For the next 10 days, all eyes will be on one room in the White House where top congressional leaders and the president will meet to discuss the debt ceiling debate. With my active mind and all the commentary I’ve read, the scenarios for this new deal look interesting. On Saturday, Speaker Boehner said they would go for a $2 Trillion deal instead of a more comprehensive $4 Trillion deal proposed earlier. The $2 Trillion figure was the one talked about during the Biden negotiations about 2 weeks ago until they collapsed when House Majority Leader Eric Cantor exited stage left because he thought tax increases were on the table. $2 Trillion is the goal, $4 Trillion is the wish, and both ideologies are at stake. One side will come out the winner and the other the loser. If we default, no one wins. My predictions are this, keep in mind these are political:
Republicans Win: This happens if taxes are not increased and no revenue is raised. Cuts in entitlements like social security, Medicare, and Medicade will happen from this deal. It easily breezes through the house and has a tough debate in the senate. Make no mistake, Republicans will hold out until the vary end, its the only way I can see this scenario happening.
Democrats Win: If any revenue increases are agreed to or taxes are increased. Some big cuts are made in entitlements. Entitlement cuts will happen no matter what. Social Security is off the table, Medicare cuts will be rather smaller than Republicans want, and revenues will be raised by cutting subsidies. I have doubts that any new taxes will happen or taxes will be raised in any way here. The point is cuts will happen, but if the impact is minimized and revenue is raised through closing tax loopholes, Democrats can probably claim some victory here.
Default: Since this is unprecedented, it becomes hard to predict. The party that walks out on the negotiations gets definitely gets blamed. Republicans get blamed if they hold out on raising any revenue, even closing tax loopholes. Democrats lose if they refuse to compromise on entitlements. The President gets blamed if he appears extremely partisan and stops playing the pragmatic negotiator. I think both parties will receive some blame. It just depends on who holds out longer and appears more stubborn. PR is super important here. Dueling statements will come out by both parties over the next 10 days. The party with the worst or harshest message will definitely miss a victory.
Temporary Stopgap Measure: President Obama put this idea down this morning. Nevertheless, don’t count this out. A Temporary Stopgap would extend the debt ceiling for about 30-180 days until the negotiations are complete. If Obama and Boehner think they are on the goal-line, but do not have the bill written, then this option could be deployed. Another options is for President Obama to extend the debt ceiling by executive order, he also ruled this out. But, in Washington, no never means hell no.
Leadership Change: This affects the GOP more than the Democrats. If Boehner makes a conscious decision to ignore the Tea Party’s wishes, they might go searching for a new majority leader. Eric Cantor is poising himself to fill that leadership vacuum if need be. Boehner has a strange relationship with the Tea Party. He must appease them, but he is not a card carrying member of the movement. I don’t foresee Democrats forcing Obama out of office or putting up a primary challenge. No one has laid the groundwork for that. Progressives will balk, but not take strong action. Leadership change will only occur if the caucus is so angry they want someone who will play ball.
Of course, your party affiliation will form the decision about who wins this win, lose, or draw scenario. No one will come out unscathed, that’s for sure.
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