The Debt Election

The Debt Election; Cain Hints at Exit Strategy

2012 Winner Will Have to Defuse Debt Bomb

“The negative outlook reflects Fitch's declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path and secure the U.S. AAA sovereign rating will be forthcoming.”

-- Statement from Fitch Ratings on the value of U.S. sovereign debt.

The word from the companies that evaluate sovereign debt is that the U.S. government has used up its last time-out on its massive indebtedness.

There will be no downgrades as a result of the supercommittee’s long-expected failure and likely none for the next year as a fickle American electorate decides whether it is going back into the arms of the Obama Democrats or will stay on the run with the GOP.

The message from Fitch Ratings on Monday: Have your election, make up your mind and then do something quick. This reinforces the fact that however the election goes – revenge of the left, affirmation of the right or some muddle – there will be very little time in which to make some dramatic moves to curb the exploding debt. Like maybe five weeks.

The 2012 election looks mostly to be about how America should deal with this debt. President Obama argues that the debt cannot be addressed without taxing top-earners more, while Republicans are looking for changes in eligibility to entitlement programs. Neither answer is sufficient.

Obama’s tax hikes might be a matter of principle to the left, but wouldn’t raise enough money. The Republican ideas would deal with long-term problems but not the very real cash crunch facing the U.S. in the next three years. And both ideas are electorally unappealing. Who wants to run on a tax increase or a benefits cut?

But the electorate is now keenly aware that something is very, very wrong with our federal finances. Having the world’s largest military, the planet’s reserve currency and competitors even more fiscally insane than Washington have shielded the U.S. from the worst of being a desperately indebted nation, so far. But there is a feeling among independent voters that things are badly out of control.

As Obama sets the stage for a mega European bailout in which the U.S. at least co-signs the loan for the seemingly doomed EU and we discover more about the massiveness of the Federal Reserve’s secret cash pumping to preferred banks, voters increasingly understand that the greenback gusher in Washington may drown us all.

So far, the Republican contenders (pace Ron Paul), have struggled to get hold of this issue.

Frontrunner Mitt Romney is calling for the automatic Pentagon cuts that were part of the debt-limit deal to be halted in favor of non-specific reductions elsewhere. Newt Gingrich has discussed the importance of efficiency and the elimination of waste. Rick Perry wants to eliminate three government agencies. But those answers are either insufficient or impractical for a nation that will be dangling by a fiscal thread on Jan. 20, 2013.

While they have all come on board with some form of support for long-term entitlement reform, the Republicans are not yet talking in stark, staunch terms about the coming crackup. They say no tax increases, but what’s the plan? There hasn’t been a budget in years and appropriations have been done in the most dysfunctional matter possible.

While the conventional wisdom is that it will be a “jobs” election, it will be just as much a “debt” election.

Having added to the debt with a large but politically unsatisfactory stimulus package and a health law that increasingly looks like a budget blight for federal and state governments for years to come, Obama will strain the credulity of even docile pressies as he runs as a fiscal conservative. But he will try, and he will couple that effort with accusations that Republicans have bankrupted the government with low tax rates for “millionaires and billionaires.”

Obama’s message is that by taking money from those rich people, Democrats can make the proper investments in public employee payrolls and public works projects that will help the economy to grow. That government-fostered growth, he argues, will increase revenues for the government and allow Uncle Sam to ease his way out of this crippling debt.

The Republican version has been to say that by keeping taxes where they are or by lowering and simplifying them and then rolling back federal regulatory overreaches they can revive the economy and thereby increase federal revenues and solve the short-term debt crisis. Both sides say “grow your way out,” they just disagree on how to do that: more government or less government.

But with fiscal oblivion, including automatic tax hikes and credit downgrades, set for the same month that the next presidential term will begin, Republicans need to start answering the question of what they would do and to say it with a fervor that matches the anxiety of the electorate.

Obama, for his part, has embraced a form of fiscal class warfare that is perfectly encapsulated in this week’s taunting Senate proposal to extend the current payroll tax holiday that began with the first Obama stimulus.

The Obama Democrats want to extend current rates, but “pay for” the extension with higher taxes on upper incomes, which includes many employers. He will keep grinding on this point for as long as it takes to make Republicans look both mean and fiscally irresponsible.

