The debt ceiling drama continues. As with before, I’ve refrained from commenting on specific plans here, mainly because the plans change so quickly and I’m a weekend warrior blogger who can’t keep up with that.
I watched the dueling speeches Monday night from Obama and Boehner. My general impression of the speakers is that Boehner came across to me as firmer and perhaps even a bit combative versus Obama coming across as more flexible and conciliatory. Both had a vibe about them that they were the ones truly speaking on behalf of the American people. I think these speeches ultimately pave the way for a deal to be done. I’ve said all along a deal will happen, but I’m getting a bit nervous that the deal won’t be good enough to dodge a downgrade. I’m sticking with that, as I believe the leaders in Washington are starting to realize that voters will probably be more angry about a default than a suboptimal deal (whether it’s followed by a downgrade or not). I also think they're seeing that voters will be angry in a few months time if we do get downgraded. The leaders in Washington wanted two things first, however.
First, Obama and Boehner wanted one more opportunity to address their voters in prime time to allow each other to save face, paint themselves as the true voice of America, and bash the other side. Both sides wanted to tell the story of, “I did the best I could for America. This was mostly, if not entirely, the other party’s fault. I compromised a little, but I held firm most of the way, and we got a deal done.” We all know both parties are to blame for decades of fiscal mismanagement, with this past decade being one of the worst ever.
Seriously, though, how long can Obama continue to blame Bush Jr.? Obama’s 2.5 years into his presidency, and at some point, he has to stop blaming the previous administration and assume ownership. It’s no longer good enough to blame the previous administration. On the flip side, Boehner can’t fairly deny his party’s responsibility and can’t entirely blame the Democrats, either. The GOP wasn’t the pinnacle of fiscal discipline under Bush Jr., either. The GOP has a reasonable point that may not really own the first two years of Obama’s presidency since the Democrats had majorities in both houses of Congress and the White House, but now the GOP has a house of Congress and they now have some responsibility. Similarly, the Democrats can argue that the GOP had the White House and Congress for some of Bush Jr.’s time. I can appreciate that, but I’m personally tired of hearing the excuses from both sides.
(On a side note, am I the only one who thought Obama has come across as, for lack of a better term, offended that Congress isn’t meekly bending to his will? Congress is doing as it’s supposed to per the Constitution by asserting its responsibility and refusing to be the president’s lackey, which is a refreshing change of pace.)
Second, both sides wanted to create some panic, and if the action in the stock and bond markets this week is any indication, the markets are starting to cooperate a bit, but this isn’t panic like we saw in 2008 as the global financial system was collapsing. Friday’s major miss on advanced Q2 GDP (1.3% versus 1.9% expected) and the even bigger downward revision to Q1 GDP (from 1.9% to 0.4%) factored in, as well. Add in Boehner’s inability to get a vote in the House on Thursday night, too, which creates the impression that Boehner is losing control of the GOP.
Politically, they’d each like to be able to say, “The other party is crashing your retirement funds and home prices by being obstinate.” However, there’s more to it than that. As I’ve said in the past, politics is show-business for ugly people, and so we think about drama. Addressing a minor problem well ahead of time before it becomes a crisis isn’t very exciting, no matter how prudent such a course of action often is. Saving America from a crisis, on the other hand, is riveting. Sure, we know that it’s a crisis the politicians not only created, but have actively fueled recently, but that’s beside the point because the politicians would look good saving the day.
I suspect this will be a hectic weekend here. Now, there are even questions of whether that’s the real deadline. They’ve moved the deadline a few times in the past and some private sector analysts suggest there may be as much as two weeks extra. I don’t know about you, but I don’t think I can handle two more weeks of this travesty of leadership.
Anyway, stay tuned. This whole ordeal isn’t over yet.
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