I'm amused now, July 25th, reading my most recent post foretelling the path of the debt ceiling debate from two months ago. Up until today, I have stood by my last post. But tonight, the President has called a national address on all news and network channels. Why?
Today, the markets (to be clear, by "markets" I mean the stock and generally traded markets; I once was deposed as a witness by a dim-witted attorney who didn't understand the context of how I use the word when he cited a blog post of mine), anyway today the markets didn't react much at all to the unresolved debt ceiling debate. I think that's because the "serious, smart" money thinks as I do and many others, "Well of course Congress will raise the debt ceiling to avoid financial Armageddon in a sputtering economic recovery." But tonight that becomes less clear. There is no "forming consensus" in Washington. No plan at all - and I can count at least 5 plans - none can pass Congress as things stand.
To be clear, the Democrats and this Democratic President have put, contrary to past ideology of the party, a) entitlement cuts on the table, b) a $2.7 Trillion spending cut plan with no new revenues plan on the table (Senate Majority Leader Reid's plan), and c) last week, the President was pushing what most financiers are wanting, the "Grand Deal" of $4 Trillion over 10 years deficit reduction with a mix of spending cuts and new revenues (which doesn't necessarily mean tax raises) at a ratio of 3/4 spending cuts (is that a party of "spending?") and 1/4 new revenues without raising marginal tax rates. If the Republicans think the President was bluffing, my god why didn't they call his bluff?
Right now the Republicans are losing, despite what the very able and smart Ezra Klein says at The Washington Post, and they could be losing for a generation. If the President and Democrats win big with the message that Democrats are the economically sensible party, they will be able to show that they have been willing to stand up to their base and bend over backward (as usual) to accommodate Republicans, particularly on an issue that middle-road voters perceive Republicans always win. No more. No more? We'll find out.
What's clear is that the new (2008 and especially 2010) Republicans in Congress are the most radical of this generation. It's clear that the intersection of "gut politics" (think Southern Strategy of Nixon) and the very serious nature of... reality... are coming to an uncomfortable and potentially explosive junction within the Republican party. Now what?
Well for now we just have to wait 3 minutes and see what move the President makes next...