Debt Ceiling Kabuki Theater Update

It hasn't been a very productive weekend in Washington, D.C.

With the blowup of the talks between President Obama and Speaker Boehner, attention has now shifted to the Congress, but what kind of deal we might end up with, if any, is anything but clear:

First came the Biden talks. When those blew up, the Obama-Boehner talks took center stage. And when that failed, the McConnell-Reid talks looked promising. And after they faltered, the Obama-Boehner talks tried to find a new life.

Now it’s all come down to the Boehner-Reid-Pelosi-McConnell talks to solve the debt crisis. Notably absent? The president.

That’s not to say Saturday’s congressional takeover went well.

In a frantic bid to avoid causing a worldwide economic disruption, debt negotiations have shifted wholly to Capitol Hill, as a frustrated President Barack Obama has taken a step back and allowed House and Senate leaders to try to find a way out of the debt-ceiling debacle. After congressional leaders told Obama at the White House Saturday morning they would attempt to stave off the crisis before Asian markets open Sunday evening, leadership aides raced to put together a framework that both parties could support.

With the president staying out of the picture, congressional leaders struggled to make progress on a temporary two-step solution that raises the debt limit with some offsetting cuts.

In an extraordinary Saturday evening session in the Capitol, House Speaker John Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Nancy Pelosi (D-Calif.) sat around negotiating, on their own turf, without White House aides present.

The four smiled for the TV cameras during a photo-op at the top of their 50-minute meeting, but no one would say a word about whether they had made any progress.

“Bye,” Boehner told a reporter who asked about whether he could reassure the country a deal could be reached.

Byron York has the details of the plan that is allegedly being talked about behind closed doors:

House Republicans are finishing work on a new proposal to resolve the standoff over the debt ceiling.  The proposal, set to be finished and crafted into the form of a bill by Sunday, will be in two parts.  The first will combine a short-term increase in the debt ceiling with spending cuts.  The second will lay the groundwork for a longer-term increase in the debt ceiling coupled with far-reaching deficit reduction.
(…)

Work on the new proposal was underway before negotiations with the White House blew up on Friday.  Sources say the plan was being created last week, even as the House leadership devoted considerable time to passing the “Cut, Cap, and Balance” proposal.  Once the Senate Democratic leadership blocked “Cut, Cap, and Balance,” House leaders stepped up work on the new proposal.  Right now, the new direction is believed to be the only way forward.  “McConnell-Reid is just not a viable option in the House,” the aide says, referring to Senate Minority Leader Mitch McConnell’s complicated proposal to allow the president to increase the debt ceiling.

President Obama has said in the past that he would not agree to any deal that doesn’t raise the debt ceiling by a sufficient amount to carry the nation “well into” 2013. While there are probably electoral considerations behind his position on that issue, I tend to agree that this would be the best thing to do simply because of what we’ve seen unfold before us in the current debate. The initial request from the Treasury Department to raise the debt ceiling was sent to Congress in January. Since this is America, we ignored it for months until the credit rating agencies started warning us about it. Now, we’ve spent a month or so dancing this bizarre kabuki theater of off-and-on again negotiations, deals that never were deals, offers that were never really made and political grandstanding by all in the grand tradition of American politics. Now, here we are nine days before the August 2nd deadline and only a few hours before the Asian markets open (about which more below) and we have no deal. Does anyone really think that this process would go any smoother a year from now when everyone in Washington is worrying about the election? The answer, of course, is that it won’t and a short term deal would just put us back where we are right now, with possibly worse results.

Nonetheless, this seems to be the idea that Boehner and the Republicans are going forward with, with Boehner apparently saying that he wants to be able to present a deal later today before the Asian stock markets open. Nobody really knows how the markets would react to the news that talks are irreparably broken, but the odds that they’ll just shrug it off at this point seem pretty dim, which is why Boehner has this in mind (also, he doesn’t want the GOP blamed if there’s a market crash this week).  Even if there’s a plan announced, though, that doesn’t mean there will be a deal:

Perhaps taking the benefit for Obama off the table will be enough. I’m doubtful. It’s more likely that what we’re really doing now is wasting time until the markets plummet and Boehner’s members decide that a deal is better than no deal. And there’s a very good chance that the first major show of market concern could come tomorrow night, when the Asian markets open. Boehner is hoping to present a plan by then, but a plan is very different from a deal. A plan is something politicians can come up with. A deal, we’re increasingly finding, is something that we need the markets to force.