Cain Invokes Family Concerns When Pressed on Affair

“I can take the lumps. I expected this kind of stuff when I made the decision to run for the president of the United States of America. But the thing that I'm worried about is the impact it's going to have on my wife and my family, because they should not be subjected to false accusations that cannot be proved.”

-- Herman Cain on CNN denying the claims of a woman who says she had a 13-year affair with the former head of the restaurant-industry lobbying group.

Herman Cain is now so defensive that when ambushed by a cameraman over the weekend, the candidate wouldn’t take a position on the LSU-Alabama game – or even whether he would rather have wings or pizza.

If the former president of Godfather’s Pizza is hedging on pie versus wings, Cain may have reached the end of his delivery route.

Cain has seen his standing in the polls plummet following a perfectly awful month. In the bright light of media attention surrounding a quartet of sexual harassment allegations, Cain committed his most memorable foreign policy gaffe yet, botching a simple question on Libya that made Rick Perry’s debate brain-freeze sound like Demosthenes exhorting the Athenians.

But the latest allegation may reveal the reason Cain may not want to grind out a long campaign. The woman, a Kentucky headhunter who approached Cain after one of his speeches, says she had been carrying on with the married, 65-year-old executive for 13 years, until just eight months ago.

She had Cain’s cell-phone number and a bill showing dozens of calls and texts from Cain. The candidate told CNN that Ginger White was just a friend and that he had only been trying to help her find work.

Big-time businessmen and successful preachers, which Cain has been both of, generally do not swap multiple texts and phone calls with members of the opposite sex they randomly met at conventions in Louisville just to talk about job prospects. It’s bad for business.

But, assuming Cain was just trying to do a good deed and is now paying the price for his kindness by what he says is the mendacity of his former friend, he knows that any other good deeds he may have done could also come out.

Now that he has brought forth his wife, Gloria, to defend him, Cain will have to continue talking about her feelings on these matters, as he had to on Monday. Having seen Gloria Cain’s offish demeanor during her interview with Fox News’ Greta Van Susteren, one would think that she wouldn’t much like to have her husband out on the campaign trail putting words in her mouth.

After weeks of promising no retreat, Cain sounded uncertain about the future his candidacy, saying that he would go forward as long as his wife and family approved. This could be the first opening of an escape hatch that might be Cain’s way of letting himself out of the race. Even though he now has tons of money from his media-victim fundraising drive and a campaign organization structured like a for-profit corporation, Cain may have reason not to stay to the bitter end, or at least lower his profile further.

The GOP’s perennial silver-medalist, Mitt Romney, this week is running a scrimmage against the Obama campaign, with both sides trying out general-election techniques in a contest that both sides are dying to get underway.

Romney is blitzing through swing states and deploying his army of well-known establishment GOP surrogates to whip up press coverage with attacks on Obama – a Pawlenty here, a Diaz-Balart there. Team Obama is trying out some Romney flip-flop attack ads in what amounts to the sighting of its long-range howitzers.

But Romney will have to get through the primaries before Democrats can really unload on him. Striking too hard, too early might help Romney gather so-far elusive conservative support.

With Cain’s exit strategy now in sight, the race for the GOP’s Not-Romney may soon be down to frontrunner Newt Gingrich and dark horse Perry. Gingrich is working hard to rebuild a campaign organization to help translate his Cain-fail national surge into real support in Iowa, South Carolina and New Hampshire.

Perry, meanwhile, is hoping that conservative annoyance with Gingrich’s flirtations with big government and decades as a Washington insider will get the Texas governor another look in the final month before the Iowa caucuses. With conservatives having considered nominating a former lobbyist who got utterly stumped on the Libya war or a Freddie Mac consultant who favors “humane” immigration policies, Perry’s blockhead debate performances and in-state tuition program may seem less awful to the right than they did when Perry first swaggered into the race.

And Now, A Word From Charles

“We're going to have to be extremely conciliatory. The reason is that as the Pakistani are choking off our supplies in the south, in the north, Kyrgyzstan, which has the air base that accepts our flights which supply our troops in Afghanistan in another way, has a new government. The Russians were instrumental in getting it into power. And it's speaking of shutting down American access in the near future. That means we have to eat a lot of crow in terms of Pakistan and be humble and apologetic because we have to have that lifeline going.”

-- Charles Krauthammer on “Special Report with Bret Baier.”

Chris Stirewalt is digital politics editor for Fox News, and his POWER PLAY column appears Monday-Friday on