Sen. Claire McCaskill says Senate Minority Leader Mitch McConnell has "lost his mind", indicated by his convoluted plan to escape negotiations around raising the debt ceiling, and his apparent renunciation of politics and elections because "Nothing has worked." I agree with McCaskill that McConnell's proposals sound like the mutterings of a man unhinged, but I don't think he's crazy. McConnell gets it. But he's trying to keep happy a wing of his party that doesn't get it, and is deeply invested in not getting it.
McConnell's not crazy. He and the rest of GOP leadership are dealing with people who are crazy, and people who expect them to keep the crazy people in line. In other words, they're caught between the people with the pitchforks and the people with the checkbooks. That hasn't driven GOP leadership crazy so much as it's driven them to throw up their hands both in despair of ever making their radicals see reason, and in an attempt to abdicate their responsibility.
Make no mistake, McConnell gets it. His comments on Laura Ingraham's show (perhaps another attempt "talk sense" to an increasingly obstreperous wing of his party) indicate that.
McConnell, on Laura Ingraham’s radio show, warned the zealots within his own ranks not to trifle with default. “It destroys your brand,” he said. “If we go into default, [Obama] will say that Republicans are making the economy worse and try to convince the public, maybe with some merit, if people start not getting their Social Security checks and military families start maybe getting letters saying service people overseas don’t get paid. It’s an argument he could have a good chance of winning.”
The Apocalypse Scenario
With good reason. A Washington Post article lays out the scenario that's likely to unfold on August 3rd, if the debt ceiling isn't raised.
What happens if President Obama and Congress don’t strike a debt deal?
...After the debt ceiling was breached, there would be no delay in the tough decisions.
On Aug. 3, the Treasury is set to receive about $12 billion in tax revenue — mainly from people paying their taxes late — and is slated to spend $32 billion, including sending out more than 25 million Social Security and disability checks at a cost of $23 billion, according to Powell’s analysis.
Obama could decide to pay half of the Social Security checks and ignore other bills coming due that day, which include $500 million in federal salaries and $1.4 billion in payments to defense contractors.
Or he could decide not to make any Social Security payments and instead hoard tax revenues to pay investors in U.S. bonds. A failure to pay those investors would severely destabilize the financial system, analysts say. (Some also argue that the Treasury could engage in a never-before-tried swap of government bonds that would allow it to pay for Social Security. But Treasury officials say it is highly unlikely to work and may not be legal.)
Aug. 4 could prove even more difficult. The government is slated to spend $10 billion and raise only $4 billion in revenue.
If want to hear it put more bluntly, go to Wall Street and you'll hear something like this:
"Asking what the U.S. economy might look like after a possible U.S. Treasury default is akin to asking 'what will you do after you commit suicide,' " wrote Steven Wieting, Managing Director in the Economic and Market Analysis team of Citigroup, in a July 11, 2011 report.
The People With The Checkbooks
The people with the checkbooks have made it clear that the debt ceiling must be raised. Fed Chair Ben Bernanke said a "huge financial calamity" will ensue. No less than the Citigroup, Bank of America, and the Chamber of Commerce and Bank of America, to name a few, have essentially written in to say "Stop screwing around and get this done!"
Indeed, as the hour gets closer to default, the nation's biggest banks are dusting off their bullhorns, predicting dooms-day scenarios in the wake of inaction. Take, for example, a July 1, 2011, report put together by Bank of America Merrill Lynch warned that there was a "significant systemic risk arising from a Treasury default" that could result in "international and domestic uproar."
...The extent to which the opinions in reports like these have made their way into the 11th hour, high-stakes negotiations over the debt ceiling is difficult to pin down. Lawmakers are hesitant to admit that they've received directives from Wall Street. But in conversations with top officials both on the Hill and in the White House, it is clear that an open avenue of communication is present between the parties.
"We have obviously a pretty good feel for what people in the outside business investor community believe," said one top Democrat involved in the talks. "We are obviously aware of the outside environment."
Indeed, just one day after Citigroup issued its report, the U.S. Chamber of Commerce -- which has substantial Wall Street interests and is deeply plugged in to Republican leadership -- sent a letter to the president and members of Congress, signed by 500 CEOs, demanding that the debt ceiling be raised.
"A great nation - like a great company - has to be relied upon to pay its debts when they become due," the letter read. "This is a Main Street not Wall Street issue."
The People With the Pitchforks
The people with the pitchforks have made their terms clear too. They either (a) don't believe it, or (b) are willing to risk it. Since the debt ceiling's never not be increased before, nobody knows for sure what will happen. Just as in 2008, nobody knew what would happen if we allowed major financial institutions to fail — taking pensions, 401(k)s, countless jobs, and knows what else down with them — but the people with the pitch forks were willing to risk it then, too. “For the sake of the altar of the free market system, do you accept a Great Depression?”, they asked. And they meant it.
To understand that, you have to understand the kind of apocalyptic economics at play here.
Republicans, to be sure, have long waged a war on government, but only now has it become an apocalyptic and total war. At its root, I suspect, is the fear and loathing that rank-and-file right-wingers feel toward what their government, and their nation, is inexorably becoming: multiracial, multicultural, cosmopolitan and now headed by a president who personifies those qualities. That America is also downwardly mobile is a challenge for us all, but for the right, the anxiety our economy understandably evokes is augmented by the politics of racial resentment and the fury that the country is no longer only theirs. That’s not a country whose government they want to pay for — and if the apocalypse befalls us, they seem to have concluded, so much the better.
