Falling back to the debt ceiling?

posted at 12:11 pm on December 5, 2012 by Ed Morrissey

We’ve hashed out the political dynamics of the fiscal cliff a number of times, with its ever-diminishing options for House Republicans.  The New York Times’s Jonathan Weisman hears from aides in House Republican leadership that if Democrats won’t negotiate in good faith to resolve entitlements as well as revenues, the GOP may just extend the middle-class tax rates and wait until Barack Obama needs to borrow more money to cover costs for the former:

With President Obama insisting on higher tax rates for affluent Americans and winning public support for the idea, Congressional Republicans find themselves in an increasingly difficult political spot and are quietly beginning to look for a way out.

Senior Republican leadership aides say they are contemplating a fallback position since a standoff over expiring tax rates will be portrayed by Democrats as evidence that the opposition is willing to allow taxes to rise on the middle class to keep taxes from rising on the rich — and their intransigence could mean taxes go up on rich, poor and middle class alike.

The leadership officials now say that if no deal can be struck to avert the automatic expiration of all the Bush-era tax cuts and the onset of deep, across-the-board spending cuts, they could foresee taking up and passing legislation this month to extend the tax cuts for the middle class and then resume the bitter fight over spending and taxes as the nation approaches the next hard deadline: its statutory borrowing limit, which could be reached in late January or February.

Why take that option?  Because thanks to the sequestration deal from the summer of 2011, Democrats have no real reason to negotiate before the end of the year:

But Republicans also know they have a problem: many liberal Democrats are more than willing to return to the Clinton-era tax code, and to allow across-the-board spending cuts to take effect, which disproportionately affect the military, rather than compromise too much with Republicans after the strong Democratic showing in the elections.

“It’s a terrible position because by default, Democrats get what they want,” said Representative James Lankford, Republican of Oklahoma, who admitted his party is boxed in.

The fight looks better when the debt ceiling comes into play, which won’t happen for a couple of months:

In the debt ceiling fight, the tables might turn. Many conservative Republicans say they are willing to let the nation default if Congress refuses to cut spending. If the tax rate fight is resolved by the time the debt limit increase is needed, Democrats will find themselves without the leverage they now have with the expiration of the lower tax rates a certainty unless Congress acts affirmatively.

Greg Sargent believes that Republicans are fooling themselves if they think Obama will blink in a game of chicken over the debt ceiling:

So here’s a prediction: If this happens, Obama will refuse to negotiate over the debt limit, just as he’s refusing to negotiate over tax rates on the rich. The message will be clear: We’re not talking, if the debt ceiling (the nation’s economy) has a gun pointed at its head.

Now, it’s true that if the middle class tax cuts are extended, Democrats lose a key piece of their leverage, and the remaining things Dems will want — an extension of the payroll tax cut and unemployment insurance, and a rise in the debt limit — will give Republicans a basis for renewing the push for deep entitlement cuts. But there is reason to believe that this time, Obama and Democrats will tell Republicans that they won’t brook the debt ceiling having any part in the talks.

The argument is straightforward: This isn’t 2011 anymore. Last time, Republicans had won an election; this time, Obama and Democrats won. Polls show the public increasingly sees Republicans as the intransigent party and the primary obstacle to compromise in Washington. The economy is on the mend; by threatening another drawn out debt limit battle, Republicans are recklessly putting the recovery at risk. The GOP’s brand is in tatters, and the party will ultimately cave on this point rather than risk more public blame for threatening to tank the economy again. Powerful GOP-aligned interests in the business community, including the Chamber of Commerce, won’t tolerate another debt ceiling fight. Having perennial fights over whether the country will pay its bills is no way to govern, and it simply must stop. The only way to put an end to this madness is to refuse to negotiate if the GOP insists on trying it again. Therefore, no discussions over the debt ceiling. Period.

Don’t bet on it.  After seeing Democrats refuse to negotiate in good faith this month, House Republicans won’t hesitate to return the favor, especially when it comes to getting some traction on entitlement spending, which is the real driver of the deficits and spiraling debt position of the US.  Those powerful GOP-aligned interests like the Chamber of Commerce know that default is coming without serious entitlement reform, because those programs are unsustainable even in the medium term.  Having a default now or a few years from now doesn’t make much difference, and having one at the present levels of debt to GDP is more solvable than it will be down the road.

Of course, none of this will be necessary if both parties agree to give significantly on their trench warfare.  Former Obama OMB chief Peter Orszag writes that Republicans have to agree to add revenue through raising marginal tax rates, but that Democrats can’t be serious if they think that will solve the deficit issue:

So the question for the Democrats is: Even if you win higher marginal tax rates, how do you plan to get the debt limit increased? The Republicans, after all, could cave on raising taxes but still be unwilling to include a debt-limit increase in the agreement, absent any changes to entitlements. In that case, the fiscal-cliff victory would be Pyrrhic, with another crisis arriving in February or March.

In any case, Democrats should affirmatively want entitlement reform that is progressive and puts the crucial programs on a sounder footing. …

The administration claims that it is committed to reforming Social Security — just not right now. But why would reform be easier in, say, 2014, when nothing is forcing action, than it is today? (And if the problem is that Republicans are reluctant to vote for additional revenue as part of Social Security reform, how exactly does that change over the next year or two?)

We should start to see some real efforts to reach a compromise starting next week.  This week is when both sides rev up their engines to demonstrate their willingness to go full speed in the game of chicken.  By next week, Congress will have to have legislative language to put in place in order to get a bill passed in time to deal with the fiscal cliff in all of its phases. If we’re hearing nothing but engines revving by the end of next week, John Boehner may well decide to reverse the leverage and put Democrats in the vise of entitlement reform vs default after the first of the year.

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Obama wants to have Chinese ruling powers.

Schadenfreude on December 5, 2012 at 12:14 PM

http://www.theblogmocracy.com/2012/12/05/republicans-are-looking-for-new-ways-to-lose-and-finding-them/ The Blogmocracy and Norquist are right about this: More sunlight for the Sun King’s plans.

Mr. Joe on December 5, 2012 at 12:15 PM

Let sequestration happen.

Let the eax cuts expire.

