Debt Ceiling Update

Posted on July 13, 2011. Filed under: Uncategorized | Tags: , , , , , , , , |

NEGOTIATION UPDATE – JULY 12, 2011

Sunday and Monday’s meetings were marked by tension, jibes, dissonance over numbers, and hardened positions. At this point, negotiators can’t even agree on what constitutes the Biden group starting point toward a $2.4 trillion deal.

Yesterday, House Majority Leader Rep. Eric Cantor used colored-coded spreadsheets to detail $2 trillion in spending cuts he asserts were agreed to by the Biden group. The President asked Cantor “if he wasn’t missing a page”, meaning the revenue aspect of the Biden talks. Cantor also proposed $350 billion in additional mandatory health care spending cuts. Obama pointed out that this $350 billion still isn’t enough to get the $2.4 trillion in savings necessary to solve the debt ceiling crisis through 2012.

OMB disputed Cantor’s numbers, citing, at most, only $1.7 trillion in potential spending cuts tentatively agreed to by the Biden group. By either side’s arithmetic, negotiators are left with a $400 – $700 billion gap – a huge amount by any standard.

Republican leaders told Democrats and the President that no deal can be reached without significant additional entitlement cuts. The President retorted “We tried that, and your side said “no”.” Boehner indicated that entitlement cuts were just as difficult a vote for them as for Democrats. The President replied , “You guys already voted for them” (when the House passed the Ryan budget). “Excuse us for trying to lead”, answered Boehner.

Meanwhile, rank and file Republicans and Democrats are increasingly distraught over the extent to which they are being left out of negotiation calculus while their support is presumed by party leaders.
The divide between Boehner and Cantor has people wondering who speaks for House Republicans and whether either of these leaders can deliver enough Republican votes to pass a debt ceiling agreement in that chamber. There are 241 Republicans in the House, with at least 20 of these belonging to the self-proclaimed “Hell, No” caucus which refuses to support any debt ceiling increase. That leaves Boehner and Cantor with only 221 Republican votes to work with. Chances are very good that even a spending-cut-only bill would have trouble getting 218 Republican House votes.

The Senate, as usual, has trickier political arithmetic. With 51 Dems, 47 Republicans and 2 Independents, this chamber has turned into a quagmire that often requires 60 votes just to bring up a bill for debate. There is no guarantee that Senate Budget Chairman Conrad’s plan to pass the debt ceiling deal with only 51 votes under budget reconciliation rules will be allowed by Senate Republicans. Senate procedures pose a huge obstacle to passage of any major legislation – let alone a complex, politically radioactive debt ceiling increase agreement.

Republicans are refusing to raise taxes on wealthy Americans – unless they are seniors, in which case Republicans are proposing increases in co-pays, reductions in eligibility, higher insurance payments, and means testing. This has Democrats flummoxed, and more unified in opposition to the latest Republican Medicare savings proposal.

Furthermore, many Dems are furious with the huge entitlement cuts and other savings offered by the President. However, even Obama’s huge entitlement cut offers have failed to generate any useful counter offer or change in Republican leaders’ negotiating stance.

We are getting farther from, not closer to, a debt ceiling agreement. The middle is proving far more dangerous than the extremes for all parties except the President, who is attempting to appeal to the independent voters who will determine the future of his presidency.

Today, a small but growing subset of House Republicans are now thinking that a much smaller deal requiring at least one additional debt ceiling increase vote before next year’s election “could play to their advantage”. In other words, the sand is eroding out from under the $2.4 trillion deal, the President’s veto threat notwithstanding.

So far, Wall St. and world financial markets, distracted by the potential default of Greece, seem to have decided that this week’s talks are the usual Washington sandbox brawl. We’ll see.
21.5 Days and counting until August 2nd. President Obama just warned that Social Security checks due to be paid on August 3rd won’t be sent to recipients unless there is an increase in the debt ceiling.

Turner GPA is one of the premier, highly respected government and public affairs firms in the nation. Turner’s state-of-the-art advocacy has earned them respect and acclaim from the media, clients, policymakers and even their competitors! Turner advocates on behalf of cutting edge businesses, municipalities, and non-profits that wish to ensure their perspectives and needs are taken into account in Washington, in state capitols and in City Hall, as well as in the media. The firm creates and implements intensely focused and targeted advocacy campaigns designed to meet and exceed its client’s expectations and goals. For more information on Turner GPA, visit www.turnergpa.com.
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