DEBT TALKS IN HOUSE FALL APART. SEN LEADERS TRYING TO FORGE A PASSABLE PLAN.

Today Washington has been an absolute madhouse, with rumors, proposals, and counter-proposals swirling around like swarms of biting insects.  {Washington Post}

N.Y. TIMES

With the federal government on the brink of a default, a House Republican effort to end the shutdown and extend the Treasury’s borrowing authority collapsed Tuesday night as a major credit agency warned that the United States was on the verge of a costly ratings downgrade.

After the failure of the House Republican leadership to find enough support for its latest proposal to end the fiscal crisis, the Senate’s Democratic and Republican leaders immediately restarted negotiations to find a bipartisan path forward.With so little time left, chances rose that a resolution would not be approved by Congress and sent to President Obama before Thursday, when the government is left with only its cash on hand to pay the nation’s bills.

A day that was supposed to bring Washington to the edge of resolving the fiscal showdown instead seemed to bring chaos and retrenching. And a bitter fight that had begun over stripping money from the president’s signature health care law had essentially descended in the House into one over whether lawmakers and their staff members would pay the full cost of their health insurance premiums, unlike most workers at American companies, and how to restrict the administration from using flexibility to extend the debt limit beyond a fixed deadline.



House speaker, John A. Boehner, Republican of Ohio, and his leadership team failed in repeated, daylong attempts to bring their troops behind any bill that would reopen the government and extend the Treasury’s debt limit on terms significantly reduced from their original push against funding for the health care law. The House’s hard-core conservatives and some more pragmatic Republicans were nearing open revolt, and the leadership was forced twice to back away from proposals it had floated, the second time sending lawmakers home for the night to await a decision on how to proceed Wednesday.

The House setback returned the focus to the Senate, where the leadership had suspended talks after the Senate Republican leadership opted to give the House a chance to produce an alternative to the Senate measure taking shape.

Under the emerging Senate deal, the government would be funded through Jan. 15 and the debt limit extended until Feb. 7. House and Senate negotiators would be required to reach accord on a detailed tax-and-spending blueprint for the next decade by Dec. 13. A proposal to delay the imposition of a tax on medical devices had been dropped from the deal, as had a complicated tax on self-insured unions and businesses participating in the health care exchanges. All that remained for Republicans was language tightening income verification for people seeking subsidies on the insurance exchanges, but that language was still being negotiated.

 

It remained unclear if the Senate plan could pass the House or even if Mr. Boehner would bring it forward for a vote. The hopes for a resolution by Thursday also appeared to rest with the senators who had begun the failed movement to tie any further government funding to the gutting of the Affordable Care Act: Ted Cruz, Republican of Texas, and Mike Lee, Republican of Utah.

If Mr. Reid and Mr. McConnell reach a final accord, Senate leaders expect to use a parliamentary maneuver that will allow the majority leader to quickly move the deal to the Senate floor on Wednesday. With unanimous consent, a final vote would come the same day. But if Senate hard-liners object, the Senate would have to wait until Friday, then muster 60 votes to cut off debate. Further obstruction would mean the final vote would happen Saturday, when the bill would go back to the House, where it would probably have to pass with overwhelming Democratic support and the votes of a minority of Republicans.

 

 

 

Given the progress that had been made in the Senate, Congressional Democrats and officials at the White House criticized Mr. Boehner’s move on Tuesday as an attempt to sabotage the bipartisan Senate talks  as they seemed to be nearing an agreement.  Initially, Mr. Boehner proposed a bill to reopen the government until Jan. 15, extend the debt ceiling until Feb. 7, delay a tax on medical devices two years and deny members of Congress, the president, the vice president and White House political appointees taxpayer subsidies to help buy insurance on President Obama’s health insurance exchanges.

 

By Tuesday afternoon, House Republican leaders were back with a new proposal to fund the government through Dec. 15, extend the debt ceiling into February and deprive not only lawmakers but all their staff members of employer assistance to buy their health care. By extending that provision to staff members, Republican leaders hoped to appeal to its far-right flank, but it angered more moderate Republicans and was not enough for the conservative hard core. Boehner acknowledged “there are a lot of opinions” among his rambunctious members.

 

 

 

Complicating the speaker’s task, Heritage Action, the conservative Heritage Foundation’s political arm, which wields great influence with the most conservative elements of the Republican Party, opposed the plan.

“I think there’s always hope there can be a final package I can vote on, but this is not the one,” said Representative Ted Yoho, Republican of Florida, as he and two other Tea Party conservatives left the speaker’s office.

Republican leaders had initially hoped the loss of members like Mr. Yoho could be made up with support from Democrats. But Democratic leaders made it clear they would offer no assistance. Democrats [opposed a]House proposal that would have forbidden the Treasury to juggle government accounts — so-called extraordinary measures — to meet obligations beyond a debt-ceiling deadline.

 

 

 

 

In the midst of the turmoil, the credit rating agency Fitch put the United States on a “negative ratings watch,” warning that Congressional intransigence has put the full faith and credit of the government at risk.

The news came as the Treasury Department said it had only about $35 billion in cash on hand. It expects to run out of “extraordinary measures” to keep on paying all of the government’s bills on Thursday, at which point outgoing payments might exceed that cash, plus any revenues, on any day going forward.

As the United States nears default, investors have demanded more compensation for lending to the government, with yields on short-term debt spiking to their highest levels in years.

Fitch warned that Congress has not “raised the federal debt ceiling in a timely manner.” It said it “continues to believe that the debt ceiling will be raised soon,” but that “political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.”

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JONATHAN CHAIT NEW YORK

 

The crucial fact about the emerging Senate plan is that it fulfills the core Democratic demand that the debt ceiling not be ransomed for policy concessions. Democrats prefer to simply lift the debt ceiling, or abolish it altogether. For the sake of appearance, Republicans have asked to tie policy changes onto the debt-ceiling bill. But Democrats have insisted they won’t pay a ransom: The policy changes must be reciprocal. The Senate compromise accommodates that, by adding on two changes — beefed-up Obamacare income verification and the delay of a small tax — which are both minor in nature and a trade Democrats would have made without a debt-ceiling threat. Attaching mutually acceptable deals onto debt-ceiling hikes is historically normal. Using the debt ceiling as a hostage to force a party to accept policies it doesn’t like is not. [...]

The principle undergirding the emerging Senate bill — ending hostage tactics, and making all deals reciprocal — is unacceptable to House Republicans, who want to preserve debt-ceiling hostage-taking as a form of policy leverage. So, rather than wait for the Senate to act on its own, the House [attempted] to move its own bill, which demands a small ransom: suspending the medical device tax, and eliminating employer health-care subsidies for congressional staff. The ransom is minor, but preserves the principle that the House can use the threat of default to force the president to accede to otherwise unacceptable policy demands, without making any policy concessions of its own.

The frequent GOP claim that Dems “refuse to negotiate” has obscured the true nature of the difference paralyzing the system. It is not over whether to negotiate over spending and debt. It’s an argument over what conditions under which budget negotiations should proceed.
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A possibility is that ...the House [will pass a] bill Obama can’t sign, and the Senate will have passed a bipartisan bill he can sign, forcing Boehner to either give in and pass the Senate bill at the last minute or allow default. Boehner has previously told colleagues he won’t allow default, which would imply he is trying to show his conservative members he’s fighting the good fight before giving in at the last possible moment.