Let the debt hit the ceiling, and don’t raise it.

Balanced budget.

Begin negotiations.

Profit…

JohnGalt23 on December 5, 2012 at 12:15 PM

Obama wants a recession and the destruction of the middle class.

Anyone who believes otherwise is a fool.

Schadenfreude on December 5, 2012 at 12:16 PM

Add it up, and it’s only Dec. 5, 2012.

2013 will be most schadenfreudig. Suffer, all who brung Obama, from the left to the right.

If you own a business fire a handful of millennials. They brought you Obama, twice.

Always starve the Looters.

Schadenfreude on December 5, 2012 at 12:17 PM

THE GOP IS DEAD!

Refuse to raise the debt ceiling. Damn the torpedoes!

Let Obama seize private property, let him do what he wants to do.

PappyD61 on December 5, 2012 at 12:17 PM

May Boehner and McConnell be fully destroyed.

Schadenfreude on December 5, 2012 at 12:18 PM

Here is Ramirez on taxes! Great as usual!

http://www.investors.com/editorial-cartoons/michael-ramirez/635726
L

letget on December 5, 2012 at 12:18 PM

Here is the problem we have, the same one most businesses have.

You can compete with good tough competition, smart, good negotiators who may be better than you, but you get in the ring and you battle it out.

But you cannot compete with stupid people, they cannot be trusted, they make decisions that you can’t be prepared for, often you don’t even have an answer because they just come out of left field with something that isn’t even sensible…often I think Obama is like that, some of the things just don’t make sense, and he has people, like Pelosi and Reid, powerful people, who will accept anything not to give up their power.

You can compete with smart people…but not stupid people…

right2bright on December 5, 2012 at 12:18 PM

THE GOP IS DEAD!

PappyD61 on December 5, 2012 at 12:17 PM

Rejoice! It’s a good thing!

Schadenfreude on December 5, 2012 at 12:18 PM

Show me that the gop isn’t dead?

PappyD61 on December 5, 2012 at 12:19 PM

The bottom line is that no matter what happens with this…
…..the American taxpayer will be the one to suffer.

In the end…it’s not their money…they have nothing to lose….and have no problem shoring up their own political agendas with our money.

Baxter Greene on December 5, 2012 at 12:19 PM

Here is Ramirez on taxes! Great as usual!

letget on December 5, 2012 at 12:18 PM

He correctly calls them “Taxes”.

May all the heads of those who call them “revenues” esplode, pronto. I’d love to see all the brains splattered, from the left, to the right.

Schadenfreude on December 5, 2012 at 12:20 PM

“The Clinton era tax code”…why isn’t anyone – to include these big government republicans – talking about returning to the Clinton era budget and spending? You know why? Because Boner and Obama are both establishment pigs that love to spend.

MoreLiberty on December 5, 2012 at 12:20 PM

The smartest thing the Republicans can do is pass a budget Obama won’t sign and go home.

We will get budget cuts with sequestration and then real cuts when the debt limit gets reached.

If the Republicans actually want to cut spending, this is an easy path to winning.

But…it is clear that the leadership does not want to cut spending anymore then Obama does.

18-1 on December 5, 2012 at 12:20 PM

Greg Sargent believes that Republicans are fooling themselves if they think Obama will blink in a game of chicken over the debt ceiling:

Hence the calls by so many conservatives to “Let it Burn“. It’s a foregone conclusion that the GOPe under John “Bonehead” Boehner are going to cave to Obama, and cave BIG.

What Boehner is doing is nothing less than GOPe Kabuki Theater so that he can continue to maintain the fiction of being a “Fiscally Conservative” Republican leader.

SWalker on December 5, 2012 at 12:21 PM

May Boehner and McConnell be fully destroyed.

Schadenfreude on December 5, 2012 at 12:18 PM

These two are the worst bumbling idiots I have ever seen.

THERE.IS.NO.LEADERSHIP.IN.THE REPUBLICAN.PARTY.

The GOP is completely lost.

portlandon on December 5, 2012 at 12:21 PM

Show me that the gop isn’t dead?

PappyD61 on December 5, 2012 at 12:19 PM

Jeb Bush 2016!

/sarc

ShainS on December 5, 2012 at 12:23 PM

Wonderful, but the problem is these two-bit politicians in the two branches of government are playing with my life and the lives of millions others just like me and it’s really starting to grate on us. When people lose faith in their government and their leaders the dynamics change dramatically and I think that is about to occur.

rplat on December 5, 2012 at 12:24 PM

What’s wrong with these GOP morons???…

PatriotRider on December 5, 2012 at 12:24 PM

Fiscal year 2000 the federal government spent $1.79 trillion, in FY 2010 they spent $3.46 trillion. I just want to go back to Clinton Era spending.

MoreLiberty on December 5, 2012 at 12:24 PM

When people lose faith in their government and their leaders the dynamics change dramatically and I think that is about to occur.

Are there still people with faith?

MoreLiberty on December 5, 2012 at 12:25 PM

So as a serious suggestion various tea party groups should credibly threaten to primary Boehner if he caves.

Right now there is no personal downside for him if he caves. None. Let’s give him a reason to do the right thing.

18-1 on December 5, 2012 at 12:26 PM

I think the GOP should frame the fiscal cliff debate as having the purpose to eliminate the need to ever raise the debt ceiling again. If we don’t spend more than we take in, then we don’t need more debt. Negotiate the best deal you can on the fiscal cliff, and then when the Dems come asking for a debt ceiling increase, the public will be asking why we still need more debt.

dcman98 on December 5, 2012 at 12:27 PM

The GOP is completely lost.

portlandon on December 5, 2012 at 12:21 PM

You say this as if it’s a bad thing. Let them go to Hell.

Schadenfreude on December 5, 2012 at 12:29 PM

Passing the middle clas stax cuts is a good idea. Earlier this week, the GOP was considering voting PRESENT on the middle class tax cuts, which was a horrible idea that would’ve reinforced the impression that Republicans care only about the rich.

But would Obama or the Senate sign that bill? My guess is that they would not, safe in the knowledge that the media would still blame the GOP for all of the resulting tax increases.

hawksruleva on December 5, 2012 at 12:30 PM

Jeb Bush 2016!

