Power Play

Spending Showdown the Main Dish at Obama-GOP Lunch

Unappetizing Menu for Obama and Boehner; Losers not Lovable in Arab World; Payroll Tax Hike Scorned; Heady Hearings on the Hill; CIA’s Complicated Mission

Luncheon Summit Between Obama and House GOP Comes Amid Spending Clash

"This sort of quid pro quo, that if Washington acts to whatever it is the president is proposing - whether it’s reducing the corporate rates or whether it’s passing trade bills - that somehow business owes it to the country to do x, y, z, I think that misses the mark.”

-- House Majority Leader Eric Cantor, R-Va., talking to reporters about President Obama's speech to the Chamber of Congress.

The top three House Republicans are heading to lunch with President Obama at the White House today, and the subject matter will not likely aid anybody’s appetite.

Obama’s invitation to Speaker John Boehner, Majority Leader Eric Cantor and Majority Whip Kevin McCarthy, is part of the president’s new courtesy offensive in which he will be talking with Republicans instead of just talking about Republicans.

The purpose, given the hierarchical guest list, is likely to be the president’s budget, due out next week. This briefing represents a shift for the administration, which in previous years would have dumped the document and then dared Republicans to react.

This is part of an overall rollout of the president’s spending plan, which is expected to be a blend of new spending, modest debt containment measures, a state bailout and changes to the tax code. All the House Democrats will be getting briefed today on the president’s budget in a closed-door session with Obama budget boss Jack Lew, so you can expect lots of leaks by day’s end.

But the real topic at the lunch today will be the coming collision of three fiscal issues – Obama’s budget, the House Republicans’ plan to fund the government for the remaining seven months of the fiscal year and the administration’s pending request for an increase in the $14.3 trillion debt ceiling.

The absence of Budget Chairman Paul Ryan suggests that this will not be a discussion of fiscal policy but a presentation of political grievances.

We have yet to hear from the Republican leadership exactly what they will demand from Obama in return for again raising the borrowing limit. Proposals on the Republican side include a balanced budget amendment, deep cuts in 2012 and deeper cuts to spending levels.

Republicans have bolstered their bargaining position by proposing a plan by which the government might not default on its obligations by sequencing payments to favor high priorities. Democrats have countered with increasingly dire warnings about the consequences of the nation reaching the ceiling.

Since Obama and the trio have no cordial relationship, the lunch is more likely to be the start of a bargaining process rather than a fruitful discussion.

Boehner, Cantor and McCarthy will return to the House to face many questions from members about what Obama wants and what the Republicans will demand. The specifics of the House spending plan for the current year are due out this week and time is running short on the debt demand, so members are getting antsy about how far their leaders are going to push the issue of fiscal austerity.

The defeat Tuesday night of a Republican effort to pass a reauthorization of the Patriot Act in fast fashion with a supermajority vote came as a result of eight libertarian-minded Republicans who unexpectedly joined Democrats in opposing the measure.

The bill will yet pass and the Republican leadership doesn’t need a supermajority to advance legislation under normal circumstances, but the surprising defeat suggests that there may be some problems with either unit cohesion among the membership or vote counting among the leadership. Democrats are cackling over the stumble.

Today’s lunch means Team Boehner comes one step closer to facing members who are calling for hardcore spending measures. Leaders can afford to lose a few votes on debt and spending issue because of the help of Blue Dog Democrats, but it would be much better for the GOP to stay united.

A lack of party agreement on such central issues now would bode ill for the fights to come.

In Middle East, the Loyal Opposition Lacks a Loyal Following

"If you think Facebook will change Yemen, you're crazy. We don't even have electricity."

-- An unidentified member of Yemen’s ruling People's General Congress Party to the Wall Street Journal.

The world is waiting anxiously to see if any legitimate secular opposition can arise in Egypt that will offer a middle way between the continued rule of President Hosni Mubarak’s ruling claque and Islamist radicals.

But the problem is that in Egypt, as in other authoritarian states in the Middle East, the opposition parties allowed to function are sort of like the foils for Harlem Globetrotters, the Washington Generals. Nobody thinks they will win so nobody roots for them in elections.

The U.S. has long provided support for these persistent failures on the grounds that fake democracy is better than nothing, but as our government looks to these groups to stand up while the old order crumbles across the Arab world, we find that the perennial losers have little public support.

