Dems Lose First Round of Shutdown Struggle

Dems Back Down on Shutdown; Obama Prepares for Qaddafi Win; Riots Squeeze U.S. Consumers; Wisconsin Battle Coming to a Head; Daniels Bashes “Hot Tub” Democrats

GOP Takes First Round in Federal Shutdown Fight

“After two years in control, it’s hard for them to understand what it’s like to share power.”

-- A senior House GOP aide to Power Play describing the about face from Senate Democrats on a short-term spending bill proposed by Republicans.

A stunning reversal from Senate leaders last week on a Republican plan to keep the government running beyond Friday’s deadline reveals the growing understanding among Democrats that a government shutdown could be politically disastrous for them.

That’s also reflected in a new poll on a potential shutdown conducted for The Hill that shows voters would blame Democrats over Republicans 29 percent to 25 percent. That compares to the two-to-one margin by which voters blamed Republicans ahead of the 1995 shutdown.

While many voters remain undecided about who to blame, part of the Democratic problem has been on messaging. While House Speaker John Boehner has been insistent that he does not want a shut down, Senate Majority leader Harry Reid had been using amped-up rhetoric and seemed to be almost daring Republicans to force a shutdown.

Returning to Washington today after the Washington’s Birthday recess, Republican lawmakers have to be happy about how things are stacking up.

On Wednesday, Reid’s spokesman issued a statement calling the House plan for a two-week extension of government funding with $2 billion in cuts a “non-starter” and disparaged Republican budget cutting zeal. But on Friday, Democratic leaders let it be known that two-week plan was a welcome offer and would help facilitate the larger debate over funding for the remaining seven months of the fiscal year.

This is a good strategic move by Democrats. With Reid’s team having so far offered zero cuts to current spending levels, forcing a shutdown by blowing off the Republican measure would have been a political disaster. The two weeks will buy Senate Democrats time to come up with a modest cuts package so the onus will be back on House Republicans to accept a deal or force a shutdown.

The two-week extension also pushes the vote on government funding closer to the next risk for a potential partial shutdown – the maxing out of U.S. borrowing power. As the Obama administration looks to finance the largest-ever federal deficit, the White House wants the current $14.3 trillion debt ceiling to be raised before April or warns of federal default and global financial crisis.

By ceding round one to Republicans, Democrats will hope to prevail in rounds two (the seven-month spending plan) and three (the debt ceiling).

But, by buckling on cuts, even for two weeks, Reid also reveals the weakness of his position inside his own caucus. With only a three-seat majority and moderate Democrats desperate to show their fiscal restraint ahead of a bruising 2012 election season, Reid cannot hold the line on his calls for continued spending at current stimulus levels.

Put it this way – Boehner has enough votes for a government shutdown if he decides to dig in on the full monty of GOP cuts. Reid does not have enough Senate votes to force a shutdown if he decides to dig in on preserving current spending.

Boehner will likely have to give ground once the Senate responds with some cuts of its own, but for now, the House takes round one in the great spending battle of 2011.

U.S. Prepares For Qaddafi Win as Libya Civil War Escalates

"The British prime minister, the French president, and others were not hesitant, and they have citizens in that country.”

-- Sen. John McCain, R-Ariz., on “State of the Union” discussing the tempered response from the Obama administration to Libya’s civil war.

Rebel forces in the east of Libya say they are gaining more power thanks to military defections and even the resumption of some oil exports from the region.

But that sets the stage for a decisive battle in the central part of the warring nation. There, the home region of dictator Muammar Qaddafi, the battle is for control of the nation’s petroleum wealth. While it might be hard for Qaddafi to hold on if the capital of Tripoli were to fall, his chances for holding on without control of the oil fields would be nil.

The United States has called for Qaddafi’s ouster (through the release of an official description of a telephone call between President Obama and his German counterpart) and imposed unilateral sanctions on the country.

Today, the U.S. continues to seek diplomatic support for sanctions. President Obama will meet with the head of the United Nations and Secretary Clinton is still seeking help from the European Union.

But these are long-term, theoretical considerations based on the assumption that Qaddafi or one of his seven sons will hold on to power in parts of the country. In a rebellion such as this one, the time it takes to handle diplomacy among Western allies is enough time to determine the fate of the uprising.

The rebels claim to be gaining ground and are begging for Western weapons or at least the use of Western airpower to keep Qaddafi’s air force on the ground.