/sarc

ShainS on December 5, 2012 at 12:23 PM

Kind note – good sarc doesn’t need esplainin’ or sark tags.

Schadenfreude on December 5, 2012 at 12:30 PM

It’s not a tax cut – just let all the rates go back to Clinton era.

Let AmeriKa see that Obama hates the middle class.

Schadenfreude on December 5, 2012 at 12:31 PM

THERE.IS.NO.LEADERSHIP.IN.THE REPUBLICAN.PARTY.

The GOP is completely lost.

portlandon on December 5, 2012 at 12:21 PM

What would you do that could actually be done, given an intractable progressive Democrat in the WH and a Democrat-controlled Senate?

hawksruleva on December 5, 2012 at 12:32 PM

Why don’t we just seize all assets of everyone making over $200,000 a year?

Take it Obama!!!!

Do it!

And take everything you want……….

PappyD61 on December 5, 2012 at 12:32 PM

Love your dummies, AmeriKa.

You sure abound with them, from the very top on down.

Laughin stock of the world!!!

Schadenfreude on December 5, 2012 at 12:32 PM

The specific offer I would make as Boehner would be Clinton era tax rates for Clinton era spending rates

As soon as the Democrats present a plan for a $2.6T budget (inflation adjusted Clinton spending) we’ll append a tax rate increase and pass it.

The Democrats would never go for this, but it would take away one of their talking points, and would be better then getting a debt ceiling enforced spending limit.

Of course the Republicans are too cowardly to go for this.

18-1 on December 5, 2012 at 12:33 PM

What’s wrong with these GOP morons???…

PatriotRider on December 5, 2012 at 12:24 PM

They’re just as corrupt and dishonest as the Dem’s.

JPeterman on December 5, 2012 at 12:33 PM

Didn’t those that are rich take it all through the corrupt and immoral Capitalist system?

Seize the property, nationalize everything, take it all.

It’s there for the taking Obama.

The media would praise you. Boehner and McConnel would “demand answers” and then ask to be on the select committee /agency assigned to “redistribute” it.

Forward!

PappyD61 on December 5, 2012 at 12:36 PM

Let the debt hit the ceiling, and don’t raise it.

Balanced budget.

Begin negotiations.

Profit…

JohnGalt23 on December 5, 2012 at 12:15 PM

You don’t think Obama would seize some emergency powers to disable the debt ceiling entirely? The press would approvingly note the unprecedented nature of the emergency. He might even wait until a couple of Social Security checks fail to go out, which would make him a hero to millions of people.

It’s easy to say ‘let it burn’, and I often feel that way myself. But we need to remember that our goals aren’t theirs. A sudden seizure of all sorts of power by the Executive isn’t likely to end in a managed national bankruptcy. Whatever ill befalls the nation in the next four years, Obama will use as an excuse to extend liberal power.

hawksruleva on December 5, 2012 at 12:38 PM

What would you do that could actually be done, given an intractable progressive Democrat in the WH and a Democrat-controlled Senate?

hawksruleva on December 5, 2012 at 12:32 PM

Well, “IF” Boehner weren’t actually a progressive himself, more interested in protecting his own job at the expense of the nation, then protecting the nation and avoiding the fiscal cliff, he could pull the House’s ultimate nuclear card.

The House of Representatives holds the nations purse strings. Bonehead controls the House of Representatives. He CAN shut the government down simply by refusing to authorize ANY expenditures. (that is how Newt got Bill Clinton to move towards the center)

Boehner could walk right straight into the fire and drag Emperor Obama in with him, see who cries Uncle first. Neither Obama nor Reid can pay one single federal expenditure on their own. Boehner won’t of course because he is every bit the Marxist Progressive that Obama is.

SWalker on December 5, 2012 at 12:42 PM

and still these Rs continue to not push back on the MSM Obama approved messaging.

CoffeeLover on December 5, 2012 at 12:42 PM

The debt ceiling is not a gun to the country’s head. It’s a pressure clip on the country’s heroin mainline. For chrissake, let’s just remove the clip and everybody will be happy, right until the syringe is empty.

Archivarix on December 5, 2012 at 12:43 PM

We have two different things going on here. We can’t get into a situation where we win the battle but lose the war. In other words, we dig in and let things go over the cliff, we take the blame, and then lose the House in 2014. Right now we are sitting in a pretty good position for 2014 if we can continue to allow the Democrats to own the problem. This is a mess of their creation. They built that cliff in the first place.

What we can not allow to happen is for the Democrats to be able to say “you lost your jobs and are on unemployment and food stamps now because the Republicans wanted to protect the ‘rich’ from tax increases”.

We have to give a little, let some revenue go up, the economy STILL goes in the toilet but now we can say “We gave them what they wanted, they tanked the economy, we need to get these idiots out of the Senate in 2014″.

crosspatch on December 5, 2012 at 12:44 PM

You don’t think Obama would seize some emergency powers to disable the debt ceiling entirely? The press would approvingly note the unprecedented nature of the emergency. He might even wait until a couple of Social Security checks fail to go out, which would make him a hero to millions of people.

hawksruleva on December 5, 2012 at 12:38 PM

I would rather he does it now, while we can still take him out Egyptian style, then later, after he appoints 2-3 liberal SCOTUS judges itching to castrate the Second Amendment.

Archivarix on December 5, 2012 at 12:45 PM

wait until Barack Obama needs to borrow more money to cover costs for the former:

Isn’t that supposed to be about mid-January,give or take a week or two?

If so, they won’t have to wait long.

farsighted on December 5, 2012 at 12:47 PM

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies… That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on. Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.”
Barry Obama – March 2006

Change!

hawksruleva on December 5, 2012 at 12:38 PM

Why Obama Wants The Fiscal Cliff

Rae on December 5, 2012 at 12:49 PM

letget on December 5, 2012 at 12:18 PM

Democrats are certainly untrustworthy snakes.

tommer74 on December 5, 2012 at 12:49 PM

Guys we need to realize these staories (this is a prime example) are being fed to us by the likes of; NYT, Greg Sargent and Peter Orzag.

We need to learn to ignore our political enemies while they give us advice.

