Wednesday, October 16, 2013

US Debt Ceiling: Issues Punted to early next year

The Cat goes to the Senate
Twenty-four hours of so before the US government ran out of money to pay its debts, Republican senators nudged aside the Tea Party senators and House representatives, to kick the can down the road and renew the fight in two months time:

The expected Senate deal would avoid a potential U.S. debt default, but it would only set new deadlines for lawmakers to make decisions about the long-term course of fiscal policy.

As outlined by aides, the deal would fund federal agencies through Jan. 15 and extend the nation's borrowing authority through Feb. 7. A negotiating committee would be charged with devising plans for longer-term solutions.

The spinning is now fast and furious on Capitol hill, with the Democrats framing the issue as one where a steadfast president faced down a blackmail effort of a small coterie of wild-eyed Tea Party and won; and the Republicans that the issues of government spending and debt increases are not solved, only postponed: the battle will go on.

Both sides have a foundation of truth in their spinning frames. Senator Cruz (now famous for reading The Cat in the Hat as part of a one-man filibuster) was pushed aside by Republican senators and ignored (at the very last minute) by the Republican House leader. Obama did not offer any modifications of Obamacare as part of the ransom payment. The whole issue will revive in about 2 months time.

The Two Key Results

What are the two key results from this economic civil war?

First, I believe, the Tea Party will devote time and money to replace so-called moderate Republican senators by running Tea Party candidates against them. If the Tea Party can gain control of senate Republicans much as it has gained control of the House Republicans, then it will be able to block future deals to permit the raising of debt to pay government bills. This fight will be nasty and brutish. Unless “moderate” businesses that favour the Republicans pour massive amounts of money into the fight to beat off the Tea Party challenge, we can expect the Tea Party to be more successful in their terror tactics than most people expect.

Second, the most significant part of the deal that will pass both houses is that a bipartisan negotiating committee will be charged with devising plans for long-term solutions. This is where the real battles will be fought over the next two years (not in the Senate with someone reading The Cat in the Hat to pass time and stall legislation).

We can expect this bipartisan negotiating committee to focus on revenue enhancement (through the removal of tax shelters – which the Republicans can frame as not really, really, really a tax increase) and spending cuts (including on social programs).

It might actually result in a continuing process that moves things along very nicely, and achieves ends both parties can agree on.

It also brilliantly takes out the Tea Party blockage and allows non-Tea Party Republicans to have their say in the Committee.

No comments :

Post a Comment

Thank you for commenting; come again! Let us reason together ...

Random posts from my blog - please refresh page for more: