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President Obama Delivers Statement and Answers Questions from Press

Published on Oct 8, 2013 by

President Obama delivers a statement and answers questions from the press on the government shutdown and the upcoming debt ceiling increase in the Brady Press Briefing Room at the White House. October 8, 2013.

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President Barack Obama’s press conference on Tuesday, October 8, 2013, as transcribed by Federal News Service.

PRESIDENT BARACK OBAMA: Good afternoon, everybody. I am eager to take your questions, so I’ll try to be brief at the top.

This morning I had a chance to speak with Speaker Boehner. And I told him what I’ve been saying publicly, that I am happy to talk with him and other Republicans about anything — not just issues I think are important but also issues that they think are important. But I also told him that having such a conversation, talks, negotiations shouldn’t require hanging the threats of a government shutdown or economic chaos over the heads of the American people.

Think about it this way, the American people do not get to demand a ransom for doing their jobs. You don’t get a chance to call your bank and say I’m not going to pay my mortgage this month unless you throw in a new car and an Xbox. If you’re in negotiations around buying somebody’s house, you don’t get to say, well, let’s talk about the price I’m going to pay, and if you don’t give the price then I’m going to burn down your house. That’s not how negotiations work. That’s not how it happens in business. That’s not how it happens in private life.

In the same way, members of Congress, and the House Republicans in particular, don’t get to demand ransom in exchange for doing their jobs. And two of their very basic jobs are passing a budget and making sure that America’s paying its bills. They don’t also get to say, you know, unless you give me what the voters rejected in the last election, I’m going to cause a recession.

That’s not how it works. No American president would deal with a foreign leader like this. Most of you would not deal with either co- workers or business associates in this fashion. And we shouldn’t be dealing this way here in Washington.

And you know, I’ve heard Republicans suggest that, well, no, this is reasonable, that this is entirely appropriate. But as I’ve said before, imagine if a Democratic Congress threatened to crash the global economy unless a Republican president agreed to gun background checks or immigration reform. I think it’s fair to say that Republicans would not think that was appropriate.

So let’s lift these threats from our families and our businesses, and let’s get down to work. It’s not like this is a new position that I’m taking here. I had Speaker Boehner and the other leaders in just last week. Either my chief of staff or I have had serious conversations on the budget with Republicans more than 20 times since March.

So we’ve been talking all kinds of business. What we haven’t been able to get are serious positions from the Republicans that would allow us to actually resolve some core differences. And they have decided to run out the clock until there’s a government shutdown or the possibility of default, thinking that it would give them more leverage. That’s not my characterization. They’ve said it themselves. That was their strategy from the start. And that is not how our government is supposed to run.

It’s not just me, by the way, who has taken the position that we’re willing to have conversations about anything. Senate Democrats have asked to sit down with House Republicans and hash out a budget but have been rejected by the House Republicans 19 times.

At the beginning of this year Speaker Boehner said, what we want is regular order and a serious budget process. So the Senate should pass a bill and the House should pass a bill, and then a committee comes together and they hash out their differences and they send the bill to the president. Well, that’s exactly what Democrats did.

Except somewhere along the way, House Republicans decided they wouldn’t appoint people to the committee to try to negotiate, and 19 times they’ve rejected that. So even after all that, the Democrats in the Senate still passed a budget that effectively reflects Republican priorities at Republican budget levels just to keep the government open, and the House Republicans couldn’t do that either.

The point is, I think, not only the White House but also Democrats in the Senate and Democrats in the House have shown more than ample willingness to talk about any issues that the Republicans are concerned about. But we can’t do it if the entire basis of the Republican strategy is, we’re going to shut down the government or cause economic chaos if we don’t get a hundred percent of what we want. SO my suggestion to the speaker has been and will continue to be, let’s stop the excuses, let’s take a vote in the House, let’s end this shutdown right now, let’s put people back to work. There are enough reasonable Republicans and Democrats in the House who are willing to vote yes on a budget that the Senate has already passed. That vote could take place today. The shutdown would be over. Then serious negotiations could proceed around every item in the budget.

Now, as soon as Congress votes to reopen the government, it’s also got to vote to meet our country’s commitments, pay our bills, raise the debt ceiling, because as reckless as a government shutdown is, the economic shutdown caused by America defaulting would be dramatically worse.