As the only repub quoted here said, “We’re boxed in”. Quit negotiating. Don’t raise the debt ceiling. Let events play out. Its the only power position the GOP controlled house can take right now.

DanMan on December 5, 2012 at 12:51 PM

Obama wants a recession and the destruction of the middle class.

Anyone who believes otherwise is a fool.

Schadenfreude on December 5, 2012 at 12:16 PM

Why not?

Another serious crisis like that will yield him even more power.

Galt2009 on December 5, 2012 at 12:51 PM

tWhile I agree with the principle behind refusing to raise the debt ceiling, the ramifications of such a decision tend to be cavalierly ignored by its supporters.

if the debt ceiling is.not raised, Obama will get to choose what bills to pay, and what bills not to pay (assuming he doesnt try for a power grab and authorize bonds to be issued unilaterally). He’s not going to cut “wasteful” spending. Instead, he’ll cut entitlement spending, or Medicare or veterans benefits. While doing so, he’ll claim that republicans are responsible for the light envelopes, and that the debt ceiling must be raised.

I don’t think the public is prepared for,.expects, or even wants a 40% decrease in federal spending. not raising the debt ceiling is a nuclear option, and the GOP will cave in the face of it.

Revenant on December 5, 2012 at 12:52 PM

Yeah, let’s keep moving the goalposts. The only reason we are in this ‘fiscal cliff’ situation is because the republicans promised us they’d be better situated to deal with this real issues and super committees and whatnot when the “fiscal cliff” was about to kick in.

Now we’re being told we will definitely win if we punt on this, but force another debt ceiling showdown. The last one led to a super committee “fiscal cliff” that got R’s nothing, what will the next one lead to? a super duper committee and a fiscal valley?

Eh, let it burn.

Timin203 on December 5, 2012 at 12:52 PM

They’re just as corrupt and dishonest as the Dem’s.

JPeterman on December 5, 2012 at 12:33 PM

I agree. It’s all a game with them about greed and power. They care nothing about the American people, nor the Country.

Boehner/McConnell/Reid have given Obama everything he’s asked for in the past 4 years. Sadly, will do so again.

Obama and the Administration, along with the 3 mentioned above, never suffer. It’s always the Country & the American people.

Canopfor linked to this Calculator last night:
http://www.creditcards.com/credit-card-news/fiscal_cliff-calculator-1701.php

bluefox on December 5, 2012 at 12:53 PM

We should start to see some real efforts to reach a compromise starting next week.

don’t hold your breath

maybe 31dec

cmsinaz on December 5, 2012 at 12:54 PM

Does anyone remember Tip O’Neill and how he handled a President who won in a landslide? Boehner needs to start acting like the Speaker of the House, the 3rd in line to the Presidency, the leader of the place where all spending originates and I’m just not sure he’s up to it.

He’s presented his proposal, now tell Obama and Reid no more until he has a budget from them. It’s simple, Obama and Reid can put what they want in a budget and the House can pass theirs. Then they go to reconciliation and work out the details then Obama either signs or doesn’t sign. The Democrats don’t want to do this because they’ve got all the spending they really need without allowing the Republicans to screw-up their racket. Boehner isn’t smart enough, or he doesn’t care which is also a possibility, to stop this scam.

I hope the Republicans replace Boehner in January.

bflat879 on December 5, 2012 at 12:55 PM

So here’s a prediction: If this happens, Obama will refuse to negotiate over the debt limit, just as he’s refusing to negotiate over tax rates on the rich.

Basically, Obama will refuse to negotiate over anything. No surprise. He never wanted to negotiate and only went through the minimally required motions because he needed to get reelected.

This is another aspect of the flexibility he talked about having after being reelected. That is, the flexibility to be inflexible and to say FU to the Republicans.

I hope all those Dems who will have to run for reelection are paying attention. That’s right, chumps, your Dear Leader doesn’t give a crap about your reelection, just as he didn’t in 2010. And he never has. Then again, perhaps he’ll declare himself dictator for life.

farsighted on December 5, 2012 at 12:55 PM

Pass the rates Obama wants ($800B), leave the sequestration cuts in place ($1T), and when it come time to negotiate over the debt ceiling is where the GOP can make their stand (get $2T more).

Tater Salad on December 5, 2012 at 12:58 PM

I have a suggestion for Congressional Republicans.

Rather than wetting yourself over Obama’s public campaign to blame you for not rolling over (or bending over, more to the point), and developing fop sweat over public opinion polls, you might want to consider this simple solution:

Consider acting in the best interests of the people who elected you. That’s right, your constituents, who sent you to Washington as their representative, not the representative of the Gallup organization or a punching bags for big, bad, scary Barack Obama (who can’t punch himself out of a logical conundrum, much less a paper bag).

Yes, if you recognize the suggestion, it is courtesy of Sarah Palin. Consider representing the people who elected you.

John Boehner might be more concerned with his public image and his hair than with the people’s business, but you can be different. You can actually do what you said you’d do when you were asking for someone’s vote.

IndieDogg on December 5, 2012 at 12:58 PM

the gop WILL ALWAYS CAVE!!!!

Because: pssssssssssst, dirty little secret……..they LIKE having more power and money to spend.

They are greedy and they are addicted to spending……..it is their meth.

PappyD61 on December 5, 2012 at 12:58 PM

if the debt ceiling is.not raised, Obama will get to choose what bills to pay, and what bills not to pay (assuming he doesnt try for a power grab and authorize bonds to be issued unilaterally). He’s not going to cut “wasteful” spending. Instead, he’ll cut entitlement spending, or Medicare or veterans benefits. While doing so, he’ll claim that republicans are responsible for the light envelopes, and that the debt ceiling must be raised.

I don’t think the public is prepared for,.expects, or even wants a 40% decrease in federal spending. not raising the debt ceiling is a nuclear option, and the GOP will cave in the face of it.

Revenant on December 5, 2012 at 12:52 PM

So? If the debt ceiling is raised, Americans will get a 100% reduction in the size of government eventually. Where’s the line in the sand? 20 Trillion? 50 Trillion? I mean our debt is already impossible to pay back… I dont care WHAT doesn’t get funded. If Bammy wants to cut off vet benefits and military spending to finance food stamps, then so be it.

