SHOCKER: It Was All A Bluff

October 15, 2013Danny Vinik 2 Comments

Looks like the House is moving forward with their own bill this morning. Here are the details, from Robert Costa:

Continuing Resolution until 1/15
Debt Ceiling increase until 2/7
Vitter Amendment for members and cabinet members
Two-year medical device tax delay
Income verification
Ban on the use of extraordinary measures

That’s it. Nothing that really undermines Obamacare and no risk of heading over the debt limit. It’s still unclear if this can pass the House. It will likely get little, if any, Democratic support and many House conservatives are not going to be happy. In addition there isn’t anything that Senate Democrats will like so I’m sure they will reject it. I imagine Boehner may still have to break the Hastert Rule in the end with a bill somewhere in between what currently exists in the Senate and this one.

But look at how far the House has come! Boehner was never going to allow us to default. That’s abundantly clear now. In addition, he watered down the Vitter Amendment at the last second because he knew all along how awful it would be for congressional aides. It’s what everyone has been clamoring about for weeks. The House GOP finally admitted it at the last second. As for income verification, this is already part of the law and a number of conservatives have already rejected it as meaningless. A ban on extraordinary measures is a minor concession (and something I support).

That’s what House leadership is now PROPOSING. That’s their offer for opening the government and raising the debt ceiling. In addition, it seems that House Republicans are relatively unified behind this plan (Robert Costa reporting that there won’t be a revolt). We’ll see if that holds true in the end, but it’s important to realize how far the House GOP has come in their demands. They said all along they were willing to breach the debt ceiling if Obamacare wasn’t stopped. Instead, they’re accepting a corporate tax delay, a benefit cut for members, enforcing a part of Obamacare that already exists and a ban on a technical method to extend the debt ceiling. It confirms they were bluffing the entire time.

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.