And I want to talk about this for a minute because even though people can see and feel the effects of a government shutdown — they’re already experiencing it right now — there are still some people out there who don’t believe that default is a real thing. And we’ve been hearing that from some Republicans in Congress: that default would not be a big deal.

So let me explain this. If Congress refuses to raise what’s called the debt ceiling, America would not be able to meet all of our financial obligations for the first time in 225 years.

And because it’s called raising the debt ceiling, I think a lot of Americans think it’s raising our debt. It is not raising our debt. This does not add a dime to our debt. It simply says you pay for what Congress has already authorized America to purchase, whether that’s the greatest military in the world or veterans’ benefits or Social Security. Whatever it is that Congress has already authorized, what this does is make sure that we can pay those bills.

Now the last time that the tea party Republicans flirted with the idea of default, two years ago, markets plunged, business and consumer confidence plunged, America’s credit rating was downgraded for the first time, and a decision to actually go through with it, to actually permit default, according to many CEOs and economists, would be — and I’m quoting here — “insane, catastrophic, chaos” — these are some of the more polite words.

Warren Buffett likened default to a nuclear bomb, a weapon too horrible to use. It would disrupt markets, it would undermine the world’s confidence in America as the bedrock of the global economy, and it might permanently increase our borrowing costs which, of course, ironically would mean that it would be more expensive for us to service what debt we do have and it would add to our deficits and our debt, not decrease them.

There’s nothing fiscally responsible about that. Preventing this should be simple. As I said, raising the debt ceiling is a lousy name, which is why members of Congress in both parties don’t like to vote on it, because it makes you vulnerable in political campaigns. But it does not increase our debt. It does not grow our deficit, it does not allow for a single dime of increased spending. All it does is allow the Treasury Department to pay for what Congress has already spent.

But as I said, it’s always a tough vote. People don’t like doing it, although it has been done 45 times since Ronald Reagan took office. Nobody in the past has ever seriously threatened to breach the debt ceiling until the last two years. And this is the creditworthiness of the United States that we’re talking about. This is our word, this is our good name.

This is real. In a government shutdown, millions of Americans face inconvenience or outright hardship. In an economic shutdown, every American could see their 401(k)s and home values fall, borrowing cost for mortgages and student loans rise, and there would be a significant risk of a very deep recession at a time when we’re still climbing our way out of the worst recession in our lifetimes.

You know, the American people have already fought too hard and too long to come back from one crisis, only to see a handful of more extreme Republicans in the House of Representatives precipitate another one.

Now, the good news is, over the past 3 1/2 years, our businesses have created 7 1/2 million new jobs. Our housing market is healing; we’ve cut the deficit in half. Since I took office, the deficit is coming down faster than any time in the last 50 years. America is poised to become the number-one energy producer in the world this year. This year, for the first time in a very long time, we’re producing more oil than we’re importing.

So we got a lot of good things going for us, but the uncertainty caused by just one week of this nonsense so far has caused businesses to reconsider spending and hiring, you’ve seen consumer confidence plunge to the lowest level since 2008, you’ve seen mortgages held up by thousands of homebuyers who aren’t sure about the economic situation out there. And all this adds to our deficit, so it doesn’t subtract from it.

So we can’t afford these manufactured crises every few months. And as I said, this one isn’t even about deficits or spending or budgets. Our deficits are falling at the fastest pace in 60 years. The budget that the Senate passed is at Republican spending levels. It’s their budget that Democrats were willing to put votes on just to make sure the government was open while negotiations took place for a longer-term budget. And what’s happened — the way we got to this point was one thing and one thing only, and that was Republican obsession with dismantling the Affordable Care Act and denying health care to millions of people. That law ironically is moving forward.

So most Americans, Democrats and Republicans, agree that health care should not have anything to do with keeping our government open or paying our bills on time, which is why I will sit down and work with anyone of any party, not only to talk about the budget; I’ll talk about ways to improve the health care system.

I’ll talk about ways that we can shrink our long-term deficits. I’ll also want to talk about how we’re going to help the middle class strengthen early childhood education and improve our infrastructure and research and development. There are a whole bunch of things I want to talk about in terms of how we’re going to make sure that everybody’s getting a fair shake in this society and that our economy’s growing in a broad-based way and building our middle class.

