laying out what its plans are for paying bills, or not, starting Aug 3. The executive branch has the duty to run the country, and so now is the time to say clearly that on a monthly cash in cash out basis, here is what we are going to do. One cannot switch accounting systems without some short of prep., and transparency is the best way to go here. They want default ? Show them what default looks like. Don't bullshit any of it - just start laying out what things look like. Are you going to pay interest and bondholders first? Fine. Who gets to the end of the line?

    Meanwhile, the funding for the non air traffic control portion of the FAA ended, and now FAA employees are being furloughed; airport taxes will not be collected; saftely programs, and i believe construction programs, will be suspended. In each and every district where there is impact, someone should be saying very clearly what is going on, and who is at fault.

    These articles about the politics that frame this stuff as "partisan bickering" are driving me nuts. Never "republican craziness vs. democratic interests in governing".

    O Canada ....

  • jpeckjr on July 23, 2011 9:58 AM:

    @DAY. Some folks I know believe the government should not have done the big bank bailout, should have let them, and the American auto industry, collapse. The government rescued those parties with the phrase "too big to fail." These people feel (as in reactionary emotional response) that they are "too small to matter."

    They want someone "big" to take a hit. This time, it's the federal govt. It is twisted thinking driven mostly by anger. The flaw in the thinking is simple: the govt is not shareholders, investors, and overpaid corporate execs. The govt belongs to the people, even if the elected class doesn't act like the people matter. By what logic does any one hope they themselves will fail?

    Captcha: setting ionstne -- I hope this mood is not set in stone.

  • Brutalfacts on July 23, 2011 10:03 AM:

    DAY is right, you never get credit in this world for being proactive. You do usually find success however.

    It will not get to the 14th Amendment, I think GOP is not willing to expend what little political capital they have left on this fight.

    The Dems have a huge opportuity here. The GOP was always the "Daddy" party in the public mind (see unwashed masses). Take the "Adult" mime and run with it. If your the adult what does that make the other side?

    Too many progressives suffer from terminal impatience. They want the President to take the "bully pulpit" and turn the GOP into quivering masses of goo waving the white flag. Ain't gonna happen that way, you establish your brand (GOP has been hugely successful at this) and play off perceptions. We have a President that has a huge amount of emotional intelligence coupled with an ability to communicate. A smarter Reagan so to speak.

    We need to continue to be the "big tent" and squabble cause that what we do. We are the thinkers, the do-ers, we don't sign pledges or cast out those we don't agree with. We just need to show ourselves to be "adults", take a few risks and allow the other side to destroy themselves.

  • N.Wells on July 23, 2011 10:08 AM:

    Trying to think ahead, if a version of McConnell's plan was to come to the floors of the senate and the house, the chance of it not happening in time and someone proposing a punt of a week or two seems pretty high. At which point, probably somewhere around 75 senatorial egos and 300 congresscritter egos come into play as each one tries to delay it, kill it, reshape it, use it to grab some limelight, or lard it up with pet legislation on the order of banning abortion or mandating displays of the ten commandments, funding South Carolina harbor dredging or whatever. Yes, I know the Senate and the House have some procedures that they can use to rush things through with limited debate or limited amendments, but I'm losing faith in their ability to keep their excesses under control, and two of the people who have to keep this process on line are Cantor and Boehner.

  • James M on July 23, 2011 10:26 AM:

    Have we won?

    As much as we love to castigate the Dems and BO for their poor negotiating skills, we may have already won! I imagine that Mr. Boehner has stiffened his nightly double martini to a triple and is now thinking, 'Oh sh@@t!

    No one wants to go down in history as the man who single-handedly brought down the global economy (He would replace Hoover if the Hall of Infamy) and there is a good chance that he might jump at any reasonable-sounding proposal.

    Whether he could get it through his caucus or not is of course a completely different matter!

  • Daryl McCullough on July 23, 2011 12:29 PM:

    Here's something that doesn't get brought up much. The Republicans act like they can get their way by saying "No" to everything. However, as I understand it, on the issue of raising taxes, if nothing is done by Congress, then taxes WILL go up when the Bush tax cuts expire. Voting "No" on everything will not prevent this from happening.

  • JB Allen on July 23, 2011 1:18 PM:

    Daryl - Well, I think this blog posted a part of an interview with Norquist where allowing the Bush tax cuts to expire would not go against the GOP's pledge of allegiance to him. I'm not sure why Norquist is OK with this, although I guess it makes sense from a power-first mindset (the GOP can avoid responsibility when the cuts expire, and engage in their usual finger-pointing).

    Related question: has anybody identified suggested cuts in Medicare as increased taxes for the elderly? This is consistent with the GOP line that terminating tax credits for the wealthy amounts to a tax increase, and is therefore unacceptable. From a dollars and cents perspective, medical coverage is not much different from a tax credit, so why aren't Medicare cuts or other public benefits compared to tax hikes?

  • bdop4 on July 23, 2011 3:54 PM:

    A lot of optimism on this thread today. I hope it plays out the way everyone thinks it will. We'll know soon enough.

    We are placing a lot of faith on third parties (Wall St., MSM, incurious voters, etc.) to do the right thing and force the repubs to quickly raise the debt through a clean bill.

    We also don't know what "victory" (whatever deal gets made) looks like. If it looks like any of Obama's "grand bargains," I won't be feeling too victorious.

    Ideal result would be waiting until 11:59 and raising the debt with minimal concessions. I don't see that as a likely outcome.

  • Doug on July 23, 2011 7:04 PM:

    "...but the more accurate assessment is that the Speaker just doesn't have the votes." Steve Benen.

    To pass a "Grand Bargain" or to retain the Speakership?

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