Most Americans, thankfully, don’t share the right’s romance with cataclysm — something then-Senate Republican leader Bob Dole realized when he called off the shutdown of 1996, something that current Senate GOP chief Mitch McConnell realized Tuesday when he unveiled a cynical and circuitous plan to back off from the impending smash-up. Dole persuaded his fellow Republicans to stand down. It’s not clear, given the furies that possess today’s Republicans, that McConnell can do the same.
Both personalities of the pitchfork wing of the GOP are actually wrapped up in the persona of one of its biggest candidates for 2012: Michelle Bachmann, who on one hand believes that congress can just "pass legislation" requiring the government to pay for at least few things after the economic apocalypse, and on the other once said that an increase in joblessness might help her chances of moving into the White House.
Until now, that is. The Bachmann-King-Gohmert plan, similar to those floated by other conservatives, is the economic equivalent of the old Cold War strategy in the event of a nuclear attack: If we just duck and cover, maybe it won’t be so bad.
To some extent, irrationality persists on both sides. Senate Democrats, rather than doing useful work, have been debating a pointless “sense of the Senate” resolution that millionaires should pay more in taxes.
But Republicans have a bigger problem. Even when leaders attempt to be responsible — both House Speaker John Boehner and Senate Minority Leader Mitch McConnell have said that default is not an option — they are being undercut by their rank and file.
And, as Lindsey Graham pointed out, Republicans didn this to themselves.
“Our problem is, we made a big deal about this for three months,” said Senator Lindsey Graham, Republican of South Carolina.
“How many Republicans have been on TV saying, ‘I am not going to raise the debt limit,’ ” said Mr. Graham, including himself in the mix of those who did so. “We have no one to blame but ourselves.”
Painted into a corner, threatened by pitchfork and checkbooks, what do you do? You throw your hands up.
Throwing Their Hands Up
GOP leadership is throwing their hands in both frustration and surrender, leaving the field to the people with the pitchforks and basically telling the president "You deal with them."
That's why McConnell's made it clear that he's throwing his hands up, because: he (a) wants the debt ceiling increased, or at least knows it must be increased, but (b) wants a debt ceiling increase — if it must be — but wants no "ownership" of the economy.
Boehner admitted that he, as Speaker of the House, couldn't get his caucus to see reason. Reduced to playing messenger boy for a caucus he's supposed to be leading, Boehner has declared the debt ceiling to be "not his problem" anymore.
That's why Obama's reference to Reagan, before he threw up his hands and walked out of a metting where he found himself negotiating not with McConnell or even Boehner, but Eric Cantor. Cantor, Bachmann, etc., represent a wing of the party that Reagan kept under control by basically telling them, "Look, this is all you're going to get, and I'm the only one who can get it for you. Screw it up, and you won't even get that much. Now, sit tight and let me work."
See, back then the GOP had their own "adult in the room." Reagan was "the adult in the room." The problem is, there's no leadership in the Republican party capable of doing that anymore. What's left of the GOP leadership have thrown up their hands and left that role to the president.
Taking It To The People
There's one more reason that McConnell and the rest of GOP leadership have throw up their hands. Even if the tea partiers are still making the mistake of believing their own press, leadership has to know that the people aren't with them on this. Recent polls show that when it comes to the deficit most Americans favor a balance of spending cuts and tax increases.
And if McConnell and Boehner bet that their shenanigans around the debt ceiling would reflect negatively on president Obama, they've now clearly lost that bet. If president Obama "takes this to the American people," they'll more than likely see him as the "adult in the room."
American voters disapprove 56 - 38 percent of the way President Barack Obama is handling the economy, but by 45 - 38 percent they trust the president more than congressional Republicans to handle the economy, according to a Quinnipiac University poll released today.
The country is in a recession, 71 percent of American voters say, but by 54 - 27 percent they blame former President George W. Bush more than President Obama.
The president gets a 47 - 46 percent job approval rating, unchanged from the June 9 survey by the independent Quinnipiac (KWIN-uh-pe-ack) University. That tops a 64 - 28 percent disapproval for Democrats in Congress and a 65 - 26 percent disapproval for Republicans. Obama outscores congressional Republicans on several points in the deficit reduction battle:
- Voters will blame Republicans over Obama 48 - 34 percent if the debt limit is not raised;
- Voters say 67 - 25 percent that an agreement to raise the debt ceiling should include tax hikes for the wealthy and corporations, not just spending cuts;
- Voters say 45 - 37 percent that Obama's proposals to raise revenues are "closing loopholes," rather than "tax hikes";
- But voters say 57 - 30 percent that Obama's proposals will impact the middle class, not just the wealthy.
Back in February, I heard Mitch McConnell speak at CPAC. I pulled out my notes from that speech, and as I read them I wondered if McConnell remembers how he advised conservatives to "Never confuse what's popular with what's right." I wondered if he remembered telling them, "If our ideas are unpopular, we will stand by what we believe in. Popularity will take care of itself."
Probably not. To consider that popularity hasn't "taken care of itself," and that the public hasn't rallied to your side might require considering that it's because you're wrong. It's much easier to throw your hands up and let someone else deal with it.
