osewalrus (osewalrus) wrote,

Debt Ceiling Friday Fun

Well, been a fun 24 hours. I found myself rooting for the Boehner Bill because it alone did not have stupid provisions on sale of spectrum as one of the non-tax revenue increases. Also, I suspect Boehner and other House Rs know that their only hope for auctioning D Block (rather than giving it back to Public safety) is to do this later, when they can whip more Rs and hopefully get some Ds. Right now, Ds remain united on reallocating D Block to public safety, so any version in the debt ceiling/deficit reduction package will almost certainly include D Block reallocation and funding for the national public safety network -- which House fiscal hawks oppose. But there is sufficient R support for reallocation (led by NY Rep. Peter King) that House Rs lose on this if it is part of a package that passes.

Alas, Boehner couldn't get enough votes to ensure passage, so they are reworking again. I worry that Boehner will be forced to include spectrum auctions to boost his bill score higher.

Which brings the maneuvering back to Reid. Reid's bill now becomes the form horse. Conventional wisdom in DC at the moment is that because Senate Rs are much less beholden to Tea Party interests, and much more beholden to Wall St. and the Chamber, Reid will get his bill passed sometime today or tonight. It then bounces to the House, where a coalition of Ds and Rs can get it passed and signed by Obama by Monday. (This even gets Obama somewhat off the hook for backing away from taxes as necessary in the mix -- if he wants to do so. Under the constitution, all bills for raising revenue must originate in the House.) (Unfortunately for me, "revenues" is narrowly defined as "taxes" and does not include revenues in the ordinary sense of "things that raise money," such as spectrum auctions.)

But as always, life is complicated -- especially when done in a rush. Because Reid is now the form horse, there is a lot of lobbying going on around specific provisions (like spectrum auctions). Further, ANY change is going to need to be rescored by CBO, which is not easy and takes time. Finally, you have a number of Senators who are not happy and either believe a default is not a big deal, or that it is worth it, who may use various procedural means to slow things down. OTOH, for all that August 2 is a hard date for when we project running out of money, there is nothing magic that expires at 12:01 a.m. August 2. Disruption will be limited at first. Bondholders will get paid, so if things are on track but spill over to August 3 or August 4 it is probably not the end of the world.

Unless folks in various financial markets finally panic hysterically. So far, panic has been muted, largely by the serene confidence that a default is so unthinkable a deal will be reached. If that belief finally breaks, it could get very ugly.

Meanwhile, Boehner is still trying to get a rewritten bill for the House to pass. I suspect the objective here is too have something to take to conference when the Senate passes Reid's bill. If Boehner can show he has a bill with House R support, he can negotiate more strongly than if he is going to have to go to the floor knowing he needs Dems, since Dems will stand behind the Reid bill knowing that Boehner and the Senior Rs taking orders from Chamber will pass Reid rather than allow default.

Fun times. See what happens when you elect True Believers who do not understand real economics and love drama? That's what happens when you vote with your anger goggles on America.

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