And by the way, if anybody doubts my sincerity about that, I’ve put forward proposals in my budget to reform entitlement programs for the long haul and reform our tax code in a way that would close loopholes for the wealthiest and lower rates for corporations and help us invest in new jobs and reduce our deficits. And some of these were originally Republican proposals, because I don’t believe any party has a monopoly on good ideas. So I’ve shown myself willing to go more than halfway in these conversations, and if reasonable Republicans want to talk about these things again, I’m ready to head up to the Hill and try. I’ll even spring for dinner again.

But I’m not going to do it until the more extreme parts of the Republican Party stop forcing John Boehner to issue threats about our economy. We can’t make extortion routine as part of our democracy. Democracy doesn’t function this way. And this is not just for me; it’s also for my successors in office. Whatever party they’re from, they shouldn’t have to pay a ransom either for Congress doing its basic job. We’ve got to put a stop to it.

Last point I’ll make. Already this week I had to miss critical meetings in Asia to promote American jobs and businesses. And although as long as we get this fixed that’s not long-term damage, whenever we do these things, it hurts our credibility around the world. It makes it look like we don’t have our act together. And that’s not something we should welcome. The greatest nation on earth shouldn’t have to get permission from a few irresponsible members of Congress every couple months just to keep our government open or to prevent an economic catastrophe.

So let’s pass a budget. Let’s end this government shutdown. Let’s pay our bills. Let’s avert an economic shutdown. Let’s drop the gimmicks, put aside what’s good for any particular party and let’s focus on what’s good for the American people because they know we’ve got a lot of work to do. All right?

So with that, let me take a couple of questions. And I will start with Julie Pace of AP.

Q: Thank you, Mr. President. Obviously if Congress does pass a clean CR and a clean debt ceiling bill, those may just be short-term measures. If that happens, does your offer to negotiate with them on issues like health care and spending and deficit reduction still stand in the intervening weeks if they pass measures that are just perhaps six weeks or two months long?

PRESIDENT OBAMA: Absolutely. I mean, what I’ve said is that I will talk about anything. What’ll happen is we won’t agree on everything. I mean, the truth is, is that the parties are pretty divided on a whole big — bunch of big issues right now.

Everybody understands that. And by the way, voters are divided on a lot of those issues too. And I recognize that there’s some House members — Republican House members where I got clobbered in the last election. And you know, they don’t get politically rewarded a lot for being seen as negotiating with me. And that makes it harder for divided government to come together.

But I am willing to work through all those issues. The only thing that our democracy can’t afford is a situation where one side says, unless I get my way and only my way, unless I get concessions before we even start having a serious give-and-take, I’ll threaten to shut down the government, or I will threaten to not pay America’s bills.

So, you know, I will not eliminate any topic of conversation. And I’ve shown myself willing to engage all the parties involved, every leader, on any issue.

Q: And that applies no matter how long the time frame is on debt ceiling bills that they would — (inaudible) –

PRESIDENT OBAMA: The only thing that I will say is that we’re not going to pay a ransom for America paying its bills. That’s something that should be non-negotiable, and everybody should agree on that. Everybody should say one of the most valuable things we have is America’s creditworthiness. This is not something we should even come close to fooling around with.

And so when I read people saying, now, this wouldn’t be a big deal; we should test it out; let’s take default out for a spin and see how it rides — and I — I — I say, imagine, in your private life, if you decided that I’m not going to pay my mortgage for a month or two. First of all, you’re not saying money by not paying your mortgage. You’re just a deadbeat. And you can anticipate that will hurt your credit, which means that in addition to the debt collectors calling, you’re going to have trouble borrowing in the future.

And if you are able to borrow in the future, you’re going to have to borrow at a higher rate.

Well, what’s true for individuals is also true for nations, even the most powerful nation on earth. And if we are — are creating an atmosphere in which people are not sure whether or not we pay our bills on time, then that will have a severe long-term impact on our economy and on America’s standard of living. And that’s not something that we should even be in a conversation about. That is not something that we should be using as leverage.

OK. Julianna Goldman.

Q: Thank you, Mr. President. You laid out the economic consequences of default, but if we were to get to that point, would you prioritize and pay bondholders first to maintain the semblance of credit or — rather than Social Security recipients or military servicemen and -women? And how would you go ahead and make that determination?