The House’s small-ransom bill has ratcheted its demands way down from its original level. The only point of the demands is to maintain the precedent that the House can hold the debt ceiling hostage. But of course the chaos and frenetic timing of the events serve only to show why it is so crucial that Democrats — or any sane American — not allow this precedent to be enshrined. The white-knuckle terror being inflicted on the world economy is the conservative movement’s vision of how divided government should be conducted from now on. Paying even a tiny ransom now means that debt-ceiling ransoms will continue in perpetuity until one party finally miscalculates and the explosives go off.
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N.Y. TIMES

 

 China has become shrill in its criticism of the fiscal train wreck in the United States, arguing that the answer to a potential government default is to begin creating a “de-Americanized world.” Beijing’s alarm is understandable, given that it is the world’s largest investor in American public debt, with at least $1.3 trillion in holdings.

 

But China does not have many options beyond wringing its hands. Despite its efforts to steer its economy away from exports and toward domestic demand, China generates billions of dollars of excess cash that it needs to park somewhere. And for all the chaos in Washington, Treasury bonds remain a safer investment than most of the alternatives.

That dependence may help explain the stridency of a recent commentary published by the official Xinhua news agency. It called for the replacement of the dollar as the world’s reserve currency “so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.”

“As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about,” the news agency said, “it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.”

Chinese officials made similar noises five years ago, when the United States was being buffeted by a banking crisis. In March 2008, the leader of China’s central bank, Zhou Xiaochuan, proposed creating a new “supersovereign currency” that would diminish the importance of any individual national currency, not least the dollar.

But economists who follow China’s monetary policy say that while Beijing has somewhat diversified its foreign exchange reserves, it continues to rely heavily on Treasury bills and other American government-backed debt.

Part of the problem is the lack of easy alternatives: euro-denominated debt has been hurt by the European Union’s crisis, except in Germany. Analysts estimate that 60 percent of China’s $3.66 trillion in reserves are still in dollar-denominated debt, though the precise numbers are a secret.

DEFER OR DEFAULT. MCCONNELL AND REID CLOSE TO DEAL. THEN IT'S BACK TO BOEHNER

HUFFINGTON POST  

Whatever deal emerges from overnight negotiations in the Senate, Republican lawmakers said they weren't sure it could pass quickly enough in their chamber to avert a default -- or that it would ever see the light of day in the House.

We’ve got a name for it in the House: it’s called the Senate surrender caucus,” said Representative Tim Huelskamp, Republican of Kansas. “Anybody who would vote for that in the House as Republican would virtually guarantee a primary challenger.”

The Treasury Department has warned that sometime on Thursday it may no longer have enough cash on hand to pay all the nation's obligations, setting up a potential default that economists have warned repeatedly may have catastrophic economic consequences.

As of Monday evening, the contours of a deal included reopening the government through Jan. 15 and extending the debt limit until Feb. 15. Both chambers also would have to appoint representatives for a budget conference that would end on or around Dec. 15, with the goal of agreeing to framework for deficit-reduction. Changes to President Barack Obama's health care law would be minimal:
Senate Majority Leader Harry Reid (D-Nev.) said there had been "tremendous progress" earlier in the day. His Republican counterpart, Minority Leader Mitch McConnell (Ky.), agreed.



N.Y. TIMES

If a deal is not completed by the end of Thursday, Treasury officials have said, the United States government will have exhausted “extraordinary measures” for managing its debt, meaning that its ability to pay its bills will be limited to the uneven flow of cash that comes into the Treasury on a daily basis. On some days, officials warned, the amount coming in will be less than the amount that is supposed to go out.       

But even that deadline provides no real sense of clarity. It remains unknown how long the federal government could operate beyond that day, what programs it might choose to suspend, or how quickly the global financial markets would pronounce judgment.

 

 

 

As they drafted their deal, Senate negotiators in both parties were hoping that House Republican leaders would have no choice but to let a bipartisan agreement come to a vote, even if it could pass only with votes from Democrats and a minority of the Republican majority. But John A. Boehner, the House speaker, provided no assurances on Monday that an arrangement hammered out by his Senate colleagues could pass muster among his conservatives.

Senate Republicans had pushed for an agreement that included a provision to delay or repeal a tax on medical devices, but that became a sticking point in the negotiations and will almost certainly be excluded from the final deal, Senate aides said. But the deal is likely to include a one-year delay of another tax associated with the Affordable Care Act known as the reinsurance tax, which employers pay.

Another Republican-backed measure likely to be in the deal would require tighter income verification standards for people who receive subsidies under the new health care law.

 

But with the country just hours from what could be a crippling default, many Republicans believe that Mr. Boehner will have no choice but to ignore his most vocal members and put whatever passes the Senate up for a vote.

THE DEBT CEILING: WHAT'S AT STAKE

CBS NEWS

It is the economic calamity that no one expects and everyone fears.
Experts agree that failing to raise the nation's debt ceiling by Oct. 17, when U.S. officials say the government will run out of money to pay its bills, would gravely wound the economy, and perhaps even throw it back into recession. Because Treasury bonds and the dollar are cornerstones of the global financial system, meanwhile, the shock wave would be felt around the world.

"The potential is disastrous," said Gus Faucher, senior economist with PNC Financial Services Group. "We would see interest rates spike across the board. We'd see a huge crash in the dollar. People count on lending their money to the federal government and getting it back, and if that trust is taken away -- it's never happened that we haven't met our obligations as a nation -- then that has very, very negative consequences for the U.S. economy."
The consequences are so severe that, even as the government shutdown enters its second week, most seasoned political observers still expect Congress to ultimately reach an eleventh-hour deal to lift the government's borrowing limit.
But what exactly is the debt ceiling, and exactly how worried should Americans be that it could come crashing down?

The debt ceiling is the total amount of money the U.S. government can borrow (by selling Treasury bonds) to pay its obligations, including interest on the national debt, Social Security and Medicare benefits, and many other payments. That limit is currently $16.7 trillion, although technically the government already exceeded it in May. The Treasury Department has since used various measures to continue borrowing.
During World War I, amid uncertainty regarding the total costs of funding U.S. involvement in the conflict, Congress created the cap in 1917 to put an upper limit on federal borrowing. Since 1960, Congress has raised the debt ceiling 78 times.



How is the debt ceiling changed?
Lawmakers can adjust it by passing a standalone bill or by including it in another piece of legislation as an amendment.

Does raising the debt ceiling increase the federal debt?
No. Lifting the borrowing limit simply allows the government to pay its existing bills. That debt exists whether or not Congress authorizes additional borrowing, and to avoid default it must be paid.

Why can't Congress and the White House avoid lifting the cap by cutting federal spending?
Because preventing the government from borrowing to meet its obligations would require all discretionary spending, such as for defense, education, housing and other annual appropriations, to stop, according to the Congressional Research Service. Most of the outlays for mandatory programs, such as Social Security, also would have to be halted, while taxes would need to rise to ensure the government had money to spend. Deep spending cuts and tax hikes would throw the economy into recession.


Jacob Lew

Treasury Secretary Jacob Lew recently forecast that on Oct. 17 the government would have about $30 billion on hand. That isn't enough because the government spends as much as $60 billion per day. "If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history," he said last week in a letter to congressional leaders.

