GOP Pushes Back on Obama’s Debt Ceiling Demands
“This bill will take Secretary Geithner’s disastrous scenario completely off the table.”
-- Rep. Jim Jordan, R-Ohio, chairman of the 165-member Republican Study Committee, announcing the committee’s new bill that would block an increase in the debt ceiling but arrange federal obligations in order to prevent default.
Republicans are getting serious about refusing President Obama’s request for more borrowing power, setting up a major showdown.
The administration warns of “disaster” if the current $14.3 trillion debt limit is not increased, and economists have warned that the U.S. could see its credit rating trashed if Republicans don’t go along with the request.
Speaker John Boehner said last year that because of the dire consequences to a U.S. debt default, Republicans would have to deal with the issue “as adults.”
But, there is now serious momentum behind a plan to refuse Obama but avoid default. The concept is that must-pay obligations, like interest on existing debts, payroll and other constant costs would go to the front of the line while long-term projects and money the government owes itself would go to the end of the line.
The White House warnings were based on the idea that the government would just run out of money and creditors, vendors and employees would just stop getting checks. Conservatives in the GOP are now suggesting that rather than default, the government do what cash-strapped individuals do: First pay crucial obligations but put off other bills until there is more cash.
As any bachelor can tell you, you pay the rent and the cable before the water bill. You can live without water for seven days, but no man has ever made it that long without television.
We haven’t heard yet from the Republican leadership on the new proposal, but with the Republican Study Committee, the largest group in the House GOP, now behind the deny but don’t default proposal, Boehner, Majority Leader Eric Cantor, and Budget Committee Chairman Rep. Paul Ryan may soon have to weigh in.
Right now, Republicans are debating internally the feasibility of such a move. One challenge is that the denial would have to come before the default prevention since Senate Democrats will never back an advance plan to refuse Obama’s request. That uncertainty could cause some ripples in world markets at a dangerous moment.
The new $1.5 trillion deficit forecast out Wednesday suggests that Republican hopes of delaying a debt-ceiling vote until May won’t likely be realized. Instead, the debt vote will probably be jammed into the coming weeks along with other short-term spending fights and budget battles.
Since Obama offered little in the way of outreach on spending reductions in his State of the Union speech and Republicans are digging in, the negotiations between Boehner and Obama will be some seriously high-stakes poker.
Deficit Numbers Pop Obama’s Big Green Bubble
“I'm not sure the president has decided whether he wants to try to solve the crisis or exploit the crisis.”
-- Rep. Jeb Hensarling, R-Texas, fourth-ranking House Republican, to Reuters on the $1.5 trillion projected deficit.
President Obama went to Wisconsin to look at green light bulbs on Wednesday, but back in Washington it was lights out for his State of the Union call for new spending on environmental initiatives.
The Congressional Budget Office forecast for the 2011 federal deficit reached an all-time high of $1.48 trillion and surpassed any previous year since the war effort of the 1940s for the ratio of federal borrowing compared to the nation’s overall economic output.
It was, perhaps, a good time for Obama to be out of town.
CBO boss Doug Elmendorf will testify on the Hill today about the forecast, and is expected to offer more grim details about the state of the Treasury. While the number was helped by the modest growth expected this year, it was widely expanded by Obama’s deal with Senate Republicans to extend current tax rates for another two years and extend emergency welfare for the unemployed.
The effect of the jaw-dropping deficit number was to immediately undercut the pitch from the Obama Democrats for more spending on the president’s green priorities.
While there may be little appetite for making the structural changes recommended to programs like Social Security and Medicare in order to deal with the long-term debt, the hugeness of the deficit will likely squash any hopes of short-term spending.
Republicans are working up their proposed cuts with one-year trims between $25 billion and $500 billion on the table. The month ahead on the Hill seems likely to be more about finding a cuts compromise than any Obama spending.
While Obama’s speech may have succeeded as a kickoff for his 2012 campaign among his political base, the likelihood of any of its main ideas going into effect looks very dim indeed.
Inflation Runs Riot, So Do Egyptians
“It’s leading to riots, demonstrations and political instability. It’s really something that can topple regimes, as we have seen in the Middle East.”
-- Economist Nouriel Roubini to Bloomberg News discussing rising food and energy prices.
The riots across the Middle East, from Tunisia to Egypt to Yemen, are about a lot of things, but the common trigger seems to be astronomical rises in food and fuel costs for already impoverished people.
