What follows below is provisional. Circumstances may change. They usually do, but something is up. Things are being settled. Commitments are being made. Except things aren’t quite settled and the commitments seem to be provisional – but then that describes more than half the marriage vows made in America every day, so we all should be used to this sort of thing. Promises turn out to be something else entirely. Solemn vows end up having escape clauses, based on unexpected developments. These days you promise what you can, with the best intentions, and hope for the best.
That said, this was the day, Thursday, October 10, 2013, when two attempted coups ended in failure. House Speaker John Boehner opened the day saying he and his unruly House caucus were giving up on one front – they would no longer refuse to raise the debt limit unless Obamacare was defunded and dismantled, or unless Obama agreed to massive budget cuts to all social programs, or if Obama refused to talk to them about their demands, on which they would not ever compromise, or something else. In the end it wasn’t clear what they wanted, other than a little respect, and it was also clear that refusing to raise the debt limit would bring on the collapse of the world’s financial system.
They finally got it. Refuse to raise the debt limit and we can’t pay our bills. We would default on our debt, and since our debt, in the form of all the Treasury bonds we had sold over all the decades, to pay for what Congress demanded we do, was the one default unit of sure value worldwide, no one could be sure of what anything was worth anymore. We might pay you back. We might not. Our Treasuries would be worth only what people decided they’d be willing to pay for them – not face value. Forget the principle amount. We might not even pay the interest on these bonds, and this would be like what happened with all those mortgage-backed securities insured by credit default swaps at the end of the Bush administration. Suddenly no one knew what anything was worth – maybe nothing, maybe something, but not face value – so the credit markets froze. Investment banks went under. Major commercial banks went under. Major corporations – now unable to fund their day-to-day operations through very short term borrowing when the credit markets froze – went under. Unemployment skyrocketed, collapsing demand for goods and services, slowing the economy to almost a dead stop – and of course millions lost their homes. Those homes were worth far less now, no one really knew how much less – but they still owed the full amount on the mortgage, and they’d lost their jobs too. This was a total system meltdown, because the one sure unit of value in a vast unregulated shadow banking system, the home mortgage, was suddenly not worth what everyone assumed it was worth. No one knew what that unit of value was worth, but that was only home mortgages. US Treasury Bonds are a different matter altogether. If no one knows what those are worth we don’t get a system meltdown. We get financial Armageddon.
There had been warnings. People like Richard Bove, the vice president of research at Rafferty Capital Markets, saw something worse than the Great Depression happening when we default – and he was one of many. Bloomberg News laid it all out too – the details were beyond frightening. There were signs in the market too. The cost of short-term treasury bonds spiked – anything that paid off around October 17, the day the government no longer would have the authority to borrow a bit more, to pay what’s due now, was a bad bet. There was this too:
The nation’s largest manager of money market mutual funds said Wednesday that it no longer holds any U.S. government debt that comes due around the time the nation could hit its borrowing limit.
Money market portfolio managers at Fidelity Investments have been selling off their government debt holdings over the last couple of weeks, said Nancy Prior, president of Fidelity’s Money Market Group. While Fidelity expects the debt ceiling issue to be resolved, the Boston-based asset manager said it is taking steps to protect investors.
Just a hint of default caused this. No one wants our treasuries. We’ll now have to offer a whole lot more in interest to get anyone to buy them. If we do default that will only get worse. The cost of just servicing even the debt we have now will skyrocket, and future borrowing costs will be sky-high. The damage was already done. It would only get worse.
All this was pretty grim, but various Republicans scoffed at the idea that we’d default on anything. We’d pay off everyone – in full, principle and interest, right on time – we’d just defer other payments, to contractors or whatever. Matthew Yglesais pointed out how that was both illegal and also practically impossible – and even if you choose to stiff someone else you’re still stiffing someone. The Fourteenth Amendment says “the full faith and credit of the United States shall not be questioned” – so the Republicans were well on their way to violating the Constitution, intentionally. That may be an impeachable offense. There wasn’t much mention of that, but that might come up later.
Given all this, it’s no wonder Boehner suddenly changed his mind. He said he planned to offer President Obama a clean six-week debt-ceiling extension – in exchange for a willingness to negotiate over the budget. There was no mention of Obamacare, but there was also no mention of ending the government shutdown. That would continue, so think of it this way. They had taken two hostages but had decided to release one, reserving the right to retake that hostage again in six weeks. They could shoot either hostage then, but for now, they would be satisfied with holding a gun to the head of only one. Presumably this would prove that the House Republicans were quite reasonable people, willing to compromise, even if Obama wasn’t.
The fact that Republicans are insisting that Obama negotiate with a debt ceiling breach looming over him is a tacit admission that the debt ceiling is still being used as a threat. Right? Or am I missing something here?