What happens if Congress doesn't raise the debt ceiling?
If the government runs low on cash, it will have to withhold a range of payments. Retirees might not get their Social Security checks, especially worrisome for the millions of Americans who depend almost entirely on the social insurance program for income. The same goes for Medicare and Medicaid recipients. Holders of Treasury notes, from Wall Street and other global banks to foreign governments, also could get stiffed, jeopardizing the solvency of many financial institutions and choking off global credit flows.

The U.S. also would struggle to pay the interest on its debt, including a $6 billion payout due at the end of the month. At that point, the U.S. would be in default of its obligations. The value of Treasury bonds and the dollar would nosedive. The nation's borrowing costs would soar as anxious investors demanded a higher return to buy suddenly shaky U.S. debt. And because the interest rate on Treasuries provides a benchmark for rates on other loans, from mortgages and credit cards to car and student loans, borrowing would become far more costly for consumers and businesses. Stock markets in the U.S. and elsewhere around the world would almost certainly plunge.
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....Consumer confidence plummeted after lawmakers squared off over the debt ceiling in the summer of 2011, while the Standard & Poor's 500 stock index dropped nearly 20 percent. Hiring among small businesses slowed. Ever after a deal was struck to raise the cap in August of that year, credit rating agency Standard & Poor's downgraded U.S. debt for the first time ever.

Beyond the immediate economic fallout of defaulting on its debt, for the U.S. the symbolic blow might be even greater. In the post-World War II era, Treasuries and the greenback have -- for better and for worse -- served as the foundation of the global financial system. A default would shatter the faith on which that system relies.



How much danger are we in?
Although financial markets are not yet in panic mode, the standoff in Washington has them worried. Unlike during the 2011 dispute, when Republicans and most Democrats favored cutting federal spending, the stark division over Obamacare suggests there may be less room for compromise this time around. One clear sign of distress: Interest rates on short-term Treasury bonds rose last week, as investors seek greater yields to offset what they perceive as the greater risk of holding the debt.

Still, most economists, stock analysts and, for all the pointed rhetoric on Capitol Hill, even congressional leaders themselves downplay the chances of a default. The belief is that common sense, or at least a sense of political self-preservation, will prevail.




THE HILL

Under the prioritization option, Treasury theoretically could chose some to make payments, such as to Social Security recipients, but forgo others such as refunds to taxpayers or pay for federal workers.

Treasury officials have said prioritization is technically unworkable when applied to non-bond payments, the group noted.

Under a delay scenario, Medicare and Medicaid payments could be pushed back from Oct. 18 to Oct. 21, for example, when more revenue comes in. Social Security checks set for Nov. 1 could be delayed until Nov. 13, leaving seniors without money for half a month.

BPC said that under this option, the delays would become longer and longer until at some point payments would have to be missed.

Hoagland said that Social Security recipients could sue the government over the delay and could likely win a judgment since the benefits are legally considered entitlements.

In either case, delays or missed payments would be seen as some type of default, BPC warned. They said there is no conceivable way the real deadline is in December or January, as some in Congress appear to believe.

PARALYSIS IN D.C.

MICHAEL TOMASKY THE DAILY BEAST

It was a head-spinning day in Washington, yesterday was, as the story seemed to change from hour to hour in terms of who was proposing or accepting or refusing what and who seemed up and who seemed down.
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A quick recap. Thursday morning, John Boehner finally picked up on the signals the White House had been sending and offered a “clean” but short-term debt-limit increase. Since Boehner clearly knew that such a measure wouldn’t get votes from his loony-tunes caucus, he was aiming for something that might pass with a combination of Republican and Democratic votes. That was admirable. But there was a problem: He proposed to do nothing about the government shutdown until Nov. 22, and that was something most Democrats wouldn’t have gone for.

Still, the Obama administration signaled that it would play ball. This angered Harry Reid, who was at work trying to round up a few Republican votes for his own one-year increase of the debt limit. The afternoon skirmishing was intense, featuring a few Republican senators (Roy Blount, Susan Collins, and, most interestingly of all, John Cornyn) undercutting Boehner, saying they would like to alter his proposal to include a provision to allow the government to open back up. Then, late in the day, the Not-So-Magic Bus of 20 Republicans rolled up to the White House, and Boehner put… well, put something on the table to Obama, something involving a six-week increase in the debt limit but who knows what else, and Obama said: not yet.

It is true that Obama drew back from the signals his people had been sending for a couple of days. But it’s also true that we don’t know exactly what happened in that room and what was proposed. One of the various crazy things about the GOP position now is that we don’t even know what they’re negotiating for. “America’s pressing problems,” they kept saying. But what exactly are those? I guess now Obamacare isn’t one of them, since it’s off the table. Or maybe the medical-device tax is. So higher taxes on prostheses is the crisis that the country must solve yesterday?

They mean, of course, Social Security, Medicare, and Medicaid. They want cuts. But they just want Obama to give in on those without giving him anything on revenues. This would be the normal way of what we call “negotiating.”

But the thing is this. People who have specific policy goals engage in negotiation. But these Republicans don’t have specific policy goals. They have what we might call emotional policy goals. They want to wipe Obamacare, and Obama’s desires on taxation, and the entire Obama record, really, from the face of the earth, like Pharoah wanted to wipe Moses’s name from the obelisks. They don’t even really know what they want to win, as Indiana GOP Congressman Martin Stutzman famously said last week. But if it humiliates Obama, it’s a win. Bad for the country? That doesn’t matter either. To them, by definition, if it’s bad for Obama, it’s good for the country. They actually think this.

And so, through a combination of a critical mass of anti-thought people in their caucus who won’t govern at all if it means seeing Obama come out OK, and a “leader” who can now plainly be called the weakest speaker since America became a country of consequence, the Republican Party has finally and fully succumbed to its cultural rage. It has used that rage mostly effectively for nigh on 50 years now, since Barry Goldwater. That rage has served it well on balance. It helped elect Nixon. It certainly helped elect Reagan, and even though it could be argued that once in office Reagan didn’t do that much to stoke it, he understood that he needed it to win, which is why he opened his 1980 campaign down in Mississippi, to say to his America that it was all right to resent black people, he understood you.

The rage kept the base galvanized. It kept the enemy, or enemies—liberal and the media, often one and the same—in the gun sights. But it could also be controlled, the way Reagan controlled it. And even Dubya controlled it. The rich didn’t really share the rage, or most of them. Even the Koch Brothers probably don’t, what with all the froufrou artsy-fartsy outfits up in New York they help sustain.

But all of them have used it. And they have tolerated it, the casual racism, the hatred of gay people, and the rest. They tolerated it because the booboisie voted the right way, and because they, the elites, remained in charge. Well, they’re not in charge now. The snarling dog they kept in a pen for decades has just escaped and bitten their hand off.

No Deal, But GOP Offers Plan For 6 Wk Extension of Debt Ceiling

N.Y. TIMES

President Obama and House Republicans failed to reach agreement on a six-week extension of the nation’s borrowing authority during a meeting Thursday at the White House, but the two sides kept talking, and the offer from politically besieged Republicans was seen as an initial step toward ending the budget standoff.

In statements afterward that struck the most positive tone in weeks of acrimony, House Republicans described their hour-and-a-half-long meeting with Mr. Obama as “a useful and productive conversation,” while the White House described “a good meeting,” though “no specific determination was made” about the Republicans’ offer. Both agreed to continue talks through the night.