There is a security concern when the backwaters of the world are roiled by high prices. That’s how Islamists and other radicals can find crises to exploit. If a man can’t feed his family, he is less inclined to defend the secular status quo.
In the developed world, the concern is stagflation – low growth combined with high inflation. That tends to lock economies into zombie modes. Japan, which saw its credit rating again dropped on Wednesday, is the poster child for stagnation, but Europeans are deeply concerned that their centrally planned economies will be seized by the icy grip of inflation.
American economists are hoping that growth will be just enough here to stay a point or two ahead of inflation and eventually break out of the tractor beam of devalued currency. But, the inflation panic rippling through the rest of the world increases pressure on the Federal Reserve to implement its slingshot maneuver to try to beat inflation.
The Fed has been actively trying to create inflation with rock-bottom interest rates and a gusher of cheap dollars. But the promise is that at exactly the right moment, the central bank can kick it into reverse and the forward momentum of the economy will carry the U.S. through the necessary efforts to prevent inflation.
It sounds too risky to much of the rest of the world, as well as many American conservatives. With bipartisan support expected for legislation now pending from Sen. Rand Paul, R-Ky., to audit the Fed, Ben Bernanke needs to pull off this loop-de-loop or pressure will grow to rein in the secretive, autonomous central bank.
More Waivers, More Worries About Obamacare Effects on Existing Plans
“We are committed to making the waiver process transparent to the public and to make sure workers with mini-med plans are informed about the limited nature of their coverage."
-- Statement from the Department of Health and Human Services on the granting of 500 more waivers from President Obama’s national health care law.
The Department of Health and Human Services wants the 4,000 members of the Health and Welfare Plan of the Laundry and Dry Cleaning Workers to know that their policies don’t meet the standards required by President Obama’s national health care law.
Of course, it’s DHHS Secretary Kathleen Sebelius’s decision that members of the union and some 2.2 million other Americans don’t have to receive the kind of coverage mandated by the president’s law.
The latest batch of waivers includes unions, small businesses, charities, local governments, schools and others that offer employees limited health policies.
As small business owners testifying in the House on Wednesday declared, in many cases it’s either getting a waiver from the Obama requirements or drop insurance altogether.
The waivers are necessary because until federally subsidized insurance exchanges and new eligibility standards for state and federal Medicaid programs for poor people go into effect, the end of non-compliant insurance programs mean displaced workers would have few options for coverage.
But, as the government’s chief health care economist hinted Wednesday in his testimony, once the new federal programs are up and running, those employer programs will likely close and workers will be dumped into government plans.
While Obama has indicated a willingness to change certain reporting requirements on his health law or other small-bore modifications, the growing worry among some congressional Democrats is that as cost and coverage estimates continue to bend away from the optimistic forecasts of the White House sales pitch, more substantial changes might be needed.
As Republicans dig deeper into the economic and systemic effects of the law, those worries will likely grow.
Meanwhile, the Court of Appeals for the Fourth Circuit in Richmond announced that it would speed up the hearing on one of the constitutional challenges to the law’s mandate that all Americans buy private insurance or enroll in a government program.
Judges will hear the appeal in mid-May, meaning that the Supreme Court could have the Virginia case, likely combined with a larger suit involving most of the 50 states, by this fall.
From the 2012 quote file:
“His theme last night was WTF, ‘winning the future.’ I thought, okay, that acronym - spot on. There were a lot of WTF moments throughout that speech.”
“I do believe that it would be helpful if at least one of the people who’s running in the Republican field have experience in the private sector; in small business, in big business working with the economy.”
-- Former Gov. Mitt Romney, R-Mass., on “Hannity” saying he was “looking at dates” to make an announcement about his presidential intentions.
“Obviously there's a big opportunity on the national field… We realize that if you're going to do this, you have to get moving. The clock is ticking."
-- Sen. John Thune, R-S.D., to ABC News on possible presidential plans.
Chris Stirewalt joined Fox News Channel (FNC) in July of 2010 and serves as digital politics editor based in Washington, D.C. Additionally, he authors the daily "Fox News First" political news note and hosts "Power Play," a feature video series, on FoxNews.com. Stirewalt makes frequent appearances on the network, including "The Kelly File," "Special Report with Bret Baier," and "Fox News Sunday with Chris Wallace." He also provides expert political analysis for Fox News coverage of state, congressional and presidential elections.