I often disagree with Walter Shapiro, but not today. Here is what I anticipate happening. Joe Biden will make concessions that will cut spending, probably by a lot and in some areas that will make progressives howl. Republicans will counter that Biden’s offer isn’t even one one-hundredth the size of what is needed to avoid fiscal armageddon. Speaker Boehner will hold another test vote to prove that no Republicans are willing to settle for anything less than huge cuts to Medicare. Boehner needs the Democrats to vote for Medicare cuts to get himself out of the jam he created when he let Paul Ryan offer his gonorrhea to the nation as a serious budget plan. The Democrats will not oblige him. At some point, Wall Street is going to freak out and the stock market will plummet by a thousand points or so.
It will only be after a ton of wealth has been destroyed that the Republicans will realize that they are going to get blamed for thinking they run the government and for taking their brinksmanship too far. Yet, they’ll remember what happened to a lot of Republicans (see Sen. Bob Bennett of Utah) who voted for TARP. They may fail to find the 80-90 members they need to pass an increase in the debt ceiling even after the market begins to collapse.
We may default on our debts. It’s hard to see how we avoid it. I definitely don’t see the Republicans caving in prior to a major dip in the stock market, although that dip will probably come prior to the actual August 2nd cut-off date.
It’s time to get a broker, or call one if you already have one.
I should probably cash some bonds that I have then, huh…
I don’t know that all of them are mature, but surely a few hundred dollars have.
That’s just what the country is going to need – a run on bonds…
Honestly I cannot understand why the administration continues to work this way. I think this is exactly how it will play out, and to avoid it all that Obama needed to do, way back when, was say “we’re not cutting anything” with the full intent to let the Republicans name the cuts they want and then “bargain them down”.
I swear to Grod this administration has no idea how to work Republicans. For Republicans all politics is theater – if you cut them off at the knees then their need for theater demands that they go for the groin. If you start with a “reasonable position” they HAVE TO move the goalposts – otherwise they’re just agreeing with you and there’s no theater there.
All that the administration needed to do was say “we don’t think things need to be cut – instead let’s raise taxes here, here and here”, then let the Republicans come out screaming and reach a “compromise” position where the cuts that Obama was going to propose as the “reasonable” position get made anyway.
It’s like they didn’t learn anything from Clinton – the thing that the right hated most about Clinton was that he gave them what they wanted without a fight. Except for tax cuts they don’t give a rat’s ass about the actual positions they stake out – they care about the theater. And if you don’t let them act their part on the stage they’ll throw a temper tantrum just to make sure they get the opportunity to have their theater.
The administration works this way because Obama believes real governance is impossible without working with the otherside. And also, Obama is from the Chicago school, he has internalized a LOT of neoliberal economics so he probably has some sympathy for cuts cuts cuts.
IIRC, Obama’s mentioned the “need” to “reform” social security more than a few times.
Of course, because he is DLC/Third Way just like the Clintons. Not to mention his love for Pete Peterson/Bob Rubin.
I can buy that Obama has neoliberal tendencies like the Clintons. And the Rubinite influence is undeniable. But Pete Peterson? He’s devoted to the elimination of SS, Medicare and the idea of a basic social safety net.
Google “The Hamilton Project.” And when that opened, there was only one Representative or Senator who showed up. I’ll give you three guesses and the first two don’t count.
Hmm. A lot of people have been forecasting social security “reforms” championed by the WH for months now. Raising or getting rid of the payroll tax cap would be a welcome reform.
Sure that’s fine. But in this case “working with the other side” means “giving them an opportunity for their political theater”. He’d do a better job of working with the other side if he stopped pre-emptively cutting out their bargaining chips and leaving them some room to look like they’re having legislative successes that they can take credit for.
It may not LOOK like he was working with the other side, but this is a case where looking like you’re not working with them is actually working with them, and going out of your way to look like you’re working with them makes it harder for them to actually work with you. After 3 years he should be able to recognize this and exploit it.
