Sunday, July 17, 2011

All Sizzle and No Steak, Could Perry Disrupt the GOP Race?

How the "Grand Deal" is Rapidly Turning Into NothingIt's quite an interesting narrative around the debt ceiling. Historically, debt ceiling increases have been non-events in American politics. The right of the government to borrow is authorized by law. From the country's inception until 1917, Congress individually reviewed every bond issuance. In 1917, realizing that the country's affairs and balance sheet had become far too complex for such micro-management, Congress passed the Second Liberty Bond Act, which authorized blanket federal borrowing, up to a preset limit, at the time, $8 billion. Since that time, Congress has continually raised the limit as inflation and deficit spending have driven the debt up over time. Historically, these increased have passed easily. Congress passed debt increases in 2002, 2003, 2005, 2007, 2008, 2009 and 2010 with little fanfare (do you even remember a debt ceiling debate during the Bush Administration?)

This time however, the newly minted House GOP majority, buoyed by Tea Party activists, saw an opportunity to set the stage for their fiscal policy goals by demanding major deficit reduction in return for the ceiling increase. House Speaker John Boehner set the standard that at least $1 in debt-reducing initiatives must pass for every $1 increase in the debt ceiling. Rep. Paul Ryan laid out the House GOP blue-print which called for radical changes to entitlements and a whole bunch of non-specific cuts to discretionary spending (the Ryan Plan set targets but did not actually say WHAT it would cut beyond entitlements.)

It now appears that the GOP was bluffing and doesn't actually want a deal. Why do I say that? Because President Obama has embraced their somewhat silly position around the debt ceiling (the debt ceiling is a product of laws Congress already passed, so why do they suddenly act shocked and demand cuts when the check comes?) and pushed for a grand bargain, a $4 trillion deal over 10 years that would include 85% spending cuts and 15% new revenues, with the new revenues being generated solely by closing corporate and wealthy tax loopholes. He even put entitlements on the table.

No dice, says the GOP. "Everything" is on the table say John Boehner and Eric Cantor, "everything" that is except tax increases. With taxes sitting at their lowest level in 60 years and the President proposing only the most symbolic of tax hikes, the GOP position is somewhat absurd.

Now it is the GOP, led by Senate Minority Leader Mitch Mcconnell, who are pushing for either a much smaller deal or a gimmick by which Congress would agree to debt ceiling increases in a way that allows the GOP to vote against them but still let them happen.

I've been critical of President Obama's negotiating tactics in the past - I thought he cut a horrible deal on the Bush Tax Cuts and gave away a ton of leverage and I thought that he gave the GOP 80%+ of what they wanted in the Fiscal 2011 budget. But, I admit, I was wrong about this one. He has played it masterfully.

The GOP looks hypocritical and is stuck defending why they would walk away from $3+ trillion in spending cuts because they don't want Exxon-Mobile or private jet owners to lose their special tax exemptions. They look unserious about deficit reduction and like they are simply pandering and playing politics.

In short, the GOP is losing the debate and is scrambling to figure out there new position. Boehner, who actually wants a deal, is wedged by Eric Cantor, who has no interest in legislation. Several others in the GOP have expressed openness to closing tax loopholes, including conservative Tom Coburn and moderate Lindsey Graham. But it looks like there will be no deal.

So, the can gets kicked down the road and the GOP loses credibility. What a shame.

Rick Perry Could Make Waves
It looks increasingly likely the Texas Governor Rick Perry will enter the GOP 2012 Presidential field. He is a compelling candidate in many ways - he obviously has executive experience, he has strong conservative credentials (which is obviously very helpful in GOP primaries and caucuses) and he is a good speaker. In short, he is Michelle Bachmann with more credibility.

His entry would clearly be bad for Bachmann as they would be fighting for the same set of voters. Moderates and those most interested in general election victory would still back Mitt Romney, although conservatives who were holding their nose and supporting Romney because they viewed him as the only credible general candidate, might jump ship.

So, in short, how relevant Perry would become depends on where he pulls his support from. If he steals support mostly from Bachmann, he will simply solidify Romney's national lead. If he stills primarily from Romney, he could win or he could open the door for Bachmann to win with a plurality of Tea Party voters and talk radio listeners.

Either way, in what has become kind of a ho-hum field, Rick Perry's entrance adds an element of excitement.

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