Would Democrats Support a Six-Month Clean CR?

October 14, 2013Danny Vinik Leave a comment

It seems like we are slowly inching towards a compromise between Senate Democrats and Senate Republicans. Majority Leader Harry Reid (D-NV) has issued a new offer that includes a nine-month debt ceiling hike, a six-week clean continuing resolution, a delay of the medical device tax, greater income verification for Obamacare subsidies, a formal budget process and a yet-to-be-decided Republican concession. It’s unclear what that concession will be. But if you take the Democrat’s position that they will not negotiate over the debt ceiling or a clean CR, here’s what the deal looks like from their perspective:

Republicans get: Democrats Get:

Delay of medical device tax • Unknown Concession
Greater income verification
Formal budget process

The clean CR and debt ceiling increase are not part of the deal as they were never negotiated upon (although Republicans can return to their constituents and say they broke Obama’s promise not to negotiate on the debt ceiling, even if it isn’t actually true). John Boehner will break the Hastert Rule and allow something like this to pass, because he knows we can’t default. That’s how Democrats envision the final deal, at the moment.

But Republicans are upset. They think that Democrats are moving the goal posts on them by demanding a six-week, instead of a six-month, CR. Here’s Sen. Lindsey Graham:

You can blame us, we’ve overplayed our hand, that’s for damn sure. But their response, where the president and [Senate Majority Leader Harry Reid] basically shutting everybody out, and when you try to negotiate, they keep changing the terms of the deal … it’s very frustrating.

So, what terms of the deal does Graham think Democrats changed? He doesn’t specify, but I think this all comes down to what Democrats thought they meant when they said they wanted a clean CR. They meant a CR that lasted six-weeks, or at least they are saying that’s what they meant. Republicans think Democrats meant that they would support a clean CR for any period of time. This is how Reid’s offer looks to them:

Republicans get: Democrats Get:

Delay of medical device tax • Six-week clean CR
Greater income verification • Unknown Concession
Formal budget process

This is the main sticking point right now. Republicans see the six-month CR as something Democrats said they would agree to by itself. Thus, the six-week continuing resolution is a concession for them. Meanwhile, Democrats see the opposite. The six-month clean CR would be a concession. When Democrats originally were calling for Republicans to open government, they didn’t say for how long. The House continually passed bills for six-week CRs that had absurd conditions on them. Democrats may have assumed that any CR would last for six weeks – but they never said so publicly (at least that I can find). Instead, they hammered the Republicans by telling them to pass a clean CR and reopen government, without any time horizon on those demands. Republicans want that clean CR to last six-months to lock in sequestration for longer. Democrats, of course, don’t.

There’s an easy way to figure out what Democrats would accept: Boehner could bring up a clean six-month CR in the House. Would Senate Democrats reject it? If so, it would contradict everything they have said about wanting Republicans to pass a clean CR. If they passed it, it would lock-in the cuts, a current goal of Senate Minority Leader Mitch McConnell. Unfortunately for him, Boehner won’t bring such a bill to the floor due to the internal political dynamics of House Republicans.

Instead, McConnell has limited power to achieve a six-month CR. Americans overwhelmingly blame Republicans for the shutdown and the October 17 debt ceiling deadline is a few days away. He must make a deal and has limited leverage to do so. Meanwhile, Harry Reid truly believes that a six-month CR is not what Democrats meant when they said they’d support a clean CR. If he agreed to a deal with a six-month CR instead of a six-week one, this is how it would look to him and Senate Democrats:

Republicans get: Democrats Get:

Six-month clean CR • Unknown Concession
Delay of medical device tax
Greater income verification
Formal budget process

That’s not acceptable to them. That’s the impasse we’re at now. It has nothing to do with Obamacare. Instead, it’s all about how long the clean CR should be and what Democrats meant when they said they wanted a clean CR. And the only person who can force Democrats to answer that question has his hands tied by extremists in his caucus. All as the clock slowly ticks towards a self-inflicted financial crisis.

