US Sen. Ted Cruz speaks to local residents during a fundraising picnic for the Iowa Republican Party, Friday, July 19, 2013. (AP Photo/Charlie Neibergall)
Sometime in the next week, Congress will either get it together to pass a new budget resolution or the government will shut down (all but essential services). Two weeks after that, the federal government will reach its debt limit. If it is not raised, nobody really knows what will happen. The only sure thing is that it would roil the financial markets and cause some damage to the global economy.
So, we have another fiscal cliff. This contrived crisis is even more irrational than those of the past few years because Republicans in Congress have not only taken a hostage that they can’t shoot, but are demanding that Democrats ditch their signature achievement of the Obama presidency: the Affordable Care Act.
Here are seven things you need to understand about how wacky all of this really is.
1. The plan …
Political observers expect to see some serious kabuki theater in the next few weeks. Speaker John Boehner (R-OH) caved in to tea party pressure and passed a budget resolution last week that includes a measure “defunding” the act.
Senators Ted Cruz (R-TX) and Mike Lee (R-UT) have been attacking House Republicans for not passing such a bill. In all likelihood, they will now filibuster the bill they have been begging for in order to try to block Senate Majority Leader Harry Reid (D-NV) from stripping out the defunding language, which he can do with a simple majority.
Because many Republican senators think this is all crazy – John McCain referred to Cruz as a “wacko-bird” a few months back, and Senate Minority Leader Mitch McConnell, R-Kentucky, said he won’t support the effort — the filibuster will only be a delaying tactic. In the final days or hours before the government shuts down, the Senate will send a budget to the House. At that point, Boehner will either attract enough Republican votes by promising a showdown over the debt limit in a couple of weeks and pass the budget with a bunch of Democratic votes or let the government shut down.
Then there’s the debt limit. Boehner has promised his members that they will get another bite of the Obamacare apple, but he faces a big problem: Obama’s insistence that it is Congress’ duty to pay the bills it ran up, and his refusal to negotiate on the matter.
The Washington Post’s Paul Kane reports that Boehner may hold a vote this week on a bill laden down with conservative goodies — including the approval of the Keystone XL pipeline, Medicare means testing, tax reform and a one year delay of all the health care act’s provisions — in order to get his caucus to raise the debt limit through 2014, but it is not clear whether any debt limit hike can attract 218 Republican votes, especially one that would be dead on arrival in the Senate.
2. Everyone knows this is all a scam …
Everyone in Washington knows that these budget shenanigans have zero chance of success because the vast majority of the funding for the health care act is “mandatory spending,” which means that a shutdown will have no effect. Only a bill passed by the (Democratically controlled) Senate and signed by Obama could defund the health care law, which is about as likely as the Loch Ness monster singing the national anthem at this year’s World Series.
But as The Washington Post’s conservative blogger Jennifer Rubin notes, the outside groups pushing the effort — Freedomworks, the Heritage Action Committee and the Senate Conservatives Fund – are raising big bucks from all this drama. In fact, according to The Huffington Post, the Senate Conservatives Fund “raised its largest-ever monthly total for a non-election year this August.” Democrats are reportedly getting in on the action as well.
3. Plan B …
Ted Cruz offered an alternative this week when he urged the House to continue sending bills funding various elements of government to the Senate. “If Harry Reid kills this bill in this Senate, I think the House should hold its ground and begin passing smaller continuing resolutions one department at a time,” Cruz told Fox News this week. “It should start with a continuing resolution focused on the military. Let’s see if Harry Reid is willing to shut down the military just because he wants to force Obamacare on the American people.”
As Roll Call noted, the House approved a defense authorization bill back in July.
4. “Clean” budget isn’t that clean …
The goal here is to get a “clean” budget resolution through both chambers of Congress and onto the president’s desk. But largely missing from the discussion is the fact such a budget would maintain the crushing cuts of the sequester, representing a significant victory for conservatives.
Democratic congressional staffers told The Washington Post’s Greg Sargent that they would not pick a fight over the sequester-level funding because the budget resolution is temporary — it will only keep the government afloat for three months — and they do not want to shift blame away from Republicans if a shutdown or default occurs.
5. Republicans are deluding themselves about the public’s opinion of Obamacare.
“The American people don’t want the government shut down, and they don’t want Obamacare,” John Boehner said after the House passed its bill. “The House has listened to the American people.” This is a common refrain from Republicans who support the effort to defund the law, and it is a product ofbeing stuck in the conservative media bubble.
The truth is that while Americans are divided on the health care law – with slightly more opposing it than supporting it – poll after poll shows that large majorities disapprove of the effort to defund it by threatening a shutdown or messing with the credit of the US government.
6. No leverage.
John Boehner has all but begged the White House to enter into negotiations to raise the debt limit. But he has no leverage, for two reasons. First, he is on record saying that not raising the debt ceiling would lead to “a financial disaster, not only for us, but for the worldwide economy.” And second, because more than twice as many Americans would blame Republicans in Congress for that disaster than would blame the president.
It’s a weak hand. But he is really caught between a rock and a hard place: He has got little control over his caucus but is set up to be the fall guy if it all goes badly. It is no wonder that it has been widely rumored that he is not interested in another term as speaker.
7. Not raising the debt limit in a timely manner will increase the national debt …
Former Senator and Senate Finance Committee Chair Judd Gregg, R-N.H., explained this irony in an op-ed urging Republicans not to play “Russian Roulette with all the chambers of the gun loaded”…
A default would lead to some level of chaos in the debt markets, which would lead to a significant contraction in economic activity, which would lead to job losses, which would lead to higher spending by the federal government and lower tax revenues, which would lead to more debt.
Federal Reserve Chairman Ben Bernanke said last week that games over the budget and debt ceiling are already hurting the economy.