Eventually math will cut off vet benefits and military spending, maybe when people feel a little pain they’ll realize how serious of situation they’ve voted themselves in to.

Probably not, but hey, government shut down / not paying bills won’t hurt me in the least — I actually work for my money.

Timin203 on December 5, 2012 at 1:01 PM

It’s time for the Republicans to just say no:

Democrats want tax rates to go up? Voters apparently believe that raising taxes on “the rich” will be all we need? Fine. All the Bush tax rates expire. Everyone gets the taxes going up.

Then we run into the debt limit. Republicans point out that, even with everyone’s taxes going up, it’s still not enough.

Republicans refuse to raise the debt limit until the Democrats have met all the Republicans demands.

In 2011, Obama refused to negotiate in good faith, even though the Republicans had just won an election. So there’s absolutely no reason for Republicans to “negotiate in good faith” with him, despite the fact that he just won an election.

If Obama wants a balanced budget? Fine. He can have one. If he doesn’t, then he can start giving the Republicans what they want.

He doesn’t like it? Tough. He should have been “bipartisan” before now.

Greg Q on December 5, 2012 at 1:03 PM

Obama has already signaled he is scared of the debt ceiling fight. He can’t continue his vision without the money, which the GOP controls.

Tater Salad on December 5, 2012 at 1:04 PM

Haven’t heard a peep out of Paul Ryan since 11/06. He was reelected to his seat so he still has a dog in this hunt. Why isn’t he front and center during all this?

RobertE on December 5, 2012 at 1:04 PM

Rand Paul: Stop the UN Gun Grab.

Take the survey, and fight the power.

SWalker on December 5, 2012 at 1:06 PM

Obama has already signaled he is scared of the debt ceiling fight. He can’t continue his vision without the money, which the GOP controls.

Tater Salad on December 5, 2012 at 1:04 PM

The GOP controls money in name only. First off, there hasn’t been a budget since Harry Reid played keep-away with Bush’s last budget. Second off, Boehner already proved he’s not willing to shut down the government. Since we have no budget, all spending is done on CR’s (which seems to work fine for both D’s & R’s), and continuing resolutions are not vehicles for budget cuts.

And besides, what makes you think Obama would actually listen to the house if they tried to cut off spending? The dems would find a way to keep spending. Remember O-Care and how it was never really passed, you know, based on the rules of the senate & laws of this land? (took an unrelated house bill, amended it, used budget reconciliation, etc.)

Yeah, me too. Dems don’t play by the “rules” that republicans use to box themselves in so that they don’t have the make any hard decisions.

Timin203 on December 5, 2012 at 1:09 PM

The House should pass a budget matching the last year of Clinton’s years. Call it the Clinton Budget. This should force some serious cuts.

freedomfirst on December 5, 2012 at 1:09 PM

SWalker on December 5, 2012 at 12:42 PM

You and I have slightly different memories of the mid-1990s. The government shutdown didn’t get Clinton to move rightward – indeed, Gingrich was the one who caved. Rather, it was because the public still wanted spending cuts, even though the Rat Presstitute Organs convinced them the shutdown was the Pubbies’ fault, that Clinton moved rightward.

The $22 trillion question is whether that dynamic still exists today.

Steve Eggleston on December 5, 2012 at 1:09 PM

The perfect cars for going over the cliff in.

Schadenfreude on December 5, 2012 at 1:10 PM

Haven’t heard a peep out of Paul Ryan since 11/06. He was reelected to his seat so he still has a dog in this hunt. Why isn’t he front and center during all this?

RobertE on December 5, 2012 at 1:04 PM

His role now is to get the 20 Pubbies necessary to sign off on whatever Schidt Sandwich Special SCOAMF lets Bo(eh)ner present.

Steve Eggleston on December 5, 2012 at 1:13 PM

I don’t see a way this doesn’t result in a break-up of the Republican Party.

blue13326 on December 5, 2012 at 1:16 PM

This could all be solved with a budget, but the Democrats know that, if they pass a budget, this bloated spending will be exposed for all to see. They’d rather have the fight because they know they can easily roll Boehner and Company.

bflat879 on December 5, 2012 at 1:23 PM

We have to give a little, let some revenue TAXES go up, the economy STILL goes in the toilet but now we can say “We gave them what they wanted, they tanked the economy, we need to get these idiots out of the Senate in 2014″.

crosspatch on December 5, 2012 at 12:44 PM

Alabama Infidel on December 5, 2012 at 1:24 PM

I am so sick of the loser GOP . We just spent 4 days trying to juggle investments , the whole thing
Is enough to make you vomit . Work hard , save , do the right things … For what ? I guess to pay
for zeros 4 m$ vacation , bail out Detroit , California , assorted unions etc . We used to take such
pride in employing people that needed work . Not any more , too late to start over . It’s depressing .
I think only a revolution could cheer me up .

Lucano on December 5, 2012 at 1:29 PM

THE GOP IS DEAD!

PappyD61 on December 5, 2012 at 12:17 PM

I’m fine with the GOP being dead, but that also means that we need to replace it with an alternative conservative party. So who’s up for it?

dominigan on December 5, 2012 at 1:33 PM

These two are the worst bumbling idiots I have ever seen.

THERE.IS.NO.LEADERSHIP.IN.THE REPUBLICAN.PARTY.

The GOP is completely lost.

portlandon on December 5, 2012 at 12:21 PM

…they are dead to me!…NOW WHAT DO WE DO…???

KOOLAID2 on December 5, 2012 at 1:36 PM

The House should pass a budget matching the last year of Clinton’s years. Call it the Clinton Budget. This should force some serious cuts.

freedomfirst on December 5, 2012 at 1:09 PM

That’s not a bad idea. I would also suggest adding a provision that halts automatic budget increases. I’m tired of hearing lawmakers fight over the scraps of “discretionary” spending. If you made a law, you can also unmake that same law.

dominigan on December 5, 2012 at 1:37 PM

Haven’t heard a peep out of Paul Ryan since 11/06. He was reelected to his seat so he still has a dog in this hunt. Why isn’t he front and center during all this?

