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Those who thought House leader John Boehner would do something different this time (not cave-in to Obama) thought wrongly.
The New York Times has the details in Boehner Tells Republicans He Won’t Let the Nation Default
With a budget deal still elusive and a deadline approaching on raising the debt ceiling, Speaker John A. Boehner has told colleagues that he is determined to prevent a federal default and is willing to pass a measure through a combination of Republican and Democratic votes, according to one House Republican.
The lawmaker, who spoke on the condition of anonymity, said Mr. Boehner had indicated he would be willing to violate the so-called Hastert Rule if necessary to pass a debt-limit increase. The informal rule refers to a policy of not bringing to the floor any measure that does not have a majority of Republican votes.
Representative Michael G. Fitzpatrick, Republican of Pennsylvania, who was one of just 22 House Republicans this year who helped Mr. Boehner pass three crucial bills — to avert a fiscal showdown, to provide relief for the victims of Hurricane Sandy, and to pass the Violence Against Women Act — with a majority of Democratic support, said he expected that he may be asked to do so again.
“Hurricane Sandy, the fiscal cliff, all of the big votes require reasonable Republicans and Democrats to come together in order to pass it and get it to the president’s desk,” he said. “This will be no different.”
And, Mr. Fitzpatrick added, “I’ve been there in the past, and I’m prepared to be there again.”
Representative Leonard Lance of New Jersey, one of the moderate Republicans who met privately with Mr. Boehner on Wednesday, would not provide details of the meeting, but said, “The speaker of the House does not want to default on the debt on the United States, and I believe he believes in Congress as an institution, and I certainly believe he is working for the best interests of the American people.”
Waiting Game
All that's left now is a waiting game. Given that Boehner is going to cave-in and pass some sort of measure Obama and the Democrats can sign off on, the pseudo-drama is gone.
Perhaps the House puts together another measure that a few Democrats will go along with, but if the Senate and president Obama do not like the measure, it will go nowhere.
The Senate would amend any bill the president does not like, pass it back, and Boehner would put it up for a vote. Then, a handful of Republicans will sign it, and that will be that.
The best Republicans can hope for is some minor changes to Obamacare (that Democrats are in favor of as well). I suspect some talk between Boehner and Obama along these lines are in progress right now.
Both parties will declare victory but Republicans will have lost.
Meanwhile, the Hype Continues
From the Times ....
A Treasury Department report released on Thursday said the debt-limit impasse could cause credit markets to freeze, the dollar to plummet and interest rates to rise precipitously. A default might prove catastrophic, the report said, and could potentially result “in a financial crisis and recession that could echo the events of 2008 or worse.”
The administration has made increasingly strong public warnings about the potential economic consequences of not increasing the debt limit.
“As reckless as a government shutdown is, as many people as are being hurt by a government shutdown, an economic shutdown that results from default would be dramatically worse,” Mr. Obama said on Thursday, speaking to construction workers at M. Luis Construction in Rockville, Md., a suburb north of Washington.
He said that a default would be “the height of irresponsibility,” adding that “there will be no negotiations over this.”
“The United States is the center of the world economy,” Mr. Obama said, “so if we screw up, everybody gets screwed up — the whole world will have problems.”
Many market participants interpret the White House’s public statements as an effort to get Wall Street to pay attention, even to provoke a market reaction that might spur Congress to act.
Reflections on the Waiting Game
Why should the market react to any of this, since everyone knows Boehner will cave-in, including Boehner himself?
Moreover, one has to wonder about the nature of hyped-up statements from the WhiteHouse in the first place, if the only intent is to create a wanted reaction in the stock market.
Such is the preposterous positioning on both sides of the aisle.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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