Obama Appropriates Blame on Debt Stalemate
“They work all day long, many of them scraping by, just to put food on the table. And when these Americans come home at night, bone-tired, and turn on the news, all they see is the same partisan three-ring circus here in Washington.”
-- President Obama in a national address expressing sympathy for “fed up,” middle-class, swing voters
“Unfortunately, the president would not take yes for an answer. Even when we thought we might be close on an agreement, the president's demands changed. The president has often said we need a 'balanced' approach -- which in Washington means: we spend more, you pay more.”
-- House Speaker John Boehner in a Republican rebuttal to president’s remarks
Swing voters, President Obama wants you to know that the execrable state of political discourse in Washington is not his fault.
In a rare nationally televised, primetime address on Monday night, the president explained that the dire state of the nation’s finances wasn’t his fault either. That is, he explained, George W. Bush’s fault (which may have been increased by a handful of trillions by a few, ahem, “emergency” measures Democrats were obliged to take.)
And the breakdown of talks to increase the debt ceiling? Not his fault either. The culprit there, the president explained, are radical House Republicans who wouldn’t allow their leaders to negotiate a “balanced” package of tax increases and spending cuts.
And if the U.S., as expected, sees the rating for its credit rating cut for the first time in history? You guessed it, not Obama’s fault. That one belongs to House Speaker John Boehner who is “putting the economy at risk.”
Boehner’s rebuttal sought to amend the record on spending by highlighting the Democratic legislative priorities of the previous two years and to try to point out that Obama is, in fact, the most powerful man in the world, but because Obama had so little to say other than blaming Republicans and offering a liberal view of U.S. fiscal history 1999-2011, Boehner was mostly limited to giving his version of events.
So why would the president choose to preempt “The Bachelorette” just to come out and play cuttlefish on the looming debt crisis? Why not wait until he has something to say: Pass this deal, reject that deal, we have a deal? Why annoy voters even more by just coming out to dither and deflect?
It’s not complicated. The president’s handling of ongoing debt impasse, coupled with a crumbling economy, has helped drive Obama’s job approval rating to its lowest point ever. Sensing disaster, the president feels the need to insulate himself.
Obama’s remarks were very much a 2012 campaign speech.
The president reached out to the independent, swing voters who helped deliver a crippling blow to his party in 2010 after vaulting him into the White House two years earlier.
Just as he did when Massachusetts voters picked Scott Brown over prohibitive favorite Martha Coakley in 2009, Obama claimed that the staunch conservatives elected to the House in 2010 as part of the backlash against the president’s health care plan were part of the same national political wave that put him in office: the fed-up middle class.
While it is true that voters have been increasingly disdainful of the Washington status quo, that is at least a three-decade trend, Obama’s team lost by such a historic margin in 2010 not because of gridlock, but because voters rejected their agenda.
Obama suggested that he was like the miserable wage slaves the president described in his speech, all “bone-tied” and “scraping by,” in that he too had hoped for something better for the country, but that Washington is just too badly broken and Republicans are just too wicked for him to have had his way.
He gave a primetime, presidential shrug.
But we see where the president is heading for his 2012 message: Don’t blame him, he just works here.
Two Plans That Can’t Pass Will Yield One that Can
"Everybody's talking... It would be ideal if we didn't have both chambers ultimately take votes on their proposals, getting their members more locked up. If we could get an agreement before there is a vote that would be a good thing.”
-- Sen. Jon Kyl, R-Ariz., to FOX News colleague Trish Turner
House Speaker John Boehner has a two-step, short-term plan to increase the debt ceiling. It would never get past the Senate and it’s doubtful that it could even pass the House without serious reworking.
Senate Majority Leader Harry Reid has a one-step package of tendentious cuts coupled with a long-term debt-ceiling increase. It would never pass the house and it’s doubtful that Reid could even get all 57 Senate Democrats to go for it as written.