RobertE on December 5, 2012 at 1:04 PM

He helped in the purging of the conservatives from the budget committee and he agrees with Boener’s idiocise of the last few days.

He can go to Hades, along with Boehner.

Schadenfreude on December 5, 2012 at 1:38 PM

I think only a revolution could cheer me up.

Lucano on December 5, 2012 at 1:29 PM

I agree. My point of no return is messing with my 401K. It’s the only money I have saved. If they take my only chance for a real future away from me, then I will happily march in an armed demonstration into D.C. And yes, I know exactly what that means.

dominigan on December 5, 2012 at 1:40 PM

I agree. My point of no return is messing with my 401K. It’s the only money I have saved. If they take my only chance for a real future away from me, then I will happily march in an armed demonstration into D.C. And yes, I know exactly what that means.

dominigan on December 5, 2012 at 1:40 PM

I seriously pray you aren’t just another wingnut blowing hot air about armed resistance when thus-and-so happens. Especially with 401Ks; that is the absolute last line to cross before we’re totally owned.

MelonCollie on December 5, 2012 at 1:59 PM

I seriously pray you aren’t just another wingnut blowing hot air about armed resistance when thus-and-so happens. Especially with 401Ks; that is the absolute last line to cross before we’re totally owned.

MelonCollie on December 5, 2012 at 1:59 PM

It will be crossed to save CalPERS and the other Communist-Red states’ public employee pensions. The only question is whether it will be next year or 2015.

Steve Eggleston on December 5, 2012 at 2:09 PM

Pass the rates Obama wants ($800B), leave the sequestration cuts in place ($1T), and when it come time to negotiate over the debt ceiling is where the GOP can make their stand (get $2T more).

Tater Salad on December 5, 2012 at 12:58 PM

Obama is performing a ‘rope-a-dope’ here, with the GOP as the dope.

I believe I’ve seen the shape of things to come, and it’s not a pretty one.

My prediction:

1. Obama will appear to play a game of brinksmanship, no matter what the GOP proposes or passes through the House. Anything that the House passes which the Dems view as favorable, they will pass and take credit for. Anything else, they will ignore. Later “leverage” is non-existent, as I’ll outline in a moment, so they’ll have no reluctance to give it up.

2. The GOP will fall for the ‘rope-a-dope’, thinking they can gain leverage later from a debt ceiling crisis. They fail to take into account the strategy I’m about to outline.

3. Obama will wait until he is safely inaugurated into his second term, and only then will pull the trigger on his option. He will, of course, demagogue all along the way about how the Republicans have driven things to this point through their intransigence, and they’ve already successfully focus-grouped this notion and the public has already bought it hook, line and sinker.

4. When the GOP tries to present their debt ceiling argument, and all of the rationale behind it, Obama will use that rhetoric in a juijitsu move. He will ‘embrace’ the notion that the national debt and deficits (which fuel it) are a horrible burden to place on our children. He will “accept” that the debt ceiling should never again be raised, and will use that as the basis for a ‘moral argument’ justifying the following maneuver… which goes so far beyond a ‘nuclear option’ that I’ll call it “antimatter weaponry”.

5. Obama will announce that it is henceforth the policy of the United States that, in accordance with the 14th Amendment and the constitutional requirement placed upon him that the validity of the debt not be questioned, we will embark upon a program wherein no further debt shall be issued by the United States, and debt shall in fact be retired every single year, via the buyback of US Treasuries.

6. The fully legal means by which such buybacks will be financed, and the means by which any shortfall between tax revenues and appropriations will be financed, shall be via coin seigniorage. No legislation is required for this maneuver, and the GOP cannot stop it.

7. Obama will take credit for placing the US on a path to retire the national debt, starting immediately, and the GOP will be permanently neutered in effectiveness on the issue or anything related to it. The public information campaign on this, complete with talking heads galore, will be non-stop, and the low information voters will drive the public acceptance of the idea.

I believe a scenario like this is the end-game, ladies and gentlemen. Prepare yourselves accordingly.

VekTor on December 5, 2012 at 2:10 PM

The Republicans should have let the tax rates increase on higher earners two years ago when it first came up. If they had, what additional revenue would Obama be able to rabble rouse about now? In “The Price of Politics,” Bob Woodward noted that even Obama was surprised that Republicans would accept huge defense spending cuts rather than any slight increase in high earners’ tax rates as part of the fiscal cliff deal. They are stupidly selling out their base to protect high earning folks in New York, LA and DC who vote overwhelmingly for Democrats.

jdp629 on December 5, 2012 at 2:16 PM

A , wake up folks , they are already are chipping awry at your 401k by taxing dividends .
Ok , maybe your income isn’t over 250k , but just wait until you sell a house , have to take $s
out of your 401k at 70 . Oh , and look at all the ocare taxes when you sell that house !

Lucano on December 5, 2012 at 2:20 PM

Ammend and pass the senate bill which would keep rates low by adding things most of us want and Obama’s base wants, i.e. a simpler tax code without all those deductions for the “evil rich folks who don’t pay their fair share” that Obama has railed against for years. We can reduce the tax rate for the wealthy when we come to power which might be sooner with the ammended bill.

burt on December 5, 2012 at 2:37 PM

I’m not sure why default is any better than increased taxes and sequestration. Let the tax cuts expire for everyone and let sequestration happen. It is better leverage with Obama because of middle class tax cuts and AMT. Media will blame republicans on debt ceiling and fiscal cliff no matter what.

philrat on December 5, 2012 at 2:50 PM

America voted for Obama. America deserves the consequences.

Make sure your families are supplied and prepared, and have enough ammo so you can defend yourselves when the hoards of hungry Democratic parasites come looking for food.

Adjoran on December 5, 2012 at 3:05 PM

philrat ,
Wouldn’t the king say : I saved all you peasants ? Now , bow down !

Lucano on December 5, 2012 at 3:08 PM

No. 1, Republicans in the House should pass the defense spending bill already unanimously passed by the Senate. This would prevent sequestration unless Obama vetoes the defense spending bill, which he wouldn’t dare do if the veto could be overridden even by the Democrat-controlled Senate.