PRESIDENT OBAMA: I am — I’m going to continue to be very hopeful that Congress does not put us in that position. And I think if people understand what the consequences are, they will set that potential scenario aside.

I — I do know that there have been some who’ve said that if we just pay bondholders, if we just pay people who’ve bought Treasury bills, that we really won’t be in default because those interest payments will be made. And to them, what I have to remind them is, we’ve got a lot of other obligations, not just people who pay Treasury bills.

We’ve got senior citizens who are counting on their Social Security check arriving on time. We have veterans who are disabled who are counting on their benefits. We have companies who are doing business for our government and for our military that have payrolls that they have to meet, and if they do not get paid on time, they may have to lay off workers.

All those folks are potentially affected if we are not able to pay all of our bills on time. What’s also true is, if the markets are seeing that we’re not paying all our bills on time, that will affect our creditworthiness even if some people are being paid on time.

So again, just to boil this down to personal examples — if you’ve got a mortgage, a car note and a student loan that you have to pay, and you say, well, I’m going to make sure I pay my mortgage, but I’m not going to pay my student loan or my car note, that’s still going to have an impact on your credit. Everybody’s still going to look at that and say, you know what? I’m not sure this person is that trustworthy. And at minimum, presumably, they’re going to charge a higher interest rate. That’s what would happen to you if you made those decisions; well, the same is true for the federal government.

So we are exploring all contingencies. I know that Secretary Lew, the secretary of the Treasury, will be appearing before Congress on Thursday, and he can address some of the additional details about this. But let me be clear — no option is good in that scenario. There is no silver bullet. There is no magic wand that allows us to wish away the chaos that could result if, for the first time in our history, we don’t pay our bills on time.

And when I hear people trying to downplay the consequences of that, I think that’s really irresponsible. And I’m happy to talk to any of them individually and walk them through exactly why it’s irresponsible.

And it’s particularly funny coming from Republicans who claim to be champions of business. There’s no businessperson out here who thinks this wouldn’t be a big deal, not one. You go to anywhere from Wall Street to Main Street, and you ask a CEO of a company, or ask a small-business person whether it’d be a big deal if the United States government isn’t paying its bills on time. They’ll tell you it’s a big deal. It would hurt.

And it’s unnecessary. That’s the worst part of it. This is not a complicated piece of business. And there’s no reason why if in fact Republicans are serious about wanting to negotiate, wanting to have a conversation, wanting to talk, there’s no reason why you have to have that threat looming over the conversations.

I mean, think about it. The only reason that the Republicans have held out on negotiations up until the last week or so is because they thought it was a big enough deal that they would force unilateral concessions out of Democrats and out of me. They said so. They basically said, you know what? The president’s so responsible that if we just hold our breath and say we’re going to threaten default, then he’ll give us what we want, and we won’t have to give anything in return. That’s not — again, that’s not my account of the situation. You can read statements from Republicans over the last several months who said this explicitly.

And — and so for them now to say, well, it wouldn’t be a big deal if it — if it happens — that’s now how they’ve been acting over the last couple of months. And if it’s not a big deal, then why would I give them concessions now to avoid it? It is a big deal. And nobody should be getting concessions for making sure that the full faith and credit of the United States is retained.
Sam Stein.

Q: Thank you, Mr. President. With Speaker Boehner so far unwilling to hold a vote on a clean CR, what assurances can you give to those affected by a shutdown who are concerned about an even longer impasse? And how worried are you personally that your preferred solution to this clean CR and sequestration levels may do harm to the nation’s economy and your second-term agenda?

PRESIDENT OBAMA: Well, I mean, Sam, you’re making an important point, which is what we’re asking of the Republicans right now is to keep the government open at funding levels that Democrats think are very harmful to the economy and inadequate to make sure that the economy is growing faster, more people are put back to work and the middle glass is growing. We’re willing to pass at least a short-term budget that opens up the government at current funding levels. It doesn’t even address the harm that’s been done because of sequestration.

Now, the Democrats have a budget that would eliminate sequestration, this meat cleaver approach to deficit reduction, and make sure that we’re adequately funding basic medical research and Head Start programs and VA programs and a whole range of things that have been really hard-hit this year. But we recognize that there are going to have be some compromises between the Democratic position and the Republican position. And in the meantime, we shouldn’t hurt the economy even worse by shutting down the government.