That may be exactly what has to happen, because, right now there doesn’t appear to be any agreement in Congress at all.  The Wall Street Journal says this morning that:

Congressional talks dissolved in recrimination again Saturday night, as the latest proposal for cutting the deficit and raising the government’s debt limit hit a wall with 10 days left before the U.S. begins defaulting on its obligations.

“House Speaker John Boehner (R-OH), hosted the leaders of both parties in his conference room at 5:30 p.m. in an attempt to resolve the impasse. The leaders were expected to issue a joint statement following the meeting, in part to reassure the markets. But no such statement was issued…”

At this point, the disagreement seems to be over the second stage of the two-part plan discussed above:

The two sides were still fighting over how to force Congress to produce the second round of savings. Boehner wants to set another debt-limit vote early next year, while Democrats are insisting on a plan that would postpone another debt-limit showdown until after the 2012 presidential election.

Boehner, Reid, Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Nancy Pelosi (D-Calif.) met briefly in Boehner’s office Saturday evening to try to break the impasse. They emerged without a fresh approach to the problem, and aides made plans to try again Sunday morning.

After the meeting, Reid issued a statement saying he was “deeply disappointed in the status of negotiations” and urging Republicans “to reconsider their intransigence.”

“Their unwillingness to compromise is pushing us to the brink of a default on the full faith and credit of the United States,” Reid said. “We have run out of time for politics. Now is the time for cooperation.”

Boehner spokesman Michael Steel fired back in a statement that Democrats have long been aware of “our principles to pass a bill that fulfills the President’s request to increase the debt limit beyond the next election. . . . The Democrats who run Washington have refused to offer a plan. Now, as a result, a two-step process is inevitable.”

Well no, it really isn’t. There have been plenty of discussions over the past three weeks about plans that would raise the debt ceiling once, along with very generous packages of spending cuts, but they didn’t go anywhere because Boehner didn’t have the support in his caucus for them, thanks in part to people for whom compromise is a four-letter word and Tea Party debt kamikazes who prefer to stick their heads in the sand and pretend we have nothing to worry about if the debt ceiling isn’t raised. Now, practically speaking it may no longer be possible for legislation that would accomplish that to be put in proper form and passed by both Houses, but whose fault is that? That deal could still be made, though, if the parties agreed to a short term debt ceiling increase to avert disaster, followed immediately(within a week or two) by a vote on the longer term package. Again, though, that requires compromise on both sides, something which, looking from the outside, no longer seems possible in Washington.

There is, of course, another problem with the plan that Boehner is working on. It may not be enough to calm the markets, and S&P and Moody’s may decide that it isn’t enough to assuage the concerns about American creditworthiness. By walking away from a Grand Bargain, our leaders in Washington may have led us into the worst of all possible worlds.

 

 

FILED UNDER: Barack Obama, Congress, Deficit and Debt, Politicians, US Politics, , , ,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. lunaticllama says:

    There’s actually a very simple plan available to avoid upsetting the markets. It’s called raise the debt ceiling like every Congress has done since the debt ceiling was created about 9 decades ago.

    It’s time to start considering the fact that Republicans are controlled by a revolutionary faction that wants to cause a financial panic.

  2. Moosebreath says:

    Hopefully this is all Kabuki and not Noh.

  3. MBunge says:

    The idea that Harry Reid and Nancy Pelosi will be easier to negotiate with than President Obama is so ridiculous that no one should be able to suggest it without laughing.

    Mike

  4. Gustopher says:

    Now, practically speaking it may no longer be possible for legislation that would accomplish that to be put in proper form and passed by both Houses, but whose fault is that?

    The Republicans. Really, it’s just their fault and no one else’s. They’ve turned a procedural vote into a crusade.

  5. jukeboxgrad says:

    It’s called raise the debt ceiling like every Congress has done since the debt ceiling was created about 9 decades ago.

    Yes. The debt ceiling has been around for a long time, and it has been raised many times. Since 1978, it has been raised 51 times. It was raised 17 times under Reagan. It was raised 7 times under GWB. And those important facts are related to these important facts: 3/4 of the debt Obama inherited was created under Reagan, Bush and Bush; Reagan tripled the debt and GWB almost doubled it.

    Non-amnesiacs understand all this. Republicans do not.

  6. PJ says:

    That deal could still be made, though, if the parties agreed to a short term debt ceiling increase to avert disaster, followed immediately(within a week or two) by a vote on the longer term package. Again, though, that requires compromise on both sides, something which, looking from the outside, no longer seems possible in Washington.

    If the Democrats aren’t going to support a short time deal, which they shouldn’t, then they aren’t going to support this either. That proposal is just a short time deal now and a long time deal that will be voted down in a week or two. What’s needed is a long time deal now.