People familiar with the meeting said that Mr. Obama pressed Republicans to reopen the government, and that Republicans raised the possibility that financing could be restored by early next week if terms for broad budget negotiations could be reached.

 

Twenty Republicans, led by Speaker John A. Boehner, went to the White House at Mr. Obama’s invitation after a day of fine-tuning their proposal to increase the Treasury Department’s authority to borrow money to pay existing obligations through Nov. 22. The government is expected to reach its borrowing limit next week. In exchange, they sought a commitment by the president to negotiate a deal for long-term deficit reduction and a tax overhaul.

 

The House Republican offer represented a potentially significant breakthrough. Even if Democrats found fault with the Republicans’ immediate proposal — for example, it would prevent the Treasury secretary from engaging in accounting maneuvers to stave off potential default — it was seen as an opening gambit in the legislative dance toward some resolution before the government is expected to breach its debt limit on Thursday.

Even before the meeting, the White House and its Democratic allies in Congress were all but declaring victory at the evidence that Republicans — suffering the most in polls, and pressured by business allies and donors not to provoke a government default — were seeking a way out of the impasse.

 

 

For House Republicans, the maneuvers represented a near-reversal of their original strategy in September of going to the mat over the debt limit but not shutting down the government. Now, under pressure from falling poll numbers and angry business supporters, they are seeking a compromise on the debt ceiling. Yet for now, they are still refusing to finance and reopen the government without some concessions.

Mr. Boehner and his colleagues left the White House without speaking to waiting reporters, and quickly gathered in his Capitol suite for further discussion. Their debt limit proposal could come to a vote as soon as Friday.

Before the White House meeting, administration and Congressional Democrats said they were skeptical that House Republican leaders could pass the proposal. A large faction of Tea Party conservatives campaigned on promises never to vote to increase the nation’s debt limit. And Congressional Democrats vowed to oppose any proposal that did not also fully finance a government now shuttered since the fiscal year began Oct. 1.

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Many House Republicans, leaving a closed-door party caucus earlier Thursday that at times grew contentious, said they would support their leadership’s short-term debt limit proposal. But they said they would do so only if Mr. Obama agreed to negotiate a broader deficit reduction deal, with big savings from entitlement programs.

The president has insisted he will not agree to significant reductions in projected Medicare and Medicaid spending — even his own tentative proposals — unless Republicans agree to raise revenues by curbing tax breaks for corporations and wealthy individuals. And Mr. Boehner in recent days reaffirmed the party’s anti-tax stance, which suggests that future talks could founder.

 

 

THE SHUTDOWN & DEBT CEILING: CRACKS I/T PAVEMENT?

N.Y. TIMES

House Republicans, increasingly isolated from even some of their strongest supporters more than a week into a government shutdown, began to consider a path out of the fiscal impasse that would raise the debt ceiling for a few weeks as they press for a broader deficit reduction deal.

That approach could possibly set aside the fight over the new health care law, which prompted the shutdown and which some Republicans will be reluctant to abandon.

In a meeting with the most ardent House conservatives, Representative Paul D. Ryan of Wisconsin, the chairman of the House Budget Committee, laid out a package focused on an overhaul of Medicare and a path toward a comprehensive simplification of the tax code.

“We’re more in the ideas stage right now,” said Representative Jack Kingston, Republican of Georgia and a senior member of the Appropriations Committee. “There is a developing consensus that this is a lot bigger than an Obamacare discussion.”

 

At the same time, Congressional leaders from both parties began some preliminary discussions aimed at reopening the government and raising the statutory borrowing limit. And President Obama, who invited House Democrats on Wednesday, asked all House Republicans to the White House on Thursday, an invitation Speaker John A. Boehner whittled down to a short list of attendees he wants to negotiate a compromise.

Democrats showed their own cracks. Twenty-six House Democrats planned to attend a bipartisan event on Thursday morning with the group No Labels, calling for negotiations to start immediately, a challenge to the president and to Democratic leaders who say they will not negotiate until the government reopens and the debt ceiling is lifted.

In the meeting with House Democrats on Wednesday evening, Mr. Obama held firm to his stated intention to negotiate with Republicans only after the government is reopened and the debt ceiling is raised. He told Democrats that if he gives in now, Republican demands would be endless. “The only thing not on their list is my own resignation,” he told Democrats, according to a lawmaker in the room.

With the impact of the shutdown starting to intensify, House Republicans were taking criticism from some of their longtime backers. Business groups demanded the immediate reopening of the government, and benefactors like Koch Industries publicly distanced themselves from the shutdown fight.

Republicans acknowledged the pressure is mounting on them. On Wednesday, the National Retail Federation joined other reliably Republican business groups like the U.S. Chamber of Commerce and the National Association of Manufacturers in asking House Republicans to relent.

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Members suggested they could get behind a lifting of the debt ceiling for several weeks to allow Republicans to unite around a deficit reduction and tax overhaul package.

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But, [the conservative Republican Study Committee leader, Representative Steve Scalise, Republican of Louisiana ] said, even that should have spending cuts attached. He also said that a debt-ceiling increase of even three weeks should include a measure passed by the House denying federal subsidies to congressmen, White House officials and their staff members, who already must buy health insurance on the Affordable Care Act’s new exchanges. And, he suggested, conservatives might insist on another House bill that would allow the Treasury to borrow enough money to pay off debts as they become due, taking away the threat of a government default.

All of those measures would be stiffly resisted by Senate Democrats and the White House.

 

Still, lawmakers did appear to be looking for a way forward after days of simply staring at one another....Mr. Obama invited all House Republicans to a get-together on Thursday. Mr. Boehner saw a meeting between the president and 232 Republicans as a photo opportunity with no chance of producing substantive discussions. So he reduced the invitation list to 18. That will at least give the appearance of negotiations if it fails to prompt actual substantive talks.

WHY HOUSE REBOOBLICANS AREN'T SWEATING THE SHUTDOWN AND WHAT ELSE IS NEWS

WALL ST JOURNAL MARKET WATCH

The public fingers Republicans for most of the blame over the government shutdown, but that doesn’t mean the GOP faces grave danger of losing power in the House come the 2014 midterm elections.
Two articles, one from the left-leaning New Republic and another from the right-leaning Weekly Standard, see slim to no chance that Democrats will capture the House in 2014. And by some accounts, Republicans face not-insurmountable odds of taking control of the Senate.
Can it really be possible? The latest Washington Post poll, for example, shows that 70% of Americans disapprove of Republican tactics in the budget impasse.

Yet as both the New Republic and Standard articles point out, Democrats face a number of tall hurdles to winning the House. First and foremost, they haven’t recruited enough good candidates to challenge the most susceptible Republicans, most of whom are entrenched incumbents with moderate voting records.
Americans also have notoriously short political memories. So the fiscal fights of 2013 are likely to have faded in the minds of most persuadable voters by November 2014 — unless the more dangerous stalemate over the debt ceiling triggers an economic calamity.
Consider what happened in 1996. Voters only threw out three Republican House members just a mere nine months after an extended government shutdown for which conservatives were widely blamed. The GOP even won two Senate seats to extend its majority in that chamber.



