With Hopes For Debt Deal Fading, Obama and GOP Look for Alternatives
Obama Ratchets Up the Rhetoric on Debt Again
“Well, the truth is, is that you could figure out on the back of an envelope how to get this thing done. The question is one of political will.”
-- President Obama speaking at a Philadelphia fundraiser about what he believes is the inability of his adversaries to “speak hard truths and then act in terms of what was best for our country.”
President Obama at a Thursday night fundraiser stressed the proximity of the Republican and Democratic positions when it came to Obama’s requested increase of the nation’s $14.3 trillion debt ceiling to suggest that Republican objections were stubborn gamesmanship, not practical objections.
Ahead of the Independence Day weekend, the president told Democratic donors that his adversaries lacked the political will to “act in terms of what was best for our country.”
The charge comes amid a rapidly deteriorating relationship between the White House and Congress.
In his press conference on Wednesday, the president accused Congress of a poor work ethic and suggested that Republicans had been wasting time while he was busy overseeing the killing of Usma bin Laden, a troop withdrawal from Afghanistan and trying to stave off a looming collapse of the common European currency. Obama also compared the Republicans to naughty schoolchildren, saying that his daughters did their homework, but that Republicans refused to.
Republicans bridled at the criticism, pointing to Obama’s unprecedented campaign and fundraising schedule and frequent golf outings.
"I think the best way to get an appointment with the president is to set up a tee-time,” Sen. John Thune, R-S.D., told Power Play.
On Thursday, White House press secretary Jay Carney dismissed an invitation by Senate Minority Leader Mitch McConnell for Obama to come to Capitol Hill for a negotiating session, saying it was “not a conversation worth having.”
As Obama wrapped up the 37th fundraiser of his presidency that night, he told Democratic donors that he and Republicans “actually roughly agree on the numbers,” but that Republicans were refusing to finish a deal ahead of a Aug. 2 deadline because they refused even modest compromise.
The administration is keen to get Republicans to include tax increases in the deal, even if the sums involved are small. Aside from needing a symbolic victory on taxes to help placate Democratic members of Congress who fear that Obama will cave too quickly on the debt deal, including any tax hike would be a way to shift the discussion and set new precedents for future fiscal battles.
As the president negotiates, in public and in private, he has his eye on not just the 2012 election, but the looming conflict over the budget for the next fiscal year. Remember, Washington has only until Oct. 1 to come up with a spending plan for the next year, pass a stopgap measure or face a government shutdown.
Democrats are eager to shift the argument from cuts, which have been the theme this year, to tax increases. Making what Democrats have taken to calling “revenues” part of this package would help to move the debate in that direction.
While many Republicans are willing to close tax loopholes and eliminate tax subsidies (as they demonstrated in 2009 when they helped kill a $246 million movie-industry tax subsidy proposed by the president). The concern on the right is that any such tax modifications need to be part of a larger deal that lowers overall rates, not just targets individual industries.
The Senate has cancelled its July 4 recess and will instead spend four days waiting around Washington for a deal to emerge first among Senate Democrats and then between Obama and McConnell. But that seems farther away, rather than closer after the administration has done so much to ratchet up the rhetoric, including the line about Republicans refusing to “act in terms of what was best for our country.”
As Obama heads to a weekend getaway, he leaves behind a bitterly divided Washington and serious questions about his renewed pledge to change the way the political process works.
“He compares us to schoolchildren and then complains about his own workload. He tells us to stay and do the job and then leaves for Philadelphia to raise money. He jeopardizes a deal on his own debt ceiling increase over tax increases during a recession and then says we’re not acting in the best interest of the country,” one senior House GOP aide told Power Play. “This is the opposite of leadership.”
“Short Term” Extension Means Different Things to Dems and GOP
"It would be a grave mistake to go through the experience of the CR. It would undermine commerce and not answer the questions of the ratings agencies."
-- A Democratic official with knowledge of the debt talks talking to FOX News colleague Wendell Goler about the possibility of a short-term, debt-limit extension.
As the White House draws a harder line over tax increases in the deteriorating debt negotiations, both sides are reexamining potential fallback plans to avoid a deadline disaster.
Credit rating agencies and lenders are issuing stern warnings about the need for President Obama to produce a deal that boosts the federal credit limit enough to cover the government’s obligations at least through 2012 combined with a commensurate reduction in deficit spending and long term debt.
Americans will pay dearly if the deal fails as bond rates shoot up and investors pull back further amid uncertainty over a dysfunctional Washington.
To get the kind of debt extension that markets want, Obama would need to accept Republican demands for deep cuts and some changes to entitlement spending. He is betting that he can also make at least some symbolic tax increases part of the deal by increasing the pressure on the GOP with rough rhetoric and some deadline brinksmanship.
Republicans are ready with a short-term extension that would essentially roll the debt limit debate into September’s battle over the 2012 budget after a few rounds of smaller cuts granted in exchange for brief debt extensions. Remember that Congress can increase the borrowing limit by dollars or days.
But Democrats are now quietly putting forward a plan that would increase the borrowing limit by $1.5 trillion, and then save the larger debate for a second term or a new presidency. The current goal of the negotiations is to get more $2 trillion in new borrowing power.
This alternate plan would essentially stop the negotiations at their current point. Both sides agree that the ongoing negotiations have settled on something like $1.5 trillion in cuts over the next five years. Accepting a smaller sum would allow the president to have a deal now and give Republicans a win on their pledge to get a dollar in cuts for every dollar in new borrowing.
The deal would require the president to give up on his politically beneficial push for some tax increases for unpopular industries. It would also expose him to the kind of griping from the left that caused him to fume about the sanctimony of his political supporters after a deal on tax rates.
But if he waits too long, the president risks causing more problems for an already feeble economy, the condition of which will determine his re-election chances.
And Now, A Word From Charles
“What Harry Reid has done is a stunt to call the Senate together. They'll accomplish nothing. They have not passed a budget in 800 days. The Republicans are serious. They control the House and passed a budget. If you measure the seriousness and hear Obama yesterday scolded Republicans like a schoolmaster saying his children get their homework done on time.
"The Republicans have done homework, it's called a budget. It's not going to turn into anything. Obama is running a campaign on class warfare and that's what he wants to stick to.”
-- Charles Krauthammer on “Special Report with Bret Baier.”
***Today on “Power Play w/ Chris Stirewalt”: Rep. Jeff Landry, R-La. Tune in at 11:30 am Eastern at http://live.foxnews.com/ ***