But out of these two flawed plans, one solution will be obtained in the next several days. And these two final negotiating positions have set the parameters for the debate.
Democrats, with the president’s blessing, have totally abandoned the idea of tax increases, a massive victory for Republicans. There are no tax increases in the Reid plan. Reid has also set his own sticking point: the increase must be large enough to last through the 2012 elections. It’s an unsavory place to make a stand, but a very practical one.
Republicans, having won on the two main issues of the fight – the absence of tax increases and the Democratic acquiescence of (nominally) equal cuts and debt cap increase – now must find a way to yield to Democrats on that single point.
While Reid and Boehner work to assemble their armies for a final clash, they are also buying time for bipartisan, bicameral negotiators to work out a final deal on their own.
As they haggle over the shape of a final deal, they will be moving Congress closer and closer to the inevitable conclusion of this mayhem: some version of Mitch McConnell’s plan that provides an increase to last Obama through the election, but conditions the release of funds on the creation of a committee to recommend future reforms, the enactment of already agreed-upon cuts and divides the increase into three tranches.
What you will see today and tomorrow in the House and Senate is the arrangement of a situation in which the McConnell solution becomes the only viable alternative.
Credit Raters Rediscover Rectitude Just in Time to Nail USA
"We have gone past the point of no return regarding the debt downgrade. We fully expect the U.S. will lose its AAA status."
-- Market analysis by Faros Trading quoted by the Wall Street Journal
There was seemingly nothing that Wall Street firms could do to get bad rating on mortgage-backed bonds. Same for European sovereign debt: No matter how crummy the government or how weak the economy, there was some credit rater out there to give a thumbs up.
Now, there is seemingly nothing that the U.S. federal government can do to prevent a downgrade in its debt rating.
Having been shown to be fools on the big bubbles of the previous decade, the credit rating agencies have decided to smack Uncle Sam over his long-term indebtedness.
Garbage loans with massive default rates and unknown risk loads routinely got stellar ratings from the big ratings houses. Those ratings allowed European central banks to buy up these mortgage-backed securities in a bid to get in on the free-money express.
In the resulting Panic of 2008 and the subsequent autopsy of the U.S. financial system, considerable blame came down on houses like Moody’s and Standard and Poor’s for having blown the calls so badly while gobbling up huge fees.
Those same houses now are saying that unless the federal government comes up with a plan to fundamentally restructure federal fiscal policy by Tuesday – a $4 billion package – that the U.S. will see its credit rating slip for the first time ever.
The good news is that the failures of these agencies in the aught have reduced what might have been a crippling fiscal impact for American citizens. If these houses had the prestige of 20 years ago the shock might have been fatal to whatever recovery still persists.
It will still be bad and still be a serious black eye for the already troubled Obama administration, but it will at least not be as bad as it once would have been.
The unintended consequence of the doomsday warnings is that lawmakers may feel freer to do a short-term deal. If a $4 trillion deal is not practically attainable and a downgrade is inevitable, negotiators can focus their efforts most urgently on avoiding default.
And Now, A Word From Charles
“The number [Senate Majority Leader Harry Reid] gives in cuts is a complete deception and a phony. The $1 trillion on the surge level in Iraq and Afghanistan, as Steve indicated, is a fiction. Nobody advocated it. It wasn't going to happen. We weren't going to spend it. I'm told there's an extra $10 billion in here of savings from not invading Normandy a second time. I mean, this is really -- also the imputed interest is also a result of fictional savings.
And the $1.2 trillion, I assure you it's going to be nebulous, squeezing excess out of programs, which of course never happens. And I'll bet you the majority of it is in the out years when a future Congress is not bound by the promises of one Harry Reid in the hoary past.”
***Today on “Power Play Live w/Chris Stirewalt” at 11:30 EDT: California Congressman and budget expert Tom McClintock, the Shannon Bream and former DNC official David Mercer. Watch at live.foxnews.com. Tweet your questions to @cstirewalt ***