The GOP Leadership’s Strange Obsession with the Medical Device Tax

October 14, 2013Danny Vinik 4 Comments

John Boehner and the rest of the Republican leadership are searching for any possible Obamacare-related concession that the Tea Party will see as substantial and President Obama won’t. Defunding or delaying the entire bill meets that first condition, but not the second. A clean debt ceiling increase does the opposite. The problem is, as Greg Sargent points out, there is no middle ground here. Whatever the Tea Party would accept,

Why so much focus on repealing the medical device tax?

Why so much focus on the medical device tax?

President Obama won’t accept and vice versa. Instead, Boehner and Co. have settled on the repeal of the medical device tax, which does just about nothing to substantially undermine Obamacare, but is still supposed to appease the Tea Party. It’s not going to work.

The Tea Party is happy to dismantle any part of the law, so on its own, they support repealing the medical device tax, but they are looking for much, much more out of these fiscal fights. This small gesture doesn’t cut it. The reason it doesn’t cut it though is more complicated than it being only a minor concession. It’s also because it’s a minor concession that helps corporate welfare and does nothing to help those afflicted by the law.

Put yourself in the mind of a Tea Party supporter. You want your representatives to do everything in their power to stop Obamacare – including shutting down the government and risking a possible default. You don’t care about the potential negative side effects; stopping Obamacare is what matters. You also probably think Boehner has no backbone and will eventually cut a terrible deal. You continue to pressure your representative and go to rallies to show that you really care about this, but you know Boehner will probably cave and all you’ll get is a minor concession. Now, you find out that the minor concession you receive is the repeal of a tax on an industry that will significantly benefit from Obamacare. You expected to get very little out of this standoff, but that’s still a terrible outcome. You want small government, but you are also sick of K Street and big business using their money to rig government in their favor. Repealing the medical device tax is a continuation of that. Lobbyists are using grassroots anger to help pad the pockets of big business. You don’t like the medical device tax and understand that repealing it helps unwind a bit of Obamacare, but it does nothing to help main street America. That’s what you really want.

That’s what’s so interesting about the repeal of the medical device tax. It’s a fig leaf to the Tea Party, but it disregards what they really want. Yet, House Republican leaders have settled on it, because they want some concession from the president that relates to Obamacare and Obama signaled an openness to it. But this will not satisfy the Tea Party in any way.

Now, there may not be any concession that Obama would accept that the Tea Party would deem to help everyday Americans. He’s not signing any bill that limits or repeals the Independent Payment Advisory Board, a longtime Tea Party fixation. He’s not going to delay the individual mandate. The Vitter amendment may be the closest thing that would make Tea Party conservatives happy and Obama would sign. Of course, it’s a horrible idea and would quickly lead to an exodus of hill staffers to K Street. But Republicans have spun it as a bill that would eliminate an exemption for lawmakers and their aides at the expense of ordinary Americans. That’s what the Tea Party is looking for if they are going to receive just a minor concession from these fiscal fights. Instead, House Republican leaders are infatuated with repealing a tax on big business. That’s fundamentally misaligned with the Tea Party’s goals regarding Obamacare and yet it has become the GOP’s top demand.

Did the Government Shutdown Stop Us From Defaulting?

October 10, 2013Danny Vinik Leave a comment

Ezra Klein thinks so:

But whatever the endgame, the fight now is over a government shutdown. That’s bad. But it’s not nearly as bad as a fight over the debt ceiling. It’s evidence of how far into dysfunction American politics has fallen that this can or should be said, but thank God for the government shutdown. It might just have saved the country.

Hmm I’m not so convinced.

Here’s what the odds of a default would’ve been without a government shutdown: 0%.
And here’s what they are with a government shutdown: 0%.

I’ve held this view for a while. Under no circumstance would Boehner allow us to breach the debt ceiling. It helps his negotiating position to try to convince journalists that he is crazy enough to breach it, but when push comes to shove, Boehner understands the catastrophic consequences of a default. He also understands that he single-handedly has the power to stop us from defaulting. History would not look on him kindly if he had that power and chose not to exercise it.

That doesn’t mean the government shutdown didn’t help him out. On the contrary, Klein is exactly right that it gave the Tea Party a chance to vent their anger. Thus, it gave Boehner political cover. He can choose to fight on the government shutdown instead of the debt ceiling. But don’t think that means that the government shutdown actually helped prevent a default. Boehner was always going to raise the debt ceiling.