    Right now, Democrats should just wait for the Asian markets to open.

  7. An Interested Party says:

    Non-amnesiacs understand all this. Republicans do not.

    Oh, I think Republicans understand all this perfectly well…they just want to use this vote to practice a little extortion…

  8. Lit3Bolt says:

    Republicans are economic terrorists. Anyone want to be on the side of economic terrorists…or even “moderate” with them?

    This event in Terry Schaivo x10000 yet when the chips fall down, a large party of the country would still reflexively back these fools even if they burnt the Constitution just because they’re part of the “red elephant team.” Slavish fandom at its finest.

    This is what fascism in America looks like.

  9. jan says:

    I was going to reply to one of the above. However, you all sound the same. “It’s the republicans fault.” is the starting point of each of your ‘discussions,’ and one can only wonder why any of you think diplomacy will be any different, higher up the political food chain, if the opposing factions think in as close-minded as you all do.

    IMO, both parties share responsibility for what is happening. However, if there is any one who bears the most weight it is the current party in power who is producing little, and waiting for the ‘other side’ to show their cards so they can say ‘no.’

    What none of you is even whispering about is ‘Where is the democratic budget? Where is a formal democratic proposal that has been introduced to either the Senate or House? The only work the democrats have done is hold ‘talks.’ That’s it! And, those talks mean squat, as they are fluid negotiations that can be alleged to have had the ‘goal posts’ changed, by someone like Boehner. The Speaker couldn’t make such a statement if the democrat’s
    plan was clearly in writing, as the goal posts would be solid and not in dispute.

    You guys have had a field day with the republican’s plan of Cut, Cap & Balance, only because you the public can read it, analyzing why you don’t like it. Again, where is there such a proposal by the democrats, something substantial, in writing, that others can either approve or pick apart??????????

  10. An Interested Party says:

    However, you all sound the same. “It’s the republicans fault.”…

    Considering that the Republicans will not allow a clean vote on the debt ceiling which would avoid this potential crisis, how is all of this not the Republicans’ fault?

  11. jan says:

    @An Interested Party:

    …because it’s like continuing to administer drugs to an addict who needs to detox. We’re in this debt ceiling mess because we are borrowing 42 cents out of every dollar we spend. Part of addressing the current crisis is not only raising the debt ceiling, but also making some drastic cuts to begin the process of healing our spending habits and addictions.

    No pain no gain…..

  12. jukeboxgrad says:

    we are borrowing 42 cents out of every dollar we spend

    If the GOP is really concerned about debt, then please explain why the Ryan plan keeps increasing the debt every year for another fifty years.

  13. jan says:

    @jukeboxgrad:

    ….and, where has the democratic plan been in shrinking the debt? They are the ones in power. Obama holds court in the oval Office. And, the Senate is controlled by the Dems. The republicans, have only held the House for 6 mos, and they have come up with some kind of plan to at least address entitlements. it was not meant to be a be all end all, but rather a start to at least a serious conversation about reform and change. All the dems have done, though, is thrash it, and then stand around and do nothing but complain.

    Don’t keep throwing this at the feet of the republicans. All they are doing is challenging the dems to do something other than simply raise the debt ceiling and do nothing else. And, don’t go on about Obama’s big plan, which was nothing but rhetoric. It’s very much like the budgetary rhetoric he put out last April where the CBO came out with the droll comment that you couldn’t rate a speech. And, that’s all the dems are doing is making speeches.

  14. jukeboxgrad says:

    where has the democratic plan been in shrinking the debt?

    You can find one of their plans here. It balances the budget at least 20 years sooner than Ryan does.

  15. jan says:

    @jukeboxgrad:

    Ok, let me get this straight….

    Ryan’s Budget was formally presented in the House — right?

    The People’s Budget was formally presented where?????

  16. An Interested Party says:

    Asking where the Democratic Plan is does not answer the question of if the Republicans are supposedly so concerned about debt, than why does the Ryan Plan not balance the budget for many, many years in the future…furthermore, if they really were so concerned about the debt, they would allow tax increases, in addition to spending cuts, to become part of the conversation…

  17. jukeboxgrad says:

    The People’s Budget was formally presented where?

    You implied there was no plan. So I showed you a plan. Now you’re making a fuss about “formally presented,” as if that matters. It doesn’t.

    Also, what he said.

  18. jukeboxgrad says:

    if they really were so concerned about the debt

    If they really were so concerned about the debt, they would not have helped Bush double the debt. The GOP has fiscal credibility only with amnesiacs.