The Qaddafi regime insists that what have been described as atrocities, such as accusations that government snipers fired on unarmed protesters, have really just been battles in a civil war, and the growing military sophistication of the rebels actually tends to support that argument. The obvious concern to the U.S. is that if Qaddafi can hold on in part of the country, U.N. officials will help him stay for fear of setting a new precedent about regime change following civil wars.

While doing nothing about the actual war, the Obama administration is trying to strengthen the case against Qaddafi once the fighting is over. That has to feel kind of like a vote of confidence to the egomaniacal dictator.

Middle East Riots Squeeze U.S. Consumers

“Justice for the ministers’ crimes!”

-- The chant of protesters who shut down the port of Sohar, Oman.

Here’s a novel way for dealing with long-term unemployment: Burn down supermarkets and police stations until the government agrees to hire more people.

In Oman, the oil-rich kingdom at the tip of the Arabian Peninsula, Sultan Qaboos bin Said Al-Said has ordered the hiring of 50,000 people to government jobs, sacked half of his cabinet and began welfare payments for college students and job seekers.

In a nation of 3 million people, making 50,000 new hires isn’t chicken feed. The equivalent number for the United States would be something like suddenly adding 5.2 million people to the public payroll in one day.

Qaboos is a friend to America and has been considered in his 40-year reign to be one of the enlightened despots of the region. He has been more reform-minded than his Saudi cousins to the north and compared to the Yemenis next door, has run a veritable Switzerland of the Middle East. But, riot police have been blamed for as many as six deaths in two days as they work to put down the uprising.

The protest movement in the region (praised for its peacefulness even as they burn government buildings and corner stores) has now affected several pro-Western nations that are key to the region’s only claim on geopolitical influence, oil. The unrest continues in Bahrain and Iraq and whoever the online activists behind the movement are, have called for massive protests in the capitals of other American allies on Tuesday, including Riyadh, Saudi Arabia.

The net effect is to drive already rising energy prices through the ceiling and threatens the already weak economic recovery in the West.

Oman is significant here not just for the oil and gas it produces, but for its location. It sits across the Gulf of Oman from Iran. An estimated 40 percent of all the world’s oil production travels through the Gulf of Oman, a 100-mile-wide choke point between the Persian Gulf and both the Indian and Mediterranean oceans controlled by Oman and Iran. The Iranians are understandably pleased to see unrest in the American ally across the way.

Consumer spending rates for January are due out today. The number is expected to disappoint as already high energy and food prices were already eating into Americans’ disposable income last month. The deepening and expanding unrest on the Middle East will only worsen those problems.

End of the Line Ahead in Wisconsin

"If we do not get these changes, and the Senate Democrats don't come back, we're going to be forced to make up the savings in layoffs and that to me is just unacceptable.”

-- Gov. Scott Walker, R-Wisc., on “Meet the Press.”

The battle over government unions in Wisconsin may come to a head on Tuesday as Republican Gov. Scott Walker prepares to release his two-year budget and to begin laying off state workers to close a budget gap.

Protesters continued their around-the-clock vigil despite requests from capitol police to clear the statehouse and Democratic state senators continued to hide out in Illinois to prevent the Senate from taking up budget issues.

But Walker says that without a new spending plan including his fiscal remedies, the state will be forced to start laying off workers – as many as 1,400 – on Tuesday. Meanwhile, Walker, who is now routinely compared to Adolf Hitler and Middle Eastern tyrants by union protesters, is due to present his budget to the legislature on Tuesday. Talk about a tough crowd.

Pressure is mounting on Walker to accept Democratic offers of accepting increased worker payments on health and retirement benefits in exchange for dropping the parts of his plan that limit collective bargaining powers of government unions and would have the state stop collecting dues for the labor groups.

But pressure is also increasing on Senate Democrats to return to work after two weeks in hiding. Their case has not been helped by Indiana House Democrats who have joined them on the lam in Illinois.

The Indiana lawmakers fled their state to avoid far less controversial measures and are now staying away to block a popular school reform measure proposed by Gov. Mitch Daniels.

While the Wisconsin Democrats argue that they are fighting for fundamental rights, the Indiana Democrats seem to be mostly fighting for the status quo on a failing school system. Solidarity here is not likely welcomed by Wisconsin Democrats.

From the 2012 Quote File

“They ran off to Illinois ostensibly over the right-to- work bill. But as soon as they got what they wanted there, they issued an ultimatum from a hot tub over there with about 10 more items. This is to tell you how reactionary Indiana Democrats are. The first four items they want killed are President Obama's race to the top agenda.”

-- Indiana Governor Mitch Daniels on “FOX News Sunday” mocking Indian House Democrats who fled to an Illinois indoor water park rather than vote on Republican school legislation.