With Or Without The Cuts

It has been known for some time, although Democratic leaders, Republican leaders, and the mainstream media all have been reluctant to acknowledge it directly. On July 6 The Washington Post/Bloomberg News determined

At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.

As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.

“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”

President Obama has been determined to effect an increase in the debt ceiling, but that hasn't been his only goal. The President sees cutting Social Security benefits- unrelated to the debt- and "reductions in Medicare spending" as part of the Grand Bargain he needs to be the transformative president he yearns to be.

It's hard to believe that Republicans would be averse to poking holes in the social safety net of elderly Americans. If given a chance to eliminate Social Security and Medicare (let alone Medicaid, which helps poor Americans) with no adverse reaction from the voters, the GOP would jump at it. No- they did happily try, when the House passed the Ryan Medicare Elimination Budget.

But the second ranking Republican in the Senate, Arizona's Jon Kyl, today conceded on ABC's "This Week" (transcript, with comment on page 4, here) with Christiane Amanpour

Republican leaders have made it clear that, if all else fails, if our efforts to adopt legislation to cut the deficit, put a straightjacket on it and balance the budget -- the so-called, cut, cap and balance -- I think that passes the House. But if that doesn't pass the Senate and if there is no other way to reach some kind of savings agreement then, at the end of the day, Republican leaders have made it clear that we will not be the ones who put the government into default.

It is unlikely that GOP scheme will pass the Senate; nevertheless, Kyl believes "at the end of the day, Republican leaders have made it clear that we will not be the ones who put the government into default." And the context makes clear that he was making no distinction between default and passing on raising the debt ceiling.

The real GOP base, corporate America, has made it clear: raise the debt ceiling. On July 13 The Daily Beast reported

"We believe it is vitally important for the U.S. government to make good on its financial obligations and to put its fiscal house in order," wrote the Chamber of Commerce in a letter signed by nearly 500 American CEOs that was sent to the White House and all Capitol Hill offices. "Now is the time for our political leaders to put aside partisan differences and act in the nation's best interests. We believe our nation's economic future is reliant upon their actions and urge them to reach an agreement."

The high-profile signers included Tom Donahue, the influential chairman of the Chamber of Commerce; Robert Koch, CEO of Koch Enterprises; and James Gorman, president of Morgan Stanley.

The message highlights a new fracture among conservative leaders, many of whom have pushed for Republicans to oppose a debt-ceiling increase without assurances from the White House that a deal would not include tax hikes.

But seeing the urgency of reaching an agreement, some Republicans have lowered their standard to ensure that a deal is reached prior to the hard August 2 deadline the White House has set.That would be Robert Koch of the Koch brothers, who rival Rush Limbaugh and Roger Ailes as forces in Repub Party politics. If deep, economically damaging spending cuts become part of a debt-ceiling agreement, the Democratic Party- and especially its leader at 1600 Pennsylvania Avenue- will deserve a huge share of the blame.

That would be Robert Koch of the Koch brothers, who rival Rush Limbaugh and Roger Ailes as forces in Repub Party politics. If deep, economically damaging spending cuts become part of a debt-ceiling agreement, the Democratic Party- and especially its leader at 1600 Pennsylvania Avenue- will deserve a huge share of the blame.

Share|