The big danger spot today seems to be Yemen, where what had been well organized protests led by the sanctioned opposition threaten to give way to angry mobs. The ruling quasi-despot has promised not to run again and hasn’t interfered with demonstrations, but if the bombs start flying, Yemen is ripe for collapse.

Obama Payroll Tax Hike Plan Flops

“$183 per worker”

-- Cost of a tax increase to be proposed by President Obama to pay for unemployment benefits.

The Wall Street Journal estimates that the cost to a business with 500 employees under the Obama administration proposal to raise payroll taxes to cover state unemployment benefits would be more than $90,000 a year.

For whatever reason, the first proposal from the president’s 2012 budget, due out Monday, to be floated publicly is a plan to postpone repayments of $42 billion owed to the federal government for states’ shares of unemployment benefits.

The Center on Budget and Policy Priorities estimates that states face a combined $124.7 billion budget shortfall in 2012. California leads with $25.4 billion and Illinois comes in second with a $15 billion shortfall.

What the administration will propose won’t help states cut into those shortfalls directly, but would prevent automatic hikes in state payroll rates to cover the state obligations that are written into current law. Avoiding those taxes may help states hold on to taxpaying companies and, especially in places like Illinois where lawmakers just decided to jack up rates or California where Gov. Jerry Brown is seeking a sharp increase.

Think of this as a continuation of part of the Obama stimulus. The initial plan gave states money to augment unemployment rolls, this would do the same, but in the form of debt forgiveness, rather than direct subsidy.

Remember also that a lot of the money states owe is obligated to federal programs. Medicaid is the biggest part of many state budgets and matching funds on other welfare programs and infrastructure projects take big bites. The path to the next state bailout could be in debt forgiveness rather than direct subsidies.

The idea paying for this bailout with an employment tax has induced widespread sputtering and disbelief. There are many portions of the president’s budget that will never get through the House, but increasing taxes on companies for hiring people will be defeated with particular relish. The plan may be part of a larger concept of broadening unemployment benefits on a permanent basis. The 26-week insurance program has turned into a 99-week welfare program during the protracted recession. But whatever its objective, the plan’s destination will still be defeat.

Another quick complaint about the bailout proposal came from the 20 states not in arrears on their unemployment obligations, states that have allowed automatic payroll tax hikes to kick in to cover the gap instead of delaying.

Consider what Paul Trause, employment security commissioner for Washington State, told the Wall Street Journal:

"The current proposal provides no recognition or reward for the employers in our state that have paid higher taxes for a number of years to ensure that our trust fund remains solvent during tough economic times."

EPA Hearing Will Bring Noise Pollution

"Simply put, you can't work if you can't breathe,"

-- Sen. Barbara Boxer, D-Calif., rebutting Republican claims that stringent new EPA regulations would cost the nation jobs.

EPA Administrator Lisa Jackson heads to the House today to answer questions about her agency plan to address concerns about Global Warming by classifying carbon dioxide – the fourth most common element in the earth’s atmosphere – as a hazard to human health.

She may want to bring some barrels and some rodeo clowns with her, because the bulls will be charging hard today. Jackson has been openly defiant of the bipartisan call for her agency to step back, and promised that President Obama will protect the controversial carbon plan with a veto if necessary. Republicans and carbon-state Democrats will have some very pointed questions for Jackson, which she will work hard to obstruct.

If the hearing goes particularly poorly it could set of a FOIA and subpoena battle between the House and the administration. Oversight Committee Chairman Darrell Issa already got brushed off by Homeland Security for a document request. The battle could broaden today.

The acrimony will be so intense that it will likely overshadow the contentious hearing around the corner as Ben Bernanke faces seriously peeved Republicans.

Bernanke has so far declined to take any responsibility for mounting inflation anxiety, but Republicans believe his aggressive cash dumps – the current one is $600 billion – of conjured money is pushing prices up.

The EPA hearing will offer more drama, but the Bernanke testimony may be more consequential. He faces Budget Committee Chairman Paul Ryan, the top numbers guy on the GOP side. If Ryan walks away unsatisfied he could add big momentum to extend for the first time House oversight to Bernanke’s secretive central bank.

It likely did not help Bernanke’s status in the majority caucus when he pooh-poohed a Republican plan to avoid default without increasing the debt ceiling as “playing around.”

Jackson and Congress are already deeply at odds, but Bernanke is only viewed with a skeptical eye. If he can’t win back some confidence today, things will devolve quickly.