Then the House should pass a bill extending the Bush tax rates for incomes under $250,000 per year, as Obama has repeatedly promised he would do, but allow the previous (Clinton) tax rates to return for higher incomes. If the Senate balks at this, Republicans can blame Democrats since they have given Obama everything he wanted.

With defense spending in place, Obama (and everyone else) will soon find out that the increased tax revenue from high incomes doesn’t cover the defense spending increases, and deficits are rising.

Then refuse to raise the debt ceiling until serious spending cuts are made. If the government shuts down in early 2013, nobody is up for re-election until over a year and a half, and early 2013 would be the time to force the issue. While Democrats might have won the Presidential election, they did not win the House elections, so both sides have a mandate in a status-quo election.

Steve Z on December 5, 2012 at 3:11 PM

Boehner – Purge the damn conservatives… Yeah. That is the tkt.

antisocial on December 5, 2012 at 3:35 PM

The Republicans should tell barry, “Yeah sure we’ll give you that raise…later.”

But they should never do it. Kill the spending right there.

Iblis on December 5, 2012 at 3:47 PM

You don’t think Obama would seize some emergency powers to disable the debt ceiling entirely?

hawksruleva on December 5, 2012 at 12:38 PM

I’d like to see him try…

JohnGalt23 on December 5, 2012 at 4:08 PM

WE HAVE ALREADY LOST THE BUDGET AND DEBT CEILING BATTLES.

Sorry about the length but McConnell and Boehner gave it away last year.

The Institutional Republicans have screwed us again. I watch these things, and the economy and Federal spending more than the average bear; and I missed this which was just invoked. Last year, the Republicans came up with a provision that gives total control of the Debt Ceiling to Obama. They have to do a little dance, but the Debt Ceiling can be whatever Obama wants it to be. And the regime has started the dance. That explains the noises that Geithner recently made about not needing Congress for the Debt Ceiling.

http://www.zerohedge.com/news/2012-12-05/market-takes-leg-lower-treasury-supports-use-mcconnell-provision-debt-ceiling#comments

So long as the Democrats control the Senate, there will be no concurrent resolution to stop Obama. They have no loyalty to the country and Constitution, and absolute loyalty to Party and power.

Summation:

1) Congress has lost the power of the purse. We have not had a Constitutional budget for 4 years, will not have one for a 5th year, and they have stated for several years beyond that until the economy improves.

2) We are funding the government by printing fiat currency [60%+ of the deficit spending] via the Federal Reserve and with an increasingly smaller share of real market purchases of US government securities by actual foreign and US investors. Also, a big part of the real purchases are by the Social Security “Trust Fund” which is required to purchase US government securities with its tax receipts.

3) All of #2 above is borrowing and subject to the Debt Ceiling. We have gone from having to raise the Debt Ceiling every couple of decades within living memory, to each new increase lasting a year or less. Short form, if we breach the Debt Ceiling, either things come to a screeching halt or it is shown to be fictional. If it is fictional, then there is no limit on borrowing, and there is no prospect of being paid back. EVER. Which means market sales of securities either stop, or the interest rates go straight up. Interest rates now are at record lows because of the current “recession” [really a depression, and about to dip farther down big time because of tax increases and Obamacare]. But if the market demands [and will get or there will be no real purchases of government securities] higher interest rates due to the increased risk of being left holding worthless paper, then government costs soar. Historically, interest rates have run between 3-5%. Now they are at 1.63% for a 10 year T-Bill. 90 day T-Bills are at 0.1%. If we go to historical average interest rates for government borrowing, the annual interest payments will swallow the Federal budget.

And NO, you cannot cut Defense to make up the difference. Right now, as best can be figured using retroactive figures because we do not have a real budget, all Defense spending including all wars and hostilities we are engaged in AND including some things that are not really defense and more Coercive Organs of the State [Homeland Security, etc.] Defense makes up 18% of Federal Spending, albeit it is a larger percentage of what is called “discretionary spending”. MOST of the Federal spending is “non-discretionary” and is automatic and cannot be changed. See all welfare programs and interest payments. Defense spending is already scheduled to be slashed January 1 as part of the “Fiscal Cliff” which was agreed to by the Institutional Republicans.

Interest payments are already around $800 billion a year on over $16 TRILLION of debt according to Congressional Budget Office estimates. Which is more than the $664.84 billion which is this year’s Defense spending before the coming slash. IF YOU ELIMINATE ALL DEFENSE SPENDING, YOU DO NOT COVER THE ANNUAL INTEREST ON THE CURRENT DEBT. If interest rates go to historical normal rate, say 4%, over time the interest paid [most debt is short term (<10 years) and has to be refinanced regularly] then the annual interest will be over $3 TRILLION a year.

There is no way that can be paid. And that is if we go to historical rates. Given the reality of the situation, then buyers are going to demand a real risk premium on holding US debt, and interest rates north of 10% may well be demanded. But let us assume that we stay at the historical average. We cannot pay the interest. The first time that we cannot make an interest payment in full, US securities and the credit of the US becomes worthless, and no one will buy them. The house of cards collapses.

That leaves the only source of “funding” for the US as the printing presses/computers of the Federal Reserve Bank churning out monopoly money as fast as they can.

What is the backing for the monopoly money? What you have in your wallet are Federal Reserve Notes. They are not backed by anything tangible. NO gold, silver, land, goods. In the top left corner it says “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE”. How can the Federal Reserve mandate this? In the law authorizing the issue, it is stated that the Federal Reserve Notes [which are all we have circulating] are backed only by “THE FULL FAITH AND CREDIT OF THE UNITED STATES”. Read two paragraphs above, again.

As the value of the dollar becomes less, prices rise. See “Hyperinflation- Weimar Germany, Zimbabwe, and at one time or another most of South and Central America”. As in prices rising 100%+ per day … at the beginning and getting worse. Incomes do not rise that fast. Nor will government welfare payments. Incidentally, we are a trading country. We have to import raw materials except for food. And our government is suppressing domestic production of everything. If you are ACME International, and you have a raw material to sell, are you going to take dollars that are worth less every hour as payment for delivering hard goods to the US? And if the raw materials don’t come in, how is our economy going to function, let alone expand?