Another hurdle for Democrats is the once-a-decade redistricting process that took place in 2010. Republicans controlled more state governments than Democrats and they used their influence to solidify the GOP’s grip on the party’s more vulnerable districts. That helps explain why Republicans only lost eight seats in 2012 even though Democrats won 1.7 million more votes nationwide in congressional races.
By far the biggest obstacle is history: mid-term elections heavily favor the party not in the White House. The opposition party has picked up seats in 24 of the 28 midterm elections since 1900, in many cases making big gains. Read Stuart Rothenberg on why the House is not in play right now.
More crucially, the president’s party has never won control of the House after being in the minority ahead of the midterms. [Both of the above links are must-reads--Esco]

Put another way, Democrats are trying to do what’s never been done before. They need to win 17 seats to oust Republicans, but even in the four midterms when the president’s own party did well, the gains ranged from just five to 11 seats.
To make history in the midterms, Democrats probably have to emerge from the latest budget standoff smelling like roses. Yet the Washington Post poll also offers a warning to the White House and its allies.  A slight majority of Americans also disapprove of President Obama’s performance, while 61% disapprove of how Democrats in Congress are handling the dispute.
– Jeffry Bartash


What Else is New?


Amidst the chaos of a closed government, here comes another nomination process. President Obama is preparing to announce Janet Yellen as his pick to lead the Federal Reserve as soon as Wednesday. -



The off-duty undercover New York City police officer who rode with the biker gang that attacked a family in their Range Rover last month was arrested. Though he told investigators that he left the scene as soon as riders began attacking the vehicle, video of the incident showed the detective pounding his fists on the back of the vehicle. His arrest will mean automatic suspension from the Police Department. Four other men have been charged and police are actively searching for others.


One week after HealthCare.gov went live, the world hasn’t ended—but the website still has glitches. The White House insisted that it is working hard to fix the site where Americans can sign up for new coverage under the Affordable Care Act. The site has had an estimated 8.6 million unique visitors in the past week. But IT specialists told Reuters that the glitches could also be linked to flaws in the site’s architecture. White House spokesman Jay Carney insisted that although they are “increasingly moving more users through the system,” they are still “not satisfied with the performance.”

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Imagine a field of snow. A skier finds little resistance and glides easily across the snow.



A woman shuffles by on snowshoes and is slowed by the snow.




And a man in heavy boots plods along, slowed at every step.




While a bird flies over, untouched.




The Higgs field is like our field of snow.


Fan favorites win the Nobel. Britain’s Peter Higgs and Belgium’s François Englert won the Nobel Prize in Physics for predicting the existence of the Higgs boson, the so-called God particle that explains why elementary matter has mass. In a statement, the Royal Swedish Academy of Sciences gave credit for Higgs and Englert for discovering the particle that “describes how the world is constructed.”
The theory, elucidated in 1964, sent physicists on a generation-long search for a telltale particle known as the Higgs boson, popularly known (though not among physicists) as the God particle. The chase culminated last year with the discovery of this particle, which confers mass on other particles, at the Large Hadron Collider at CERN, in Switzerland. Dr. Higgs and Dr. Englert will split a prize of $1.2 million, to be awarded in Stockholm on Dec. 10.

The finding affirms a grand view of a universe described by simple and elegant and symmetrical laws — but one in which everything interesting, like ourselves, results from flaws or breaks in that symmetry.

According to the Standard Model, the Higgs boson is the only manifestation of an invisible force field, a cosmic molasses that permeates space and imbues elementary particles with mass. Particles wading through the field gain heft the way a bill going through Congress attracts riders and amendments, becoming ever more ponderous.

Without the Higgs field, as it is known, or something like it, all elementary forms of matter would zoom around at the speed of light, flowing through our hands like moonlight. There would be neither atoms nor life.

THE SHUTDOWN ENTERS ITS SECOND WEEK

GREG SARGENT WASHINGTON POST

With the government shutdown dragging into Week Two, and the debt limit deadline creeping closer, Republicans continue to insist the cause of our current governing crisis is that Obama and Democrats refuse to negotiate with them. On ABC News yesterday, John Boehner repeated this talking point again and again.
Yet in the process, Boehner revealed what this invitation to “negotiate” really means. He implicitly confirmed Republicans will only negotiate in a context in which Republicans can employ the looming threat of disaster for the country as a way to unilaterally increase their leverage, and will not negotiate without being granted this leverage. Here’s the key exchange, with ABC’s George Stephanopoulos:

STEPHANOPOULOS: The Democrats, including Senate Democrat Harry Reid, has said he’s more than willing to have a conference, more than willing to have a negotiation, but not under the threat of a government shutdown, not under the threat of a default.

BOEHNER:  So it’s my way or the highway.  That’s what he’s saying.  Complete surrender and then we’ll talk to you.

This is an extremely important and revealing moment. Boehner is explicitly saying that the Democrats’ refusal to negotiate in a context where the threat of widespread harm to the country gives Republicans leverage – and their insistence on negotiating outside this context — represents a demand for ”complete surrender” by Republicans, and hence is a non-starter. But in this scenario, Republicans would not be giving up anything, other than the very leverage Republicans presume the threat of widespread harm to the country grants them. For Republicans, agreeing to negotiate without this unilateral leverage would itself be surrender!
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Stephanopoulos also asked Boehner what concessions Republicans would be willing to make in this “negotiation” he’s requesting. Boehner couldn’t name any, and indeed, he even ruled out conceding anything on new revenues.....[In effect, Boehner is] saying Republicans will make no concessions of their own...

Some will argue that agreeing to raise the debt limit constitutes a “concession” on the part of at least some conservative Republicans. But why is it a concession if Boehner concedes it must happen to avert widespread disaster for the country? As Boehner himself admits, it is the giving up of presumed leverage itself that constitutes surrender for Republicans. He’s insisting on this leverage as a condition for any negotiations.



REPUBLICANS FLOAT SHORT TERM SOLUTION TO CRISIS: It’s being reported that some Republicans are floating the idea of a six-week extension and funding of the government, during which time both sides could sit down and negotiate a longer term solution. The Post’s big write up has the key detail:

Among the options: A short-term suspension, perhaps no longer than six weeks, designed to force Obama to the bargaining table. But some Republicans argue that even a short-term suspension should come with strings attached.

Yup — even this escape hatch for Republicans must include unilateral concessions by Dems. More broadly, it’s unclear why a temporary extension would solve the problem — Dems would still be negotiating under threat of widespread harm to the country later.
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MEMBERS OF BOTH PARTIES CONTRADICT BOEHNER: The House Speaker continued to insist this weekend that a “clean CR” funding the government can’t pass the House, but members of both parties are contradicting him, including Dem Chuck Schumer and GOP Rep. Peter King, who said:

“If it went on the floor tomorrow, I could see anywhere from 50 to 75 Republicans voting for it. And if it were a secret ballot, 150.”

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 COULD A CLEAN DEBT CEILING PASS CONGRESS? Republicans continue to insist a clean debt limit could never pass the House, and David Drucker reports that Republicans are now claiming it would “never” pass the Senate:...Really? There wouldn’t be six GOP Senators willing to support raising the debt limit if default loomed? I’m skeptical, but at any rate, you’ll be hearing a lot of this in the days ahead. Might be worth putting GOP Senators on record here.

