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Desperation (Not Deal-Making) Takes Hold in Debt Talks Desperation (Not Deal-Making) Takes Hold in Debt Talks

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The Daily Fray

Desperation (Not Deal-Making) Takes Hold in Debt Talks

July 19, 2011

Senate Minority Leader Mitch McConnell's plan--which gives Congress a chance to show its disapproval of a debt limit increase but little power to stop it--is moving from being considered Plan B to Plan A, The Hill's Alexander Bolton reports. Meanwhile, former President Bill Clinton is floating an even more drastic option--completely ignoring Congress and invoking the 14th Amendment--which says the full faith and credit of the U.S. "shall not be questioned"--to pay America's debts on time. Clinton says if he were in the Oval Office, he would take that route "without hesitation, and force the courts to stop me."

Talk of a grand bargain has moved to contigency plans. Why the lowered expectations? Think of the debt limit negotiations as a sweaty dance club just as the lights blink for last call. When you walked in hours (weeks) earlier, looking your best in your towering heels and high poll numbers, you thought you had a great chance to get the sexiest plan on the dance floor. No compromising this time. But you missed a few opportunities--a grand bargain, a smaller deal that at least had a bit of entitlement cutting--and now you're getting desperate and your beer goggles are making the frumpier, sweatier legislation look maybe not so bad.

Despite President Obama's threat to veto the bill, House Republicans are moving forward on their "cut, cap, and balance" plan, a proposal that allows the debt ceiling to rise only if Congress passes a constitutional amendment requiring a balanced budget. But there's no way it's getting past the Democratic-controlled Senate. The conventional wisdom is that once House Republicans get that symbolic vote out of their system, they'll be ready to vote for an alternative. But those folks would be wrong, Politico's Jonathan Allen and Jake Sherman report the GOP has no backup plan.

 

As Politico reports, debt negotiations don't look like they're getting any better. "The bottom line: Nothing yet--not the McConnell plan, not simply getting a vote on the cut, cap and balance measure--has moved the center of the House Republican Conference toward a deal." Talks between Senate Majority Leader Harry Reid and McConnell have been put on a "temporary freeze," Bolton reports, while the GOP prepares to vote on "cut, cap, and balance." Further, the "full group of congressional leaders, however, has not met with Obama since Thursday, and House GOP leaders on Saturday ignored a 36-hour deadline Obama set for them to come up with a politically viable plan."

Which could be why Clinton told National Memo's Joe Conason, "I think the Constitution is clear and I think this idea that the Congress gets to vote twice on whether to pay for [expenditures] it has appropriated is crazy." The Treasury Department has said it's not pursuing the 14th Amendment option. But Bruce Bartlett, who worked for Treasury under George H. W. Bush, says it should be on the table, for the sake of national security. As has been frequently pointed out in the debt debate, China holds a huge amount of our debt--a quarter owned by foreign countries, and 12 percent of the total held by the public. Why? Because China is very risk-adverse, Barlett explains in The New York Times, and Treasuries "are assumed to have zero risk of default." So if the U.S. defaulted it would be a very big deal, even if it were only temporary. 
The idea floated by Republicans such as Representative Paul D. Ryan of Wisconsin, the chair of the House Budget Committee, that the Chinese won't mind if there is a "technical default" and they get their money a few days late is total nonsense and gross self-delusion...
 
It goes without saying that national defense is a core government function, one that has long included America's economic interests, such as protecting the supply of oil. It would be myopic in the extreme to view the flow of oil to the United States as a legitimate national security issue but to view the flow of foreign capital into Treasury securities as a matter of no particular concern.
Despite these high stakes, many conservative groups are intensifying pressure on Republicans that they not cave. Club for Growth, FreedomWorks, and RedState issued statements strongly opposing McConnell's plan, Politico's Mike Allen reports. "We will refrain from backing any Member of Congress ... who supports," the proposal, they write. "Those of us with Congressional scorecards commit to using [the plan] as a 'key vote' that will carry the heaviest weight possible." 
 
The New York Times' David Brooks blames conservative activists for throwing away a chance to get a Democratic president to make major cuts to entitlements, not to mention cut government spending by $3 trillion over 10 years, when they pressured House Speaker John Boehner to back away from Obama's $4 trillion "grand bargain." Brooks writes:
American conservatism now has a rich network of Washington interest groups adept at arousing elderly donors and attracting rich lobbying contracts. For example, Grover Norquist of Americans for Tax Reform has been instrumental in every recent G.O.P. setback. He was a Newt Gingrich strategist in the 1990s, a major Jack Abramoff companion in the 2000s and he enforced the no-compromise orthodoxy that binds the party today.
 
Norquist is the Zelig of Republican catastrophe. His method is always the same. He enforces rigid ultimatums that make governance, or even thinking, impossible.
One bright spot: At least lawmakers are suffering for their inability to craft a deal. The Hill's Molly K. Hooper writes that the Senate is now committed to working weekends until the debt limit is raised. And several members of Congress said they hadn't even bothered to plan family vacations for August. Meanwhile, House Majority Leader Eric Cantor had to stay in boring old Washington Monday night, instead of attending a glitzy fundraiser with Goldman Sachs head Lloyd Blankfein in Manhattan as he'd planned, the New York Post reports. 
 
And despite all the doom and gloom, Missouri Senator Claire McCaskill is hopeful. She tweeted Tuesday morning, "In the room. 25 Rs,21Ds, 1 I here. Folks are coming and going but it's basically 50/50. Could this be the moment that we compromise?"
 
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