Monday, July 18, 2011

Nothing Can Pass/Something Has To Pass

...and that's where the debt limit negotiations remain. I just got around to reading Keith Hennessey on the McConnell plan, and the key quote from him is:
The proposal could not pass the House today, but then I don’t think any debt limit proposal could pass the House today.
That's from someone who probably has a pretty good sense of what House Republicans are thinking. It sounds right to me, although of course it might not be true -- it may be that lots of people are just bluffing (in which case it may be technically correct that no proposal could pass the House "today", but there are proposals that would pass if we were at a deadline).

Still, if it's correct in the stronger sense that there really is nothing that could pass the House, then we have to pair that with the other part of it: sooner or later, some debt limit increase will pass the House.

Which means either that there's some possible proposal that no one has thought of...or, more likely, that something will change. And I continue to agree with those who say that the latter is the best read of the situation -- and that "something" means an external shock of some kind.

What's really not clear, to me at least (and I'd love to know what Hennessey would say about this) is how many House Republicans would respond to a sudden shock -- say, an awful day on Wall Street. What I'm mostly getting from House Republicans is that every time an external source says that the debt limit has to be raised (or even eliminated), what Tea Partiers hear is spending on programs they don't like has to be cut. What worries me is that if that's the case, then perhaps external shocks won't help, if House Republicans interpret them as just confirming their current position. I don't think that's true about the House GOP leadership, but if it's true for up to half of the GOP Members, well, that's a pretty big problem.


  1. I'm having a hard time understanding the dynamics of "[the] proposal could not pass the House today, but then I don’t think any debt limit proposal could pass the House today." Surely not the entire House Republican caucas are Tea Party adherents; there must be enough Democrats that can be persuaded to cover the Tea Party hardliners?

    Now, I understand that Boehner needs to protect his flank in order to fight off Cantor from assuming his Speakership position, but is that the problem? That Boehner won't bring the vote to the floor because he doesn't have 100% support of his own party?

    Granted, the above assumes enough Democratic votes to cover the Republican shortfall but I don't get the sense that House Democrats are even being "courted" as such.

  2. You're right. I always assumed that if the market crashed everybody would come to their senses, but that might be too much to assume with this group. TARP failed its first time up in the House, and that was before we had a tea party majority.

    So, let's imagine that August 2nd comes and the Dow has lost 500 points so far because no deal was made. A quick read shows that Congress is still not ready to budge. Given the fact that Mitch McConnell and John Boehner genuinely want the ceiling raised, what's the downside for Obama to invoke the 14th amendment?

    I think the leadership would quash any cries for impeachment. Or maybe they don't, and the House moves on it and Republicans look even more unreasonable. I don't think it would get thrown out by the Supreme Court, because I can't think of anybody with standing to bring a lawsuit about this. There would have to be somebody with an injury in fact, and just being a taxpayer isn't enough.

    I understand Obama not wanting to talk about this possibility now. If he is willing to invoke this power, what's the sense of negotiating? But if it came to it, in the 11th hour, what would the costs to Obama be? He could look like the tough, decisive adult in the room, and prevent a second crash.

  3. Perhaps someone should point out that the McConnell plan and variations are the 14th Amendment solution by other means, ceding actual power and responsibility to the President, and thus similarly expressing and revealing the inability of the Congress to act positively while one of its two major parties remains fatally split both within its delegations, between houses, and nationwide. The difference is that under the McConnell stratagem the Congress at least preserves the appearance and residual potential of an equal role in government.

  4. “An awful day on Wall Street” can mean a variety of things. If you’re talking about the bond market, it will be up to Treasury to decide whether or not to stiff bondholders.

  5. Couves,

    Left it vague deliberately. There are lots of things that would be "awful day on WS" - some before Aug 2, some after, some depending on how post-Aug 2 might play out.

    But I need to also note that I've now, since posting, seen at least one article about one of the ratings agencies (S&P) that said that the agency was in fact talking about deficit reduction, not just the debt limit thing. I think that's nuts, but it is what it is, and if true then it would be more plausibly reasonable for Republicans (and, for that matter, Obama) to act how they're acting.


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