I suppose Obama would have to sign a clean extension regardless. And he probably should. And who knows? Anything can happen in six weeks. But it’s a little hard to see that this accomplishes anything except to guarantee a Thanksgiving hostage crisis instead of a Halloween hostage crisis.
Still, even so, this was something, and Obama asked Boehner and his folks to drop by the White House to chat about this, which is where things got interesting:
President Obama opened talks with House Republicans on Thursday about their plan to lift the federal debt limit through late November, raising hopes that Washington would avert its first default on the national debt.
But after a 90-minute meeting at the White House, the two sides remained at odds over how and when to end the government shutdown – now in its 11th day – with Obama insisting that Republicans reopen federal agencies before negotiations over broader budget issues can begin.
Obama hadn’t changed his mind. He’s willing to talk about everything, to consider all sorts of ideas, but not with hostage-takers. He won’t deal with people who threaten pain and misery for the entire nation unless they get their way, even if they say they’ll table one of their two big threats for six weeks. That’s no way to run a government. That’s banana-republic crap, and if he agrees on anything now they’ll just come back with some new dire threat later, because they’ll have seen that threats work better than elections and legislation and all that stuff in the Constitution. He would have none of it, and the talks stalled. Boehner was flabbergasted. Those who watched any of this on television saw that. After the meeting Boehner walked past reporters, head down, dead silent, refusing to answer any questions or make any comment. Others spoke for him. Ending the government shutdown was now on the table too.
That was probably going to happen, soon. Obama had won:
In the Senate, top Republicans began crafting a proposal that would reopen the government and raise the federal debt limit for as long as three months – an approach closer to the terms Obama has set to end the standoff. The developments meant that bipartisan negotiations were suddenly underway on two separate tracks Thursday after weeks of stalemate.
No one trusts that Boehner can convince his unruly caucus to agree to anything at all. The Republicans in the Senate will take care of ending the shutdown, forcing the House Republicans, in shame, to go along. Obama is set to meet with all of the Senate Republicans, together, to work out the details, but those would be only the minor details:
According to a Democrat familiar with the meeting, Obama agreed to review GOP proposals for reopening the government but reiterated that he would not make policy concessions.
It’s not that he’ll never make policy concessions, ever – he just won’t make policy concessions with a gun to his head. He taught constitutional law at the University of Chicago so he kind of likes the rules in there, and the whole idea of regular order and all that. He even took an oath five years ago to uphold and defend the Constitution. He’s just doing his job.
Boehner was doing something else:
Boehner’s offer to temporarily lift the debt limit but keep the government shuttered was engineered in part to satisfy far-right conservatives, who first suggested using the threat of a shutdown to strip funding for the law. Those conservatives have grown anxious in recent days as talk of making this stand singularly about the health law died off among many rank-and-file Republicans.
On Thursday, many creators of that strategy – including Sens. Ted Cruz (R-Tex.) and Mike Lee (R-Utah) – voiced support for Boehner’s latest gambit.
“It’s to continue [the] fight on Obamacare, to not leave that as a side issue,” said Rep. Raúl Labrador (R-Idaho).
Heritage Action for America, a conservative advocacy group influential with tea party Republicans, said it will not ask lawmakers to vote against raising the debt limit with no strings attached in order to refocus attention on the healthcare law. The conservative Club for Growth also announced that it will look the other way on the debt limit vote.
Boehner got the green-light from the important people, not from rereading the Constitution, but everyone could read the tea leaves:
GOP leaders, meanwhile, appear increasingly eager to extract the party from the health-care fight, which has not only failed to achieve its goals but also has decimated the party’s reputation among voters. According to a Wall Street Journal/NBC News survey released Thursday, 24 percent of voters have a positive view of the GOP – an all-time low in 24 years of polling.
Obama’s approval is up; Republican Party approval is down; confidence in the economic recovery has plummeted thanks to the budget standoff; and voters blame Republicans for the government shutdown by a margin of 53-31. Virtually everyone who’s not a hardcore dittohead blames the GOP. What’s more, 73 percent of the public thinks the shutdown is a serious problem and 31 percent have been personally affected.
But none of that is a big surprise. Here’s something that is: After a week of 24/7 media coverage about the problems with the rollout of Obamacare, its popularity has gone up. It’s still not doing gangbusters or anything, but it’s pretty interesting that an awful lot of people who previously had no opinion are now feeling pretty positive about it. Is this because they or someone they know has actually gone on line and discovered that there are pretty good deals available? I don’t know. But something has changed their minds.
All that will change a few minds, and now, even if the government shutdown does go on for a few more days, at least the world’s economy is safe, although Jonathan Bernstein points out the pesky details:
Democrats have no choice but to accept a clean debt-limit extension (or government funding bill, if that’s available) of any length at all… Where it gets fuzzier is if Republicans propose something that isn’t exactly “clean.”
