Let me start by stating for the record that, while it would have been extremely entertaining to have a government shutdown a month before the 2012 election, the deal for a six-month continuing resolution kind of/sort of announced yesterday by Senate Majority Leader Harry Reid (D-NV) and House Speaker John Boehner (R-OH) and blessed later in the day by the White House is a good thing for the economy, financial markets, investors, business, and the country as a whole.
It may not be good for the tea party, but I’m more that okay with that.
Having said that, there are several points that need to be raised.
First, in spite of yesterday’s announcement, I’m not sure this really is a done deal. In particular, I’m not convinced that the tea party wing of the GOP has signed off on it. The fact that the House isn’t going to take a vote on the CR before it leaves this week for the August-labor Day recess may be an indication that Boehner isn’t confident he actually has enough support from his own caucus for the deal. And as anyone who has ever worked a legislative issue will tell you, the longer you wait before you take a vote on something that is as much a political hot potato as federal spending, the more likely it is that opposition will develop or intensify.
One thing to watch will be he Republicans Boehner campaigns for during the recess. Campaigning for a tea partier almost certainly will come with a quid pro quo that he or she supports the CR. It will also be interesting to see whether, in light of the CR deal, tea partiers want Boehner campaigning for them.
Second, the CR could be the first step in a new version of Washington’s favorite budget game — Kick the Can Down the Road. The latest edition would be kicking the fiscal cliff down the road, that is, delaying the fiscal cliff into next year and setting up a new deadline for imposing short-term damage on the economy.
That’s what I was hearing yesterday from some high-placed contacts on Capital Hill. The six-month CR lays the ground work for delaying some or all of the other fiscal cliff-related tax increase and spending cut policies until early 2013 so that the cliff would be the next Congress’ responsibility.
That could also eliminate the need for a lame duck session of Congress, although almost everyone I talked to thought that was much more of a fantasy than a real possibility.