Saturday, September 28, 2013

Workin' for the Shutdown--

get along, get along.*

The next two weeks, the fifth round of a scheduled ten-rounder, will be the test of courage of John Boehner in his leadership of the House of Orange.  He's going into the fray with his chin sticking out, suggesting that he can take a punch and then get in his licks, but there's a good chance for a knockout.

A better analogy to a boxing match, single combat with well-defined rules, would be a steel cage match (all against all, no way out) or a gang streetfight.  He only gets to lead the Jets if he's willing to stand up front, his bully boys behind, and bear the brunt of the counter-attack.  His gang will put up a fight, regardless of whether his profile shows the false courage of a punk in a game of chicken, or whether he takes the truly courageous act and goes against his bloodthirsty backers' taste for "action".  But if he makes a deal, they will turn on him afterward.

In this opening encounter, expect Boehner to stand his ground.  No one is really afraid of the clock running out on the continuing resolution funding the government for a day or two or six.  In that sense, it will not prove to be the decisive proof of the Republicans' inability to be anywhere near the government that President Obama might hope for, going into the 2014 Congressional elections in which he will need a big win.

A few days of government furloughs will not cause too much pain to the public--fortunately, the peak season for the national parks, which will be closed, has passed.  If there is an agreement of some sort by the end of the round, even if only a temporary one that allows the sixth round to be scheduled for late this year, a few days of shutdown will be just another bump in the road.

The real crisis, the one that would do permanent damage, is the deadline of the debt ceiling, which Treasury Secretary Lew has indicated would occur around the middle of October.  I suspect that the resolution of the shutdown will be folded into the negotiation around the raising of the debt limit, something which absolutely must be approved in some form.  Treasury will come up with a formula to save the government a couple more days to work with, possibly using a "payday loan" to convert some of the shutdown/sequester savings into a temporary debt payment.

It is impossible to think that the Republicans can permit a default on Federal government debt and preserve intact anything like a semblance of a reputation as fiscal conservatives.  There would be one immediate, permanent result:  an increase in the cost of our national debt, as our bonds and T-bills would no longer be the safe instrument the markets crave.   Figure another $100 billion in the cost of our debts, every year, for the next generation or so (until all this crew are permanently gone from the scene and a more responsible elite emerges to run our government).  Compared to that, anything the Republicans could hope to achieve in entitlement reform or discretionary spending would be chicken feed (feeding a giant beast).

Boehner knows this, so his challenge is to get a deal which will not rupture the full faith and credit of the US, while not appearing to give up too easily to President Obama and getting something in return. A lot of the more reasonable, establishment Republicans, like McCain and Romney, realize this, and are not signing on for the suicide pact.  McConnell knows this--and he has a possibly difficult re-election campaign next year--so he will keep his head and wattle down as much as possible.  Obama knows this, so he will look to find some bone to offer the hungry dogs, something that is clearly a one-time, not to be repeated, concession of some kind.

I predict the concession will have two components, and that it will come in two parts on Oct. 18 (after a huge drop on Friday, and before the Monday trading session of the week when the limit would be breached):  1) agreement to approve the Keystone XL pipeline and to allow some additional fossil fuel development (offshore, underground, or near but outside the Arctic preserves); and 2) when that is not enough, agreement to change the formula for the cost-of-living index for Social Security, beginning in 2017 or so.  As I've suggested before, 2) is not unthinkable, really, and is a reasonable trade-off to preserve the program's funding for the younger generation without much cost to today's retirees.  1) is a really bad idea that will cause him to be hated by the Left, which is beginning to rise up against him, but I feel that he is leaning that way anyway, and preserving the current low cost of gasoline will net him gains in popular support in 2014.  It's not exactly a Profile in Courage, but the rules of Chicken apply to him, too, and a head-on collision is the courage of a fool.

There is one other way for Obama to go, and I encourage him to threaten it, even to use it if these bids for compromise are spurned.  In the final days before the breach, he can announce that he simply will not allow the US to default on its obligations.  Whether it's by issuing platinum coins, or posting a challenge to the constitutionality of the debt ceiling (it can be argued that it is contrary to the 14th Amendment, which states that the debts of the US will not be questioned), or simply violating the statutory debt limit and daring Congress to take action.  This could be the "impeachable offense" the most rabid Tea Partiers have sought; I'd say bring on the challenge, as this is a battle Obama is sure to win, either in the courts or in the Senate (after a partisan Republican majority once again sinks to the level of a dubious impeachment vote).

*Cf. The Clash, "Clampdown", from "London Calling"

1 comment:

Chin Shih Tang said...

So, it actually got done before the end of the day on 10/16 (though I was right that Treasury had a couple days' reserves beyond what they said)--we didn't get as close to the brink as I thought. And, there were no concessions--this time. This was, though, only the fifth round of the scheduled 10-rounder--the next one comes up in 3-4 months.

9:12 PM, October 16, 2013