Report Finds Obama CIA Rewards Agents Who Botched Missions

“It's not about retribution. It's about maintaining discipline and order and responsibility up and down the command chain. Otherwise trust is eroded."

-- John Maguire, a former senior operations officer who spent 23 years at the CIA, talking to the Associated Press.

Consider the case of Raymond Davis, a former Special Forces soldier who is currently at the center of a huge diplomatic standoff between the U.S. and Pakistan.

Davis, who now works in “security” at the U.S. consulate in Lahore, shot and killed (with a total of nine bullets) what he says were two Pakistani street thugs on motorcycles who were trying to rob him (if so, they picked the wrong car to jack). When local police arrived, they detained Davis and found in his possession a pocket telescope, a headband flashlight, a camera with lots of pictures of Pakistani buildings of dubious aesthetic or cultural value and various identification cards that show him simultaneously to be a Defense Department contractor and a State Department employee.

Pakistan was already burning with resentment toward America and the West for the secret war our intelligence agencies are fighting in that country. Our diplomatic stations in Pakistan have grown massively in recent years and are believed by locals to be something more akin to tactical headquarters for spying and covert operations than outposts of cultural understanding.

But the deaths of these two young Pakistanis, said by local police to be unarmed, has further inflamed the citizenry. The U.S. has told the teetering government of President Asif Ali Zardari that Davis must be handed over under the conventions of diplomatic immunity. Zardari, facing popular unrest and the massive threat of Islamists in his country, has so far declined to intervene. The wife of one of the dead men has killed herself and the local press is in more of an uproar than usual. It is an open question whether Zardari could even get the local authorities in the 81-million resident Punjab Province, now an Islamist hotbed, to release Davis.

In a move that sorely tests the credibility of the concept of a state visit, Zardari is due in Washington next month for a red carpet reception at the White House. The visit is a payback for having the leader of Pakistan’s detested rival, India, for such a visit in 2009 (thence came the Salahis). A 21-gun salute for the leader of a country so infested with corruption and Islamic radicalism that Zardari’s regime seems to function on a day-to-day basis was already going to be tough to pull off before the Davis debacle.

If Zardari doesn’t obtain Davis’ release, though, the visit could be off – which would likely be a relief for President Obama – and the relations between the two countries would descend from strained cordiality to open confrontation – which would be a relief to no one.

Davis may simply be a security contractor out scouting locations, but he looks like a spy to the Pakistani public. And the incident highlights the complications and perils of fighting a shadowy war against unconventional foes in terrible parts of the world.

A new report out today from the Associated Press documents numerous occasions when serious failures by CIA operatives – snatching the wrong guy in a botched rendition, accidentally killing a detainee, and most seriously, allowing an al Qaeda double agent into a U.S. base to detonate a suicide bomb last year – have resulted in uneven, sometimes negligible, consequences.

The AP found that officers responsible for such failures have been promoted repeatedly, and demonstrates an almost endearing credulousness when expressing surprise that officers who did such things “under the Bush administration” have not been drummed out of the service with Obama in the White House. This is one of the most notable forms of Washington press thinking: when guys with guns do bad things in the employ of Republican presidents it is described as part of a reckless cowboy culture, when they do the same things under Democratic presidents, reporters lament the executive’s inability to bring reform to ossified and brutish agencies.

CIA old timers defend the lax penalties for top officers who blow missions on the grounds that agents need to feel free to take risks in defense of national security. This is not the court system, they would argue, this is espionage and counterterrorism and bad things happen.

But, the CIA now has tens of thousands of employees and an unknown number of contractors who aren’t just doing spy stuff but acting as frontline soldiers in the war against Islamists. The drones killing baddies in Pakistan and Yemen and covert operations around the world are CIA jobs.

Those calling for reform in light of the AP report, including some other old timers, suggest that because the job and mission of the agency has changed so much since the cloak and dagger days of the Cold War that the CIA needs something more akin to a military command and accountability structure to prevent excesses.

Chris Stirewalt joined Fox News Channel (FNC) in July of 2010 and serves as politics editor based in Washington, D.C. Additionally, he authors the daily Fox News Halftime Report political news note and co-hosts the hit podcast, Perino & Stirewalt: I'll Tell You What. He also is the host of Power Play, a feature video series on FoxNews.com. Stirewalt makes frequent appearances on network programs, including America’s Newsroom, Special Report with Bret Baier and Fox News Sunday with Chris Wallace. He also provides expert political analysis for FNC’s coverage of state, congressional and presidential elections.