Wednesday, April 20, 2011

Obama Seeks Compromise Even Though Business Ready For Unconditional Debt Ceiling Hike

Everyone playing that drinking game had better stock up on extra cases, as President Barack Obama appears intent on saying "bipartisan" enough times to float an aircraft carrier. Although everyone from the U.S. Chamber of Commerce to the National Association of Manufacturers is lining up to call GOP lawmakers to make sure the nation's debt ceiling will be raised before markets can get nervous, the President seems intent on bargaining away Medicare and Medicaid to get a ceiling hike agreement that would otherwise be handed to him on a silver platter.

The nation's $14 trillion debt ceiling must be raised between May 16, when the current cap will be exceeded, and early July, when Treasury Secretary Tim Geithner runs out of creative book juggling options, or the government will no longer be able to fund operations and begin defaulting on maturing debt obligations. Should the United States, the universal gold-wishes-it-were-this-golden-gold standard of credit worthiness, venture down skid road toward tap city, the resulting chaos in the bond markets would make 2008 look like a banker's holiday. All those market crash and freeze buzzwords folks were just beginning to forget - terms like "systemic risk" and "contagion" - will howl across the landscape in a maelstrom of collapsing markets and brokers flinging themselves off tall buildings.

Thus the borderline panic in the business community a month before the first deadline. Lobbyists from major trade associations have already begun contacting freshmen House Republicans seen as potential obstacles to a debt ceiling hike to make sure the assorted Tea Partisans and their ilk have read the emails, post-it notes and parchments speared by flaming arrows: raise the ceiling. Period. No, wait, exclamation point, then period. Boldface. Underlined, all caps, delivered by Luca Brasi carrying a horse's head wrapped in a blanket.

Dirk Van Dongen, president of the National Association of Wholesale Distributors said the debt ceiling hike should be a "check-the-box exercise."

"If we get it done with ornaments, let's get it done," Van Dongen said. "If we can't get it done with ornaments, let's get it done anyway."

Yet, President Obama seems intent on trimming the Republican tree with boxes of ornaments, tinsel, garland and bows. After his national address March 13 drew praise for laying out a vision for trimming $4 trillion off government debt without abolishing Medicare in favor of Rep. Paul Ryan's (R-WI) scheme to hand seniors' health care funds directly to insurers in exchange for 30% discount coupons, it only took Obama forty-eight hours to begin trumpeting compromise in the interest of garnering bipartisan support to raise the debt ceiling.

Pop another brewsky, there's that word again.

Obama told the Associated Press April 15 that raising the debt ceiling would require compromise. "It's not going to happen without some spending cuts," the President said.

Apparently, Obama was intent on making cuts regardless of whether anyone insisted on them. The Republicans, who would like to extract cuts and put Medicare privatization and Medicaid elimination on the table, don't go anywhere without a note from their plutocrat masters, and America's plutocrat masters won't go anywhere without a debt ceiling hike.

Chaos in the bond markets resulting from the US being unable to roll over debt would eviscerate the very plutocrats who call the GOP's shots. This is why all those business lobbies and trade associations were already burning up phone lines and cell towers to make sure their Republican toadies got the message. Who panics a month before the earliest deadline? The world's most paranoid mothers are negligent drunks compared to plutocrats brooding bond markets.

Standard and Poor's credit rating gurus Tuesday demoted its outlook on US debt from "Stable" to "Negative" on fears lawmakers and the White House couldn't agree on long-term fiscal moderation. Markets quickly rebounded as everyone realized such a situation could only arise should the President somehow grow a backbone and oppose Congressional Republicans.

 President Obama appears committed to giving in to any Republican demand whether he needs to or not. The President seems determined to say "bipartisan" as often as possible, then invent new situations to say "bipartisan." Drinking game enthusiasts better stock up, and put AA on the speed dial.

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