[Reports that Senate Republicans would consider supporting such a bill began to roll in on Monday.
Sens. Mark Kirk (R-Ill.), John McCain (R-Ariz.) and Lisa Murkowski (R-Alaska) have all floated the idea of voting for a clean debt limit increase, according to reports by Politico, ABC News and Public Radio International:]



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Paul Krugman suggests Republicans have now found themselves with their backs to the wall on the debt limit because they were too incompetent to realize that Obama would have no choice but to refuse to negotiate, and to turn that into a matter of principle. And this continues to be cast as a “both sides to blame” story:

How did this happen? The main answer, which only the most pathologically “balanced” reporting can deny, is the radicalization of the Republican Party….Everybody not inside the bubble realizes that Mr. Obama can’t and won’t negotiate under the threat that the House will blow up the economy if he doesn’t — any concession at all would legitimize extortion as a routine part of politics.

The continued treatment of this as a conventional Washington negotiation, I’d argue, is a symptom of a broader refusal to reckon with the reality of what today’s GOP has become.

* THE DELUSION DRIVING THE GOVERNMENT SHUTDOWN BRIGADE: E.J. Dionne gets this exactly right: The whole quest to use this fall’s fiscal fights as leverage to undermine Obamacare is “premised on the delusion that Obama’s election victories were meaningless.” Indeed, it’s driven by the refusal of many Republicans to come to terms with the fact that they no longer have the leverage they enjoyed in 2011.




 * AND IS TEA PARTY FATIGUE SETTING IN? The Post has a great piece detailing that at least four Tea Party Republicans are now facing primaries from challengers who say it’s time for less of a slash and burn approach to governing, a reversal of the situation in which primaries all came from the right. Here’s the motive behind the challenge to Rep. Justin Amash:

Some business leaders are recruiting a Republican primary challenger who they hope will serve the old-fashioned way — by working the inside game and playing nice to gain influence and solve problems for the district. They are tired of tea party governance, as exemplified by the budget fight that led to the shutdown and threatens a first-ever U.S. credit default.

Wait, so GOP candidates are running on a promise to govern constructively, rather than engage in endless sabotage governing? Should be an interesting experiment.

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Over the weekend, National Review’s Robert Costa reported that Republicans are talking about a package of modest demands to end the government shutdown and raise the debt limit — including a mechanism for revenue-neutral tax reform, small entitlement reforms and minor changes to Obamacare (such as repeal of the medical-device tax, a measure that enjoys bipartisan support).

The fiscal showdown seems likely to extend at least until mid-October and could consume Washington all the way through December if a short-term continuing resolution is signed.

A Federal Budget Crisis Months in the Planning

Michael Stravato for The New York Times

"You are here because now is the single best time we have to defund Obamacare. This is a fight we can win." SENATOR TED CRUZ, speaking in August to a Heritage Action gathering in Dallas

N.Y. TIMES SHERYL GAY STOLBERG and MIKE McINTIRE

 Shortly after President Obama started his second term, a loose-knit coalition of conservative activists led by former Attorney General Edwin Meese III gathered in the capital to plot strategy. Their push to repeal Mr. Obama’s health care law was going nowhere, and they desperately needed a new plan.

Out of that session, held one morning in a location the members insist on keeping secret, came a little-noticed “blueprint to defunding Obamacare,” signed by Mr. Meese and leaders of more than three dozen conservative groups.

It articulated a take-no-prisoners legislative strategy that had long percolated in conservative circles: that Republicans could derail the health care overhaul if conservative lawmakers were willing to push fellow Republicans — including their cautious leaders — into cutting off financing for the entire federal government.

 

We felt very strongly at the start of this year that the House needed to use the power of the purse,” said one coalition member, Michael A. Needham, who runs Heritage Action for America, the political arm of the Heritage Foundation....Last week the country witnessed the fallout from that strategy: a standoff that has shuttered much of the federal bureaucracy and unsettled the nation.

To many Americans, the shutdown came out of nowhere. But interviews with a wide array of conservatives show that the confrontation that precipitated the crisis was the outgrowth of a long-running effort to undo the law, the Affordable Care Act, since its passage in 2010 — waged by a galaxy of conservative groups with more money, organized tactics and interconnections than is commonly known.

 

 

David Koch of Americans for Prosperity, Michael A. Needham of Heritage Action and former Attorney General Edwin Meese III played roles in the health law fight.

 

 

With polls showing Americans deeply divided over the law, conservatives believe that the public is behind them. Although the law’s opponents say that shutting down the government was not their objective, the activists anticipated that a shutdown could occur — and worked with members of the Tea Party caucus in Congress who were excited about drawing a red line against a law they despise.

A defunding “tool kit” created in early September included talking points for the question, “What happens when you shut down the government and you are blamed for it?” The suggested answer was the one House Republicans give today: “We are simply calling to fund the entire government except for the Affordable Care Act/Obamacare.”

The current budget brinkmanship is just the latest development in a well-financed, broad-based assault on the health law, Mr. Obama’s signature legislative initiative. Groups like Tea Party Patriots, Americans for Prosperity and FreedomWorks are all immersed in the fight, as is Club for Growth, a business-backed nonprofit organization. Some, like Generation Opportunity and Young Americans for Liberty, both aimed at young adults, are upstarts. Heritage Action is new, too, founded in 2010 to advance the policy prescriptions of its sister group, the Heritage Foundation.

 

The billionaire Koch brothers, Charles and David, have been deeply involved with financing the overall effort. A group linked to the Kochs, Freedom Partners Chamber of Commerce, disbursed more than $200 million last year to nonprofit organizations involved in the fight.....

 

 

The groups have also sought to pressure vulnerable Republican members of Congress with scorecards keeping track of their health care votes; have burned faux “Obamacare cards” on college campuses; and have distributed scripts for phone calls to Congressional offices, sample letters to editors and Twitter and Facebook offerings for followers to present as their own.

One sample Twitter offering — “Obamacare is a train wreck” — is a common refrain for Speaker John A. Boehner.

As the defunding movement picked up steam among outside advocates, Republicans who sounded tepid became targets. The Senate Conservatives Fund, a political action committee dedicated to “electing true conservatives,” ran radio advertisements against three Republican incumbents.

Heritage Action ran critical Internet advertisements in the districts of 100 Republican lawmakers who had failed to sign a letter by a North Carolina freshman, Representative Mark Meadows, urging Mr. Boehner to take up the defunding cause. “They’ve been hugely influential,” said David Wasserman, who tracks House races for the nonpartisan Cook Political Report.

 

On Capitol Hill, the advocates found willing partners in Tea Party conservatives, who have repeatedly threatened to shut down the government if they do not get their way on spending issues. This time they said they were so alarmed by the health law that they were willing to risk a shutdown over it. (“This is exactly what the public wants,” Representative Michele Bachmann of Minnesota, founder of the House Tea Party Caucus, said on the eve of the shutdown.)

 

Despite Mrs. Bachmann’s comments, not all of the groups have been on board with the defunding campaign. Some, like the Koch-financed Americans for Prosperity, which spent $5.5 million on health care television advertisements over the past three months, are more focused on sowing public doubts about the law. But all have a common goal, which is to cripple a measure that Senator Ted Cruz, a Texas Republican and leader of the defunding effort, has likened to a horror movie.

 

 

We view this as a long-term effort,” said Tim Phillips, the president of Americans for Prosperity. He said his group expected to spend “tens of millions” of dollars on a “multifront effort” that includes working to prevent states from expanding Medicaid under the law. The group’s goal is not to defund the law.

