Monday, January 14, 2013

Pulling The Trigger On The Economic Hostage

If Politico is right on the GOP being ready to start tossing bodies out the window to prove they're serious (I know, I know, the WIN THE MORNING crew is rarely so, but let's work through the scenario) then President Obama's victory will be total.

House Republicans are seriously entertaining dramatic steps, including default or shutting down the government, to force President Barack Obama to finally cut spending by the end of March.

The idea of allowing the country to default by refusing to increase the debt limit is getting more widespread and serious traction among House Republicans than people realize, though GOP leaders think shutting down the government is the much more likely outcome of the spending fights this winter.
 “I think it is possible that we would shut down the government to make sure President Obama understands that we’re serious,” House Republican Conference Chairwoman Cathy McMorris Rodgers of Washington state told us. “We always talk about whether or not we’re going to kick the can down the road. I think the mood is that we’ve come to the end of the road.”

The GOP has done this before.  Obama didn't bite then, he's not going to bite now.  The House GOP is pushing the only leverage they think they have:  the Tea Party nutjobs going crazy.

Republican leadership officials, in a series of private meetings and conversations this past week, warned that the White House, much less the broader public, doesn’t understand how hard it will be to talk restive conservatives off the fiscal ledge. To the vast majority of House Republicans, it is far riskier long term to pile up new debt than it is to test the market and economic reaction of default or closing down the government.

GOP officials said more than half of their members are prepared to allow default unless Obama agrees to dramatic cuts he has repeatedly said he opposes. Many more members, including some party leaders, are prepared to shut down the government to make their point. House Speaker John Boehner “may need a shutdown just to get it out of their system,” said a top GOP leadership adviser. “We might need to do that for member-management purposes — so they have an endgame and can show their constituents they’re fighting.”

This is an absolute bluff.  Wall Street and the hedge fund titans will never allow the GOP to blow up the markets like this.  The second President Obama goes on TV and says that the GOP is forcing hundreds of thousands of government employees to be laid off, national parks to close, the markets to sink and Social Security checks to be late, the Republicans lose just like they did in 1995-96.  The real effort behind this story is to make the President blink.  He won't.

Republicans are betting that shutting down the government in order to force massive cuts to Social Security and Medicare is a winning hand?  It'll never happen.  But the GOP is convinced the threat of this alone will make Democrats panic and give even worse idea.  Meanwhile, they are sure they will get those sequestration cuts.

GOP officials said 90 percent of their members are prepared to allow the cuts to take effect, rather than compromise, based on their preliminary head counts. This seems like the most likely outcome right now.
So please proceed, Tea Party nutjobs.  We just might get the House back after all.

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