So, let me just give you an example, very specific. Because of sequestration, because of the meat cleaver cuts that have been taking place over the course of this year, thousands of families have lost Head Start slots for their children.

And so you’ve had parents all across the country who’ve been scrambling trying to figure out, how can I find some decent, quality child care for my kids?

Now, the government shutdown means several thousand more are going to be losing their slots. If we vote today or tomorrow or the next day in the House of Representatives to go ahead and reopen the government, at least those additional several thousand people will be spared the difficulties of trying to scramble and figure out where your kid’s going to be when you’re trying to go to work.

But it doesn’t solve the broader problems. And if we were going to have real negotiations, the Democrats would say, let’s solve the bigger problem. What about all those thousands who’ve been hurt by sequester? The Democrats aren’t making that demand right now. We understand there’s going to have to be some give and take. What we are saying is don’t hurt more people while we’re trying to resolve these differences. Let’s just at least make sure that we keep the lights on while we’re having these conversations.

Q: Do you support back pay for furloughed workers?

PRESIDENT OBAMA: Excuse me?

Q: Do you support back pay for furloughed federal workers?

PRESIDENT OBAMA: Absolutely. I mean, that’s how we’ve always done it.

Roberta Rampton.

Q: Thanks. You talked a bit about the hit to credibility around the world that this impasse has caused. I’m wondering what you and your administration are telling worried foreign creditors, China and Japan, who are calling and then asking about whether the United States is going to avoid defaulting on its debts?

PRESIDENT OBAMA: Well, you know, I won’t disclose any specific conversations, but obviously my message to the world is the United States always has paid its bills and it will do so again. But I think they’re not just looking at what I say; they’re looking at what Congress does.

And that ultimately is up to Speaker Boehner.

This will not get resolved — we’re not going to calm creditors until they see Speaker Boehner call up a bill that reopens the government and authorizes the secretary of Treasury to pay our bills on time. And until they see that, there’s going to be a cloud over U.S. economic credibility.

But it is not one from which we can’t recover. I mean, we’ve been through this before. You know, every country, every democracy in particular, has tussles over the budget. And I think most world leaders understand it. They’ve themselves been through it if they’re in a democracy.

What you haven’t seen before, I think, from the vantage point of a lot of world leaders, is the notion that one party in Congress might blow the whole thing up if they don’t get their way. They’ve never seen that before. And that does make them nervous, particularly given what happened in 2011.

I mean, keep in mind we’ve been here before, right? We saw what happened in 2011. I think the assumption was that the Americans must have learned their lesson, that there would be budget conflicts, but nobody again would threaten the possibility that we would default.

And when they hear members of the Senate and members of Congress saying maybe default wouldn’t be that bad, I’ll bet that makes them nervous. It makes me nervous. It should make the American people nervous, because that’s irresponsible. It is out of touch with reality. It is — it is based on a flawed analysis of how our economy works. You cannot pay some bills and not others and think somehow that the fact that you’re paying some bills protects you from a loss of creditworthiness.

That’s not what happens in our own personal lives. I don’t know why people think that that’s how it works for the United States government.

Q: They think you might have emergency powers that you could use after any default.

PRESIDENT OBAMA: We have used a lot of our emergency powers. Jack Lew has used extraordinary measures to keep — make — paying our bills over the last several months. But at certain point those emergency powers run out, and the clock is ticking. And I do worry that Republicans but also some Democrats may think that we’ve got a bunch of other rabbits in our hat. There’s — there comes a point in which if the Treasury cannot hold auctions to sell Treasury bills, we do not have enough money coming in to pay all our bills on time. It’s — it’s — it’s very straightforward.

And I know there’s been some discussion, for example, about my powers under the 14th Amendment to go ahead and ignore the debt ceiling law. Setting aside the legal analysis, what matters is — is that if you start having a situation in which there — there’s legal controversy about the U.S. Treasury’s authority to issue debt, the damage will have been done even if that were constitutional, because people wouldn’t be sure. It’d be tied up in litigation for a long time. That’s going to make people nervous.

So — so a lot of the strategies that people have talked about — well, the president can roll out a big coin and — or, you know, he can — he can resort to some other constitutional measure — what people ignore is that ultimately what matters is, what do the people who are buying Treasury bills think? And again, I’ll — I’