“We want to see this law repealed,” Mr. Phillips said

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..... In the three years since Mr. Obama signed the health measure, Tea Party-inspired groups have mobilized, aided by a financing network that continues to grow, both in its complexity and the sheer amount of money that flows through it.

A review of tax records, campaign finance reports and corporate filings shows that hundreds of millions of dollars have been raised and spent since 2012 by organizations, many of them loosely connected, leading opposition to the measure.

One of the biggest sources of conservative money is Freedom Partners, a tax-exempt “business league” that claims more than 200 members, each of whom pays at least $100,000 in dues. The group’s board is headed by a longtime executive of Koch Industries, the conglomerate run by the Koch brothers, who were among the original financiers of the Tea Party movement. The Kochs declined to comment.

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In the fight to shape public opinion, conservatives face well-organized liberal foes. Enroll America, a nonprofit group allied with the Obama White House, is waging a campaign to persuade millions of the uninsured to buy coverage. The law’s supporters are also getting huge assistance from the insurance industry, which is expected to spend $1 billion on advertising to help sell its plans on the exchanges.

 

“It is David versus Goliath,” said Mr. Phillips of Americans for Prosperity.

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“I think people realized that with the imminent beginning of Obamacare, that this was a critical time to make every effort to stop something,” Mr. Meese said in an interview. (He has since stepped down as the coalition’s chairman and has been succeeded by David McIntosh, a former congressman from Indiana.)

The defunding idea, Mr. Meese said, was “a logical strategy.” The idea drew broad support. Fiscal conservatives like Chris Chocola, the president of the Club for Growth, signed on to the blueprint. So did social and religious conservatives, like the Rev. Lou Sheldon of the Traditional Values Coalition.

The document set a target date: March 27, when a continuing resolution allowing the government to function was to expire. Its message was direct: “Conservatives should not approve a C.R. unless it defunds Obamacare.”

But the March date came and went without a defunding struggle. In the Senate, Mr. Cruz and Senator Mike Lee, a Utah Republican, talked up the defunding idea, but it went nowhere in the Democratic-controlled chamber. In the House, Mr. Boehner wanted to concentrate instead on locking in the across-the-board budget cuts known as sequestration, and Tea Party lawmakers followed his lead. Outside advocates were unhappy but held their fire.

“We didn’t cause any trouble,” Mr. Chocola said.

Yet by summer, with an August recess looming and another temporary spending bill expiring at the end of September, the groups were done waiting.

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When Senator Richard M. Burr, a North Carolina Republican, told a reporter that defunding the law was “the dumbest idea I’ve ever heard,” the fund bought a radio ad to attack him. Two other Republican senators up for re-election in 2014, Lamar Alexander of Tennessee and Lindsey Graham of South Carolina, were also targeted. Both face Tea Party challengers.

AT LAST. BOEHNER STANDS UP, PLEDGES TO AVOID DEFAULT.

N.Y. TIMES

Speaker John A. Boehner has privately told Republican lawmakers anxious about fallout from the government shutdown that he would not allow a potentially more crippling federal default as the atmosphere on Capitol Hill turned increasingly tense.

Mr. Boehner’s comments, recounted by multiple lawmakers, that he would use a combination of Republican and Democratic votes to increase the federal debt limit if necessary appeared aimed at reassuring his colleagues — and nervous financial markets — that he did not intend to let the economic crisis spiral further out of control.

They came even though he has so far refused to allow a vote on a Senate budget measure to end the shutdown that many believe could pass with bipartisan backing. They also reflect Mr. Boehner’s view that a default would have widespread and long-term economic consequences while the shutdown, though disruptive, had more limited impact.

With the mood in Congress already unsettled by the bitter sparring over the fiscal standoff, the Capitol was shaken anew Thursday afternoon when a high-speed chase beginning near the White House ended near the Senate office complex with Capitol Police shooting the driver to death.

 

His comments were read by members of both parties as renewing his determination on the default and came as the Treasury warned that an impasse over raising the debt limit might prove catastrophic and potentially result “in a financial crisis and recession that could echo the events of 2008 or worse.”

 

It is conceivable that Mr. Boehner could pass a debt-limit increase with a slim majority of Republican votes, with Democrats making up the difference, as he has in the past on budget measures. But moving in that direction poses risks of a threat to Mr. Boehner’s leadership position from a watchful conservative bloc, which has warned that his post could be on the line if he goes against the legislative position of large numbers of the rank and file.

Representative John C. Fleming, Republican of Louisiana and one of his conference’s more conservative members, said that he doubted Mr. Boehner would be able to pass any bill — with or without Democratic support — that did not extract some significant concessions from Mr. Obama and Senate Democrats.

 

At the same time, growing numbers of House Republicans have expressed frustration at those insisting on changes to the health law when Mr. Obama has made clear he will not accept them. Their unhappiness, the furor caused by the shutdown and the desire to avoid default could help protect Mr. Boehner.

 

Boehner on the Tightrope:

 

CILLIZZA & SULLIVAN WASHINGTON POST

 

There are currently 19 House Republicans on the record in support of a “clean” continuing resolution, meaning one without any other extraneous measures — like the defunding or delaying of Obamcare — attached. Combine those nineteen with the 200 Democrats who would almost certainly vote as a bloc in support of such a clean CR and you get 219 votes — a majority of the House. The bill has already been passed by the Democratic-controlled Senate, so it would go to straight to President Obama who would sign it. Shutdown over. Easy.
Except one little thing, which is that the only way for that scenario to happen is for Boehner to allow a piece of legislation supported by roughly 7 percent of his conference to come to the House floor for a vote. And, doing that on something as high-profile as a government shutdown/Obamacare, would almost certainly signal either the symbolic (or maybe even practical) end of his speakership.

Why? First a bit of context.

On Jan. 1, 2013, Boehner put the deal to avert the fiscal cliff on the House floor. It passed with 257 votes — just 85 of which came from Republicans. Later that month, the House voted in favor of relief money for Hurricane Sandy victims although just 49 Republicans supported it. Then in February, the House re-authorized the Violence Against Women Act (VAWA) with just 87 Republican votes. In all three cases, a minority of Republican House Members backed the measure.
So, there is both precedent and peril in allowing a vote on a measure that lacks the support of a majority of the House Republican conference. Precedent in that Boehner has done it before — although never with so few Republicans “yes” votes guaranteed — and peril in that, well, Boehner has done this sort of thing before.

Remember that Boehner came within a hair’s breadth of being forced into a second ballot vote to be re-elected Speaker at the start of the 113th Congress, and that was before the Sandy relief and VAWA votes.  To allow another measure — and this one that not only deals with a government shutdown but also Obamacare — to pass with almost exclusively Democratic votes would be a bridge too far for lots and lots of House Republicans. There could well be an immediate revolt against Boehner and, even if there wasn’t, any chance that he would remain on as Speaker in 2015 (assuming Republicans hold the majority) would be gone.
Boehner knows that reality all too well. Without some sort of major concession — something he can go to his GOP conference with and say, “See, they gave in on this” — it would be political suicide for him to bring up a clean continuing resolution supported by less than 10 percent of his conference.
So, the government will remain shut unless that sort of deal is made or Boehner decides that he’s had enough of being Speaker.