  19. jan says:

    @jukeboxgrad:

    ..of course. We’re talking about ‘plans’ presented to Congress. All other plans aren’t involved in this conversation. You might have a plan, the guy down the street might have one too. But, none of these independent plans, albeit, they might be better than the one’s politicians make up, are not ones being debated and addressing the current crisis.

  20. jukeboxgrad says:

    You might have a plan, the guy down the street might have one too.

    The plan I cited was not created by “the guy down the street.” It was created by members of congress. That’s enough to make it a serious plan. I realize you’d rather ignore it, but that’s your problem.

    And speaking of ignoring things, there are a bunch of questions you’ve been ducking.

  21. jan says:

    @jukeboxgrad:

    So, why hasn’t this ‘plan’ been formally presented as part of the ongoing debate?

    And speaking of ignoring things, there are a bunch of questions you’ve been ducking.

    I think I’ve been doing a pretty good job of responding to most people’s posts to me. Some are redundant. Others are kind of wacky. But, the ones that warrant a response and that I’ve seen are getting them, to the best of my knowledge.

  22. jan says:

    @An Interested Party:

    furthermore, if they really were so concerned about the debt, they would allow tax increases, in addition to spending cuts, to become part of the conversation…

    …because most conservatives believe the fiscal problem to be caused by excess and reckless spending and not in under-taxation. If you have a sore throat it seems worthless to take a remedy for athletic’s foot. If you have a spendig problem, why tax more people, raise more revenue, which in many cases will not go to the debt but to more of Obama’s ‘investments.’

  23. jukeboxgrad says:

    So, why hasn’t this ‘plan’ been formally presented as part of the ongoing debate?

    Obama hasn’t presented that plan because it embodies Democratic principles, and he’s more of a Republican than a Democrat (link).

    I think I’ve been doing a pretty good job of responding to most people’s posts to me.

    One of the questions you are ignoring is here.

    most conservatives believe the fiscal problem to be caused by excess and reckless spending

    Where were these so-called conservatives when Reagan tripled the debt, and when Bush almost doubled it?

  24. jan says:

    @jukeboxgrad:

    For you to say that Obama is a republican is pure rubbish. It’s like some republicans calling Boehner a RINO or democrat because they don’t think he is going far enough. Both men are representing their parties in partisan ways.

    I don’t believe what you are saying about the Ryan Plan. And, besides, his plan was a framework, something which he openly said was subject to revision.

    We’re not talking about Reagan, Bush, or any other era…it is all about the here and now. Besides, under both Reagan and Bush the economy was doing better and the UE rate was much lower. We are going through tough times, which is entailing new ways for handling accentuated problems.

  25. jukeboxgrad says:

    For you to say that Obama is a republican is pure rubbish.

    Do you understand the difference between an assertion and an argument? I guess not. You have addressed this many of the facts that are pointed out in the article I linked: zero. But this is typical for you.

    I don’t believe what you are saying about the Ryan Plan.

    You are painfully ignorant about highly relevant facts. This is also typical for you. This is what I said about the Ryan plan:

    If the GOP is really concerned about debt, then please explain why the Ryan plan keeps increasing the debt every year for another fifty years.

    You “don’t believe” that the Ryan plan keeps increasing the debt every year for another fifty years? Then you are incredibly ignorant about the most basic characteristics of that plan. See here:

    The percentage of GDP shifts from negative (representing a deficit) to positive (a surplus) in 2063.

    And if you think that politifact.com invented that information, you can go directly to roadmap.republicans.budget.house.gov to see the relevant table (pdf). There you can see Ryan’s own numbers, which indicate that his plan calls for running a deficit (and therefore adding more and more debt) every year between now and 2062.

    You claim to be concerned about “healing our spending habits and addictions,” while being too ignorant to realize that Ryan’s concept of “healing our spending habits and addictions” is to keep borrowing more and more money every year for the next 50 years.

    The Ryan plan proves that underneath all the posturing, the GOP really does believe what Cheney famously said, that “deficits don’t matter.”

    What really matters to the GOP is not cutting deficits and debt. What really matters to the GOP is making sure that rich people pay low taxes, while also making sure that programs helping the non-rich are destroyed. That’s why the Ryan budget chooses to make even more tax cuts (beyond the Bush tax cuts for the rich), even though that means deficits and growing debt for another 50 years.

    besides, his plan was a framework, something which he openly said was subject to revision.

    Of course it’s “subject to revision.” If the GOP ever has the power to do so, they will implement that plan, except that it will be even more extreme, and probably take 100 years to balance the budget, instead of just 50.

