The debt ceiling negotiations get more convoluted with each passing day.
Yesterday, Republican Senate Minority Leader Mitch McConnell offered what he referred to as a “back-up plan” in case the two sides fail to reach an agreement before the August 2nd deadline.
McConnell’s plan would in essence authorize the President to increase the debt ceiling in three incremental stages between now and the 2012 elections WITHOUT requiring any offsetting spending cuts. In a face saving measure, the plan affords Republicans the opportunity to voice their disapproval of the debt ceiling increase. It calls for Congress to vote on a “resolution disapproving” each incremental increase…which the President would naturally veto. The plan also calls for the President to provide Congress with the offsetting spending cuts “he would SUGGEST making”… without actually requiring him to make those cuts.
McConnell may call this a back-up plan; but many are calling it a full scale capitulation.
So what happened? What caused the Republicans to go from emphatically stating that they would not agree to ANY increase in the debt ceiling unless it was matched with offsetting spending cuts? What happened to the full throated “no debt ceiling increase…period” from the Tea Party members? Are McConnell and Boehner no longer listening to their base?
They are indeed. But it’s not the Tea Party base that is bending their ear. It is the Wall Street base that has grabbed McConnell’s attention.
Wall Street is getting nervous. They see the wild fire of economic ruin that is sweeping across Europe and they can feel the flames licking at their heels. Moody’s just downgraded Ireland and Portugal to Junk bond status. Italy, Europe’s third largest economy, is on the verge of becoming Greece. Germany has been bankrolling the continent and can only continue for so long. Is the US far behind? Tea Partiers make a lot of noise and carry signs with funny slogans. But Wall Street and big corporations pay the Republican bills and fill the Republican election coffers. Wall Street wants this fixed; and they don’t want to risk waiting until the eleventh hour to close the deal.
McConnell has said from day one that his number one priority is to defeat Obama in 2012. Not create jobs. Not fix health care, or repair our infrastructure or improve our education system. Defeat Obama. In announcing his back-up plan he said there was no way to cut a deal "as long as this President is in office." So he’ll allow Obama to increase the debt ceiling and then spend the campaign season painting him as a free spending liberal who is driving the country further into debt.
And the can gets kicked down the road once more.