 

 

GOVT SHUTDOWN

GREG SARGENT WASHINGTON POST

House Republicans are allowing the government to shut down, rather than permit a vote on continued funding of the government at sequester levels, which alone would (in a sane universe) have been a real victory for them. This puts Republicans in precisely the same position they were in before they caved to conservative demands and launched a series of anti-Obamacare votes that have proven futile. Remember, Congress will vote to fund the government soon enough. Dems are not going to meaningfully undermine Obamacare, which means John Boehner will have to figure out a way, very soon, of allowing a vote on funding for the government, untethered from the health law, even if it means making the Tea Party very, very angry.

How long Boehner is willing to postpone this will be partly influenced by how much damage the GOP is sustaining, as judged by influential party insiders. And on that score, today’s new Quinnipiac poll should set off alarm bells.
It finds that 58 percent of Americans, including 58 percent of independents, oppose Congress defunding Obamacare. Seventy two percent, and 74 percent of independents, oppose shutting down major activities of the government to stop the health law. On the debt limit, 64 percent oppose not raising it to block the law. All of this is in spite of plurality disapproval of Obamacare. Dems have opened a nine point lead in the generic House matchup, 43-34. Underlying structural factors mean even a wide lead probably won’t dislodge the GOP majority. But as Steven Shepard rightly notes, a shutdown could make things “volatile.”

[The poll] finds that ...54 percent say Obama is “honest and trustworthy”; 54 percent say he cares about people’s needs and problems; and he leads Republicans on handling the middle class by 51-38. While 50 percent say Obama isn’t doing enough to compromise with Republicans, 68 percent say Republicans aren’t doing enough to compromise with Obama. This may be the most important finding:
Which comes closer to your point of view; there is gridlock in Washington mainly because President Obama lacks the personal skills to convince leaders of Cnogress tow ork together, or there is gridlock in Washington mainly because Republicans in Congress are determined to block any President Obama initiative:
Obama lacks skills: 33
Republicans block 55
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These findings were taken before the government shutdown. There’s no telling how much worse public perceptions could get now that it’s under way, let alone how they’d be impacted by default and a resulting economic crash.

BUSINESS WEEK:  Wall Street to Washington: 'What, Me Worry?'

....the market assumed a sense of serenity unseen in more than seven years. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (or VIX) is down 9 percent year-to-date, to a level that is now 18 percent below its average since 1990, Bloomberg data show. The average daily change for the S&P 500-stock index narrowed to 0.45 percent in the third quarter, the smallest rate since the end of 2006. Compare that to the record 3.31 percent a day clocked in the final quarter of 2008, during the worst of the financial crisis.

The market recently hit all-time high, and is up by a third just since June 2012, a run that has pumped nearly $5 trillion into the capitalization of the Standard & Poor’s 500.
“I think the risk aversion is back to near historical lows mostly because of the no-taper decision by the Fed,” says Chun Wang of the Leuthold Group, referring to the Fed’s decision not to slow the pace of its bond-buying program. “The market still expects a last-minute resolution of the debt ceiling and the effect of the government shutdown to be minimal.” Leuthold’s Risk Aversion Index is near an all-time low.
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However copacetic Wall Street may be feeling about things, a protracted government shutdown would inflict real pain on the lackluster economy. Moody’s Analytics’ (MCO) chief economist Mark Zandi calculates that a three- to four-week shutdown would shave 1.4 percentage points off growth; without a shutdown, he was predicting a 2.5 percent annualized pace of fourth-quarter growth.

Government Is Shutting Down in Impasse

WASHINGTON POST

The U.S. government began to shut down for the first time in 17 years early Tuesday, after a Congress bitterly divided over President Obama’s signature health-care initiative failed to reach agreement to fund federal agencies.
Hours before a midnight deadline, the Republican House passed its third proposal in two weeks to fund the government for a matter of weeks. Like the previous plans, the new one sought to undermine the Affordable Care Act, this time by delaying enforcement of the “individual mandate,” a cornerstone of the law that requires all Americans to obtain health insurance.

The new measure also sought to strip lawmakers and their aides of long-standing government health benefits.
The Democratic-led Senate quickly rejected that plan on a party-line vote. Senate Majority Leader Harry M. Reid (D-Nev.) urged House Speaker John A. Boehner (R-Ohio) to abandon the assault on the health-care law and pass a simple bill to keep the government open. Otherwise, Reid warned, “the responsibility for this Republican government shutdown will rest squarely on his shoulders.”

Boehner refused to yield. He instead won approval, in a 1 a.m. largely party-line roll call, requesting a special House-Senate committee to meet in the coming days to resolve differences between the two parties, leaving in limbo the fate of millions of federal workers and the services they provide.

The impasse means 800,000 federal workers will be furloughed Tuesday. National parks, monuments and museums, as well as most federal offices, will close. Tens of thousands of air-traffic controllers, prison guards and Border Patrol agents will be required to serve without pay. And many congressional hearings — including one scheduled for Tuesday on last month’s Washington Navy Yard shootings — will be postponed.

Obama warned that the broader economy, which is finally starting to recover from the shocks of the past six years, would take a substantial hit if congressional gridlock shutters “America’s largest employer.”
“Keeping the people’s government open is not a concession to me. Keeping vital services running and hundreds of thousands of Americans on the job is not something you ‘give’ to the other side. It’s our basic responsibility,” Obama said in a statement Monday evening at the White House.

 A fraction of today’s House Republicans were on Capitol Hill in 1995 and 1996 when a Republican-led Congress last shut down the government in a dispute over the budget with a Democratic president. Younger lawmakers don’t remember the pain the shutdown caused constituents, senior Republicans said. And many of them now question the conventional wisdom that the closures weakened the GOP presidential candidate in 1996 and nearly cost the party control of the House.

Democrats predicted that if the shutdown stretches into the weekend, the government-funding dispute could be rolled into an even more serious battle over the $16.7 trillion federal debt limit. The Treasury Department will begin running short of cash to pay the nation’s bills as soon as Oct. 17 unless Congress approves additional borrowing authority. With so little time remaining to avoid what would be the nation’s first default, Democratic aides predicted that negotiations to reopen the government may be merged into the debt-limit talks.

CNN Poll: GOP Would Bear The Brunt of Shutdown Blame

CNN NEWS

According to a recent CNN/ORC poll, if there is a federal government shutdown over Obamacare, Congressional Republicans would bear the brunt of the blame (46 percent).

Some 68% say a shutdown for a few days would be a bad thing for the country, with that number rising to nearly eight in 10 for a shutdown lasting a few weeks.

 

Six in 10 questioned in the CNN survey say that it is more important for Congress to avoid a shutdown than to make major changes to the new health care law, with only a third saying it is more important for lawmakers to prevent major provisions in the new health care law from taking effect by cutting the funds needed to implement them.

 

The poll indicates that Obamacare is not popular, with 57% saying they oppose the law, up 3 points from May, and 38% saying they support the measure, down five points from May.

Forty-six percent of respondents would blame congressional Republicans, 36 percent would blame Obama and 13 percent would blame both. Sixty-nine percent said that the GOP is acting like "spoiled children" in the budget fight, while 58 percent think that of congressional Democrats and 49 percent think that of President Barack Obama. Six in 10 respondents reject the GOP's approach and think it is more important to avoid a shutdown than to make major changes to the Affordable Care Act.
The poll is an indication that the Republicans' hard-line approach does not resonate with many Americans, and could have consequences in future elections. Nevertheless, the GOP has touted the tactic of using the continuing resolution to fund the government to demand changes to Obamacare, crafting the populist slogan "Make DC Listen."