  26. jukeboxgrad says:

    We’re not talking about Reagan, Bush, or any other era

    Are you familiar with the concept of ‘fool me once?’ I guess not. Ryan himself helped Bush double the debt. Bush’s GOP congress, including Ryan, helped Bush pass Medicare Part D, even though it “added $15.5 trillion (in present value terms) to our nation’s indebtedness.” This is more proof that Ryan and the rest of the GOP don’t care about debt, and they don’t really care about spending, either. They just pretend to care about those things when they think the pretense can help them politically. And they rely on the support of aggressively ignorant amnesiacs like you.

  27. jan says:

    @jukeboxgrad:

    It’s pretty futile to address you point by point, as most of your ‘beefs’ and basic philosophy hinges on class warfare. It’s all the rich people’s fault!

    In part you are right, because there are a lot of scumbag rich people. Soros, the backer of so many dem projects, like moveon.org or the SOS project during the previous midterms, is at the top of the list. But, corrupt rich people come in all colors, shapes, and party affiliations, and merely having tons of money isn’t what makes them corrupt. It’s how you use and/or abuse it.

    So, I don’t find fault with people being rich. Just like I don’t find fault with people for being poor. Although there are plenty of scumbag poor people as well, who take advantage of the system, go on the dole and act like parasitic human beings in order to get what they want for free. Consequently, IMO, it is both of these lower denomination of homo sapiens, from the rich and poor categories, who need oversight and consequences.

    However, the progressives tend to dwell only on who has the money and who doesn’t, leaving all other associated defects out of the picture. Just like you demean Ryan’s plan for at least extending some kind of reform (which would probably be changed a million times), and you batter him for his vote on the medicare plan D, when that was all about George Bush being a “compassionate conservative,” while neglecting to add up the costs. BTW, I think Ryan was wrong on this vote. But, then again Obama voted against raising the debt limit during Bush’s term too, and now is condemning republicans for doing the same thing! So, there are all kinds of incongruencies, on both side of the aisle to footnote and cast at each other.

    Nonetheless, in my mind, the most important thing to be discussing now, is what is the right action to take for the current debt ceiling issue.

  28. An Interested Party says:

    But, then again Obama voted against raising the debt limit during Bush’s term too, and now is condemning republicans for doing the same thing!

    When you get a chance, pick up a dictionary and look up the words “context” and “nuance”…when the President did that, there were more than enough Republican votes to raise the debt ceiling…in other words, he voted “no” knowing full well that it would still pass…

  29. jan says:

    when the President did that, there were more than enough Republican votes to raise the debt ceiling…in other words, he voted “no” knowing full well that it would still pass…

    So, you’re giving Obama a pass because his vote was nuanced or perhaps simply ‘symbolic’ in it’s gesture of opposing raising the debt ceiling? Would that look good on his resume, that he was consistent in everything Bush put forth? Hmmmm….yep, that shows leadership.

    BTW, do you work for the press? Because that’s how they script obama’s blunders too, by making convenient excuses for his votes, gaffes etc.

  30. jukeboxgrad says:

    Jan, what a surprise that you wrote a 300 word comment which continues to do exactly what you’ve been doing all along: run away from the question I asked you. Let’s review. I said this:

    If the GOP is really concerned about debt, then please explain why the Ryan plan keeps increasing the debt every year for another fifty years.

    Your first response was to not respond at all. You ignored the question. Then when I pointed out that you were ignoring the question, you responded as follows:

    I don’t believe what you are saying about the Ryan Plan.

    In other words, you don’t believe that the Ryan plan keeps increasing the debt every year for another fifty years. So I responded to you by showing you Ryan’s own numbers, from Ryan’s own web site, indicating that the Ryan plan does indeed keep increasing the debt every year for another fifty years.

    And how did you respond? By continuing to run away from the question. Is it that the question is too complicated for you? Then I’ll ask you a simpler question. In what year does the Ryan plan stop producing deficits? Hint: if you follow the link I provided, you’ll be able to find Ryan’s own numbers on Ryan’s own web site.

    I’m sure I can count on you to continue your vivid demonstration of how you ignore and deny all inconvenient facts.

  31. jukeboxgrad says:

    Jan:

    Obama voted against raising the debt limit during Bush’s term too, and now is condemning republicans for doing the same thing!

    Wrong. It’s not “the same thing.” AIP has already explained this to you, and you can find a more detailed explanation here.

  32. An Interested Party says:

    @Jan: Do you work for Fox News? Because you seem to like regurgitating just about every single negative talking point they have concerning the President…