“Sunday evening’s much anticipated deficit-reduction meeting at the White House, involving President Barack Obama and congressional leaders, concluded after negotiations that lasted about 1 1/2 hours.
“When asked before the start of Sunday’s talks if a deal could be reached within 10 days, Obama told reporters, ‘We need to.'”
“‘You have to have a backup plan. If you are relying on Congress to avoid the possibility of an Armageddon, you can’t just bet on that,’ said Keith Hennessey, who headed the White House National Economic Council during President George W. Bush’s administration…
“As recently as June 21, Miller told a group of sovereign debt holders in London that there is no Plan B and assured them that the debt limit would be raised before August 2.
“Publicly, Treasury has maintained there is no contingency plan. ‘Our plan is for Congress to pass the debt limit,’ Geithner said late in May. ‘Our fall-back plan is for Congress to pass the debt limit, and our fall-back plan to the fall-back plan is for Congress to pass the debt limit.'”
“As the White House continues negotiations with congressional leaders over a budget deal this weekend, newly elected head of the International Monetary Fund Christine Lagarde says that she ‘can’t imagine for a second’ that the United States would default on its debt obligations, saying it would be ‘a real shock’ to the global economy if no agreement is reached…
“Lagarde, who previously served as France’s finance minister, said there could be ‘real nasty consequences,’ including rising interest rates, depressed stock markets, increased unemployment, and decreased investment if a deal is not reached by the Aug. 2 deadline facing the United States.
“‘It would certainly jeopardize the stability, but not just the stability of the U.S. economy, it would jeopardize the stability at large,’ Lagarde said.”
“Democrats need a lot more tax revenue to make their long-term budget plans works. This is why Obama has not offered a long-term budget plan. The need for massive tax increases would then be clear to all. In private, liberal economists all talk about a need for a value-added tax to raise the additional revenue.
“But a liberal think with close ties to the White House, the Center for American Progress, recently released a budget plan that goes out to 2035. It shows taxes as a share of the economy rising dramatically to nearly 24% of GDP vs. around 18-19 percent historically. And I am guessing they would go even higher if the table went beyond 2035. If Boehner and the Republicans don’t hold the line now on taxes, this is the American future.”
“The details of a smaller deficit reduction deal have yet to be worked out, but the collapse of the grand bargain leaves President Obama in a more favorable political position. If both parties agree to cut $2 trillion from the budget with minor tax increases, he’ll notch a bipartisan accomplishment. But he can also say he tried something more ambitious in putting cuts to Social Security and Medicare on the table without facing the political fallout of actually slashing those programs. He went big and congressional Republicans — not to mention the noticeably silent 2012 Republican presidential candidates — didn’t. It will be Republicans who will have to justify bowing to the extreme wing of their party and walking away from a deal that included some ten times more spending cuts than revenue increases. Some things just aren’t too big to fail.”
“Anyone harboring any doubt over who is repsonsible for the failure of a “grand bargain” must consider Pres. Obama’s record. He avoided the debt before the election. After the election, he submitted a budget so absurd it got zero votes in a Democrat-controlled Senate. (Indeed, Senate Democrats have yet to submit a budget of any kind.) He has not moved from the positions he staked out in April. His position is not balanced, no matter how much the White House and the establishment media try to spin it as such.
“Furthermore, there should be no expectation that Obama will budge on the budget. Obama’s non-budget speech was a tacit admission that he cannot run for re-election on his record, but must demonize his opponents with class warfare and MediScare. He would be willing to entertain a GOP surrender on his terms, because he likely calculates that the liberals put off by any deal will be outnumbered by demoralized conservatives and libertarians, while he gains casual, low-information independents. Otherwise, he has already announced his intentions. He will do the only thing for which he has shown any talent: campaign. Whether he can run a negative campaign running from his record, as opposed to standing as the blank slate of Hope and Change, remains to be seen.”
“‘No matter the size of the cuts,’ a House GOP aide says, ‘I have major doubts that any kind of revenue raises could pass the House.’ Multiple Republican staffers suggest that Boehner faces as many, if not more, defections than the GOP did on the continuing resolution to keep the government running in April. Fifty-nine Republicans voted no on that deal; less than half of them were freshmen. Early on, Boehner called the debt-limit vote the first ‘adult moment’ for the new GOP majority, but the Tea Party’s mantra has been that the vote represents their greatest point of leverage to force the kind of draconian cuts the conservative grassroots wants. The sentiment only deepened in the wake of the April budget deal. Some, like freshman Republican Jeff Landry, are ready to risk the dire consequences of default to make a point. ‘If I don’t get exactly what I want, I’m not voting for it,’ Landry told Politico.
“Faced with the prospect of losing up to 100 members, Boehner will have to assiduously court Democrats without exposing his right flank, particularly as Cantor, his No. 2, lurks over his shoulder. Democrats are laying down their own markers, vowing not to support a deal that includes cuts to benefits in entitlement programs like Medicare and Social Security, though several have expressed a willingness to discuss these cuts separately. ‘Because of the dogmatic, know-nothing wing that is willing to discard the interest of the country…at the altar of Norquist purism,’ Connolly says, Boehner and Obama will ultimately find themselves needing a passel of Democrats to save a deal — likely more than the 81 Democrats who supported the CR in April. Connolly estimated some 100 Democrats would be required to thread the needle. ‘Triangulation isn’t going to work,’ Connolly says. ‘You need the Democratic caucus to pass this. And so does John Boehner.’