One analysis of the House GOP right now is that there are two players in the GOP who can cut a budget deal: Eric Cantor and John Boehner (and, on some of the other budget issues, Appropriations Chair Hal Rogers). One of them is going to have to do it. Which means one of them is going to lose his job. The optimistic take is that what we’re seeing right now is a game of musical chairs over which one of them it’ll be.
But the pessimistic analysis is that if you had to write a plausible scenario for how America defaults on its debt, or at least seriously spooks the market, this is how it would start. After insisting on using the debt limit as leverage for a budget deal, the Republican leadership finds they can’t actually strike a deficit-reduction deal, but nor can they go back on their promise to vote against any increase in the debt limit that isn’t accompanied by a deficit-reduction deal. What follows is a lot of jockeying and fingerpointing, a short-term increase or two, and eventually, a market panic.
Basically Klein's point is that Cantor has the backing of the Tea Party, which will accept no tax increase. If Cantor signs on to a deal with a tax increase, he loses. But Boehner is less trusted by the Tea Party, and if he signs off on a tax increase then he loses. Cantor probably wants a tax increase to happen because he's not stupid, but if Boehner does it without him then Cantor could be the next Speaker pretty soon. Boehner knows this because he's not stupid either, so he wants Cantor to be part of the deal. So it looks like there won't be a deal because neither one of them is blinking.
Cantor is putting personal power before country here, and in a very dangerous way. If Boehner actually does manage to cut a decent deal despite Cantor’s effort to throw him under the bus, he may not hold on as leader of his party, but unlike Cantor, he’ll deserve to. For better or worse, this is when we learn whether anyone on the Republican Party’s leadership team is actually prepared to lead.
But there's another possibility! Maybe the Democrats will blink! Why would they do that? Good question- I think they'd do it because they're gutless windbags, and Obama might lead it because he might be delusional enough to think that if he acts like the "grown up in the room" then it will benefit him and the country.
I just want to scream. I'm really afraid that the Democrats are going to cave on this one. This has been worrying me for a while. If the party of the center-left in this country, controlling the Senate and the Presidency, joins a deal that destroys the safety net in order to keep tax rates at unaffordable historical lows while polls show that Americans support higher taxes on wealthy people, then what do we have a center-left party for? I know I'm a fire-breathing radical liberal, well to the left of the mainstream in the US; but really, what's the point in supporting Democrats if they can't fight for this??
Democrats have lots of leverage here. For starters, the Bush tax cuts expire in 2012. If congress does nothing, the long-term deficit issue is greatly improved just like that. Secondly, if the government shuts down and people stop getting their social security checks when the Debt Ceiling is reached, Republicans will be blamed (as long as Democrats hold their feet to the fire and make sure of it). Third, as Jon Chait points out, Wall Street doesn't want a default and is nervous that the whack-jobs in the Tea Party are going to bring the whole country over the cliff, and there could be real defections to the Democrats if that happens.
The Republican strategy has been compared to hostage taking- making the Democrats believe they just might be crazy enough to let the country default. Democrats just have to stand up and call the bluff, and be ready to follow through with some rough and tumble blame gaming if Republicans can't come back to the table.
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