If the add-ons are cosmetic, Democrats probably (again, depending on details) should accept it. If it includes Republican policy gains or Republican-favoring procedural gains, then Democrats should reject it. But if it’s just some meaningless mumbo-jumbo tossed in so that Republicans can claim a victory (or at least pretend there was no defeat), then Democrats should accept it.
We’ll see. Everything is provisional, and Alex Altman points out something else:
It is still uncertain whether the restive House Republican conference broadly supports the plan. While members described the meeting as positive and cordial, others said both more moderate and more conservative members expressed reservation. Some centrist Republicans are concerned about leaving the government shuttered. While several of the Tea Party Republicans who forced the shutdown in an effort to change elements of Obamacare said they would support the plan if Obama signed on, others withheld their support.
There are still those who just know they could blow this up, and maybe they can, but that’s less likely now. The Republican coup d’état is over. It didn’t work. Our constitutional system was not set up to allow one small group in one chamber of one house of Congress to decide how things should be, even if they nominally control funding. Yep, they hate Obamacare, but they don’t get to nullify the results of an election, or in this cause multiple elections, nor nullify a law that has been passed by both chambers and signed into law, nor do they get to render a pesky Supreme Court decision about that law entirely moot. That’s not how things work. To claim otherwise is to stage a coup d’état – to attempt to overthrown the existing government.
What they were trying to do may have been about the rights of what they saw as the few remaining Real Americans – to use Sarah Palin’s favorite formulation – but that implies ending the current government of the so-called “people” – that stupid multicultural majority, with all those black folks who want your stuff – all those folks who vote the wrong way and for the wrong things and for the wrong people, and pass the wrong laws. They have a problem with majority rule and did try voter suppression, a coordinated national effort. From North Carolina to Texas to Florida, now, a whole lot of minority folks, and the young, are going to find it damned hard to ever vote again, what with all the voter-ID stuff and no early voting and whatnot – but they lost the black vote, and the Hispanic vote, and they lost women and the young and the urban vote, so they had to do something, and they could, so they did.
This crowd keeps talking about a new revolution and taking “their” country back. They’re serious, and this was a long time coming. Stopping Obamacare by any means possible – shutting down the government, crippling the economy, or forcing America into default, collapsing the world’s economy – unless America does the right thing, was only one part of a larger effort. At least they didn’t demand that in return for delaying certain ruin, Obama and Biden resign – but this has been as close to a coup as we’ve gotten. It really wasn’t their country. They’ll now just have to live with that.
The Republican Party wasn’t really their party either, and their firebrand, Erick Erickson, just figured that out:
I’m being told by several sources that Speaker Boehner and Majority Leader Eric Cantor are plotting to give up trying to either defund or delay Obamacare.
This comes at the same time the Obama administration admits it will be months before their Obamacare website will be fixed and Kathleen Sebelius is saying if people want out of the mandate they can pay a fine.
Nonetheless, Cantor, Boehner, and with them Mitch McConnell and John Cornyn are expected to cave in and fully fund, unimpeded, Obamacare.
They will work up a new deal that includes a debt ceiling increase with a few sops to the GOP as cover. The only change they are still considering it the medical device tax repeal, which is being heavily lobbied for by former Boehner and McConnell staffers who left for K Street.
A number of Democrats who are recipients of campaign cash along with these Republicans may provide a crony capitalist bridge over which this one tax repeal can pass while leaving in place all the other taxes, penalties, and fees.
But John Boehner, Eric Cantor, Mitch McConnell, and John Cornyn will ensure that Obamacare is fully funded and give the American public no delay like businesses have.
This is unacceptable:
In doing so, they will sow the seeds of a real third party movement that will fully divide the Republican Party.
The Tea Party Coup – taking over the Republican Party – didn’t work out either. Ted Cruz is no longer a hero to anyone but a very few, who now want to start their own party, and Keven Drum, looking at the recent polling numbers, adds this analysis:
Republican favorability ratings have been hovering within a few points of 40 percent ever since 2006. Then Ted Cruz mounted his filibuster, Republicans starting threatening to crash the economy, and their favorability crashed ten points to 28 percent, the lowest in history. As we all know, the Crazification Factor is 27 percent, which means that literally nobody sane approves of the Republican Party any longer.
This demonstrates a surprising amount of common sense among average Americans. In a way, I’m heartened.
So, if Erickson is onto something, we’d then have the Democratic Party – about half of everyone – and the remaining relatively sane Republicans and the angry and crazed but pure Tea Party – the two parts of other half. Who would have the power to get things done the way they want then? Obama was more dangerous than the folks on the right ever imagined. All it took was two failed coups.