4) Going back to #1 above, the existence of any sort of republic is contingent on someone besides the Executive [King, President, Emperor, First Secretary, Grand High Panjandrum] controlling the finances. It is the only limit on the power of the Executive that prevents arbitrary tyranny. See our Revolution, the English Civil Wars of the 1600′s when Charles I tried to tax and spend without Parliamentary authority, the French Revolution which was triggered by Louis running out of money and trying to call the first legislature that France had had in 150 years [Estates-General] to force them to raise taxes for him to spend at will. This is no small thing.

5) In reference to #’s 1 & 4, I will leave it to the Gentle Reader to consider whether we meet the definitions of “republic”, or “constitutional democracy” any more, and the implications as to duty, honor, and obedience.

6) In reference to the other points, and the matters above the summation: Speaking personally, and ex cathedra from my navel, I offer the following for your consideration and personal judgement;

a) The dance to destroy everything and give the Enemy everything that they voted for/stole November 6 is in progress.
b) It would be a good idea to watch the McConnell Resolution dance as a marker of how close we may be to collapse.
c) If you are making preparations for coming hard times [food, water, fuel, defense, alliances, self-sufficiency as a family or larger group] you might want to accelerate those.
d) If you have not started anything along the line of “c)”; the time is really short for starting.
e) It is noted that to TWANLOC, their plan for hard times is to kill you and yours and take what you have; either as private or government sponsored predators.
f) I offer the thought, for your consideration and acceptance or rejection based on your personal circumstances, that if you have access to fixed rate credit that cannot be jacked up to match the coming hyperinflation; that going into debt to accelerate “c)” above may be a rational response to conditions. YMMV. I note that debt may be uncollectable in the near future, that if collectable, it may be in dollars that are useful mainly for toilet paper, and that tangibles may be king.

Subotai Bahadur on December 5, 2012 at 4:33 PM

You don’t think Obama would seize some emergency powers to disable the debt ceiling entirely?

hawksruleva on December 5, 2012 at 12:38 PM

As I pointed out in my 2:10PM post, there are absolutely no emergency powers that have to be “seized” in order for O to completely bypass the constraint of the debt ceiling, which has always been a polite fiction from Jump Street.

Everything he needs was granted in 1996 under the Clinton Administration, via 31 USC § 5112 – Denominations, specifications, and design of coins, section (k):

(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

It’s already standing law that Turbo Tax Timmy is authorized to mint coins with arbitrary fiat face value having no relationship to the value of the platinum used in these coins. These coins are legal tender. So, when the Mint deposits them in its Public Enterprise Fund account at the Fed, the Fed must credit that account with the face value of these coins. This difference between the Mint’s costs in producing the coins and the credit provided by the Fed is the US Mint’s profit. The US code also provides for the Treasury to periodically “sweep” the Mint’s account at the Federal Reserve Bank for profits earned from these coins. Coin seigniorage is just the profits from these coins, which are then booked as miscellaneous receipts (revenue) to the Treasury and go into the Treasury General Account (TGA), narrowing the revenue gap between spending and tax revenues. Platinum coins with huge face values e.g. $2 Trillion, could close the revenue gap entirely, and technically end deficit spending, while still retaining the gap between tax revenues and spending.

This is the whole enchilada, the ultimate escape hatch that the Dems could trigger at their whim. They would technically be complying with the debt ceiling requirements without raising it (and even lowering the debt via extinguishing it with the new balances provided). Coin seigniorage will be the weapon.

No cooperation by the GOP is required, and there’s nothing they could do to stop it, either. Nothing has to be seized, no executive orders are even necessary. Obama can simply direct the Treasury to do so, and it’s a fait accompli. Pandora’s Box will be open, and the djinn will be out of the bottle. It will be effectively impossible to ever put it back in.

Did you honestly think he was going to let a “crisis” like this go to waste? How else did you think he was going to “fundamentally transform America”?

Why do you think he talked about actually retiring the national debt and paying it off on that Bloomberg interview?

It’s an opportunity to cement a legacy in the minds of the dunderheads out there… O becomes “the president who freed us from the national debt”, and “set generations free from those crushing burdens placed on them” by those evil Republicans.

It will be sold as the only moral thing to do. The Republican cries for so long about the debt, the deficit, and the debt ceiling will be used as tools of their undoing.

VekTor on December 5, 2012 at 5:19 PM

A deal is a deal.

The D’s wanted one more year of the Bush-Obama tax cuts for a one time debt ceiling extension.

The R’s agreed to fall on their sword on taxes.

The D’s now get to see if they can delivered a balanced budget with no more debt ceiling raises.

That was the deal… they wanted to play ‘chicken’ with the ‘fiscal cliff’. Neither of them should swerve. Collide.

Obama asked for it, he can have it.

The Left and Democrats insist there is magic in the Clinton tax rates! Plus the Obamacare taxes! So they can have them! And with $2.44 trillion they can be asked one, simple question: for $2.44 trillion can’t you run a government? Really, any fool ought to be able to run a government on that amount of cash… and if there has been over-promising… which there has by both sides of the aisle… well now is as good a time as any to start pointing the fingers at WHO has been doing the PROMISING.

Then things get evil and fun as both sides try to say that they haven’t promised ANYTHING. And that, in the ‘entitlement’ era won’t fly. Most evil. Most fun.

ajacksonian on December 5, 2012 at 6:31 PM

We have two different things going on here. We can’t get into a situation where we win the battle but lose the war. In other words, we dig in and let things go over the cliff, we take the blame, and then lose the House in 2014. Right now we are sitting in a pretty good position for 2014 if we can continue to allow the Democrats to own the problem. This is a mess of their creation. They built that cliff in the first place.

What we can not allow to happen is for the Democrats to be able to say “you lost your jobs and are on unemployment and food stamps now because the Republicans wanted to protect the ‘rich’ from tax increases”.

We have to give a little, let some revenue go up, the economy STILL goes in the toilet but now we can say “We gave them what they wanted, they tanked the economy, we need to get these idiots out of the Senate in 2014″.

crosspatch

So, instead of standing our ground today and making the dems take the blame, we should cave today and make the dems take the blame in the future? Gotcha.

xblade on December 5, 2012 at 8:02 PM