The war goes on

15 Jan

Tea-Party-Wag-the-Dog-sizedIt’s like a game of chicken but instead of two drunks rushing head on at each other, it’s the White House and the GOP.

It could be the last gasp effort of a wounded political party to show it’s relevant.

House Republicans are giving serious thought to doing something dramatic, including default or shutting down the government, to force President Barack Obama to finally cut spending by the end of March.

As insane as it sounds, the idea of allowing the country to default by refusing to increase the debt limit is finding more acceptance among House Republicans than people realize.

GOP leaders think shutting down the government is the much more likely outcome of the spending fights.

Last week, in a serious of closed meetings, Republican leadership warned that the White House and the public don’t understand how hard it is to get ultra-conservatives to back off.

To the Tea Party followers, it is riskier to pile up new debt than it is to test the market and economic reaction of default or closing down the government.

The word on the Hill is more than half of conservative members are ready to allow default unless the President agrees to dramatic cuts he has repeatedly said he opposes.

As an alternative to default, many more members, including some party leaders, are prepared to shut down the government to make their point.

The reason for either move?

Show their constituents they’re fighting.
It’s all about re-election.

The country would eventually default if House Republicans refuse to raise the debt limit, which will hit in late February or early March.

The government would shut down if House Republicans instead were to refuse to extend the law funding current government operations on March 27.

House Speaker John Boehner thinks he can talk members out of default, but he is so wounded and beat up from last month’s tax-hike battle that he probably won’t be able to pull it off.

The President thinks Republicans would never be so stupid as to put the economy at risk to win a spending fight.

Conservatives say he’s definitely wrong and he’s the foolish and reckless one for piling up $6 trillion in debt on his watch.

How much is simple political posturing is hard to say at this point.

The mother-of-all-battles is coming and no one can predict who will win.

Here’s the Republican plan:

Boehner is now meeting with his leadership team to discuss his thinking on a spending strategy.

In one leak, someone who attended says GOP leaders are at a loss on how to control members who don’t respond to the normal incentives of wanting to help party leaders or of avoiding situations — like default — that could be public relations nightmares.

Later this week, Boehner heads head to Williamsburg, Virgina to meet with the entire GOP conference.

He will walk them through the political and economic consequences of default and his plan for forcing spending cuts without allowing any new tax hikes to get smuggled in.

The truth is Boehner doesn’t have enough political capital to get what he wants.

Boehner lost points when he had to pull his plan for raising taxes — and then lost more as three-quarters of his members opposed him on the final tax increase bill after Christmas.

Right now he might be the weakest speaker of the last 40 years.

On top of that – he’s made two promises to his members that will greatly restrict his ability to come up with a compromise in the spending fights ahead.

The first was to bring to the floor only legislation a majority of his members support and do it through the committee process.

The second was to increase the debt limit only in exchange for a dollar-for-dollar decrease in spending in the time period covered by that debt increase.   He’s painted himself into quite a corner.

The conventional wisdom is that Obama and Congress will ultimately work out some sort of spending compromise that raises the debt limit, keeps funding the government and changes the $1.2 trillion in automatic “sequestration” spending cuts set to kick in on March 1st.

Here’s the problem with that: Top GOP officials say Republicans are not willing to compromise on the $1.2 trillion in cuts.

Those cuts, designed initially by the White House and GOP leaders, were agreed to by the last Congress and Republicans consider them a done deal, money in the bank.

They would negotiate the specific programs that get cut — but not the total number.

Right now, half the cuts target defense, half other programs.

This is a very different view from Obama’s.

The White House not only wants to use the sequestration debate to resolve all of the spending fights — it wants to replace some cuts with tax increases.

Once again, GOP officials said 90 percent of their members are prepared to allow the cuts to take effect, rather than compromise.

If true, then this seems like the most likely outcome right now.

Sequestration, while devastating to defense contractors, is small stuff compared to the debt limit.

Just about everyone agrees if the limit is not adjusted and the country defaults, then deficits will soar, as interest rates rise, the markets will tumble and the economy will face catastrophe.

Boehner’s meetings this week are to show conservatives it would be economic and political suicide to go all in.

The lines have been drawn, the battle plans set.

All we can do is wait and watch.

Just remember – you put them in office.

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