It appears that Obama cares about policy not politics.
My guess, is that he thinks if he can give the GOP something they can call a policy win and gain a policy win for himself that’s working together. For Obama, policy wins can come at the expense of political wins. But no other politician works like that and politics itself doesn’t work like that. At least not on this planet.
Basically, he thinks people are rational and reasonable when people are actually emotional and want to just beat their enemies.
If drowning government in a bathtub is the goal, I suppose destroying the economy in the process is looked upon as merely collateral damage to serve the “greater good”. Time to bury the valuables in the backyard, maybe?
I think you’re jumping the gun, Booman. I just don’t see it going this far, yet. The Dems will agree to some cuts, yes, but not on Medicare and the other main Dem priorities. But the most salient issue is that the real Republican base – Wall Street, banksters, modern robber barons, etc. – ain’t gonna let their party sink the full faith and credit of the United States, and with it their investments. Your analysis ignores that.
We’ll see about that. Right now I am at about 60/40 that the ceiling will be raised before anything like a 1,000 Dow drop happens.
Agreed. It will get done. Right now Boehner and the WHare just jockeying right now to figure out what pound of flesh the WH will have to give to get it. If the WH plays the politics better, its a small piece of flesh; if the GOP plays it better, its a big piece of flesh, maybe Medicare cuts.
Oh the dream of watching the Dems follow the polls and put their feet down in a march to respond to budget cuts with a CBO analysis of how much can be regained if taxes are raised on the corp & wealthy. Then, take that analysis and say, take GE new taxes pays for xx number of high school kids getting a better math curriculum, Exxon’s new tax pays for infrastructure projects, Shell’s new makes down payment on lite rail project…ConAgra’s tax pays for new cancer studies…Paris Hilton’s pays for orphan drug project funding.
Just sayin, now is the time to push back hard with tax revenues, because polls are already there.
At this point I’d really like to see the government just ignore the debt limit ceiling. It’s only as crazy as letting the Republicans run the show and maybe less.
Just for information.
There are ETFs (Exchange Traded Funds)that trade like stocks but inverse to the underlying asset. Shorting stocks requires pretty substantial margin and these funds increase in value as the market goes down so you buy shares which requires no margin. Here are a couple of symbols.
S&P 500……..SDS
Russel 2000….TZA
Nasdaq………QID
They will posture until the day the market collapses. On that day, the House will vote to raise the debt limit, with all democrats and a minimum (40-50) of republicans voting in favor.
They’ll do it because, let’s face it, they have money in the stock market too. So it’s in their own damn self-interest.
Not sure when the market will collapse…could be tomorrow, could be August. I’d bet on it happening sooner. These things are completely unpredictable (chaotic, in fact).
This doesn’t take into account the global effects of this and how that shock could possibly cause a global run on the banks (like in ’08) and freeze the capital markets and create the second depression.
I’m just praying Wall Street gets these schmucks in line.
remember when i said i was glad my credit cards were paid off and my mortagege and student loan rates were locked in?
Still glad of that. Talking to the broker in law tonight.
You think they won’t raise your rates if they’re locked in? You think you have protection from the banks on this?
yup, locked in. It’s called “a contract”.
can you show me where a bank has the right to change my rate once it’s locked in? I don’t think such a power actually exists.
Can you show me a court that wouldn’t bow to the banks in a financial panic?
I don’t know. If the Republicans were faking it, and really intending to eventually raise the debt ceiling whether or not they got what they want, but were determined to pressure as many concessions from Democrats as they could, they’d be acting the way they are now. So it’s hard to know how serious they are or how far they’re willing to go. They did compromise on the budget itself which surprised me.
On the other hand, I will be horrified if the Democrats offer more than symbolic concessions. As frightening as a default would be, giving a party the ability to dictate policy by being willing to take the country hostage would be at least as bad, in my opinion. The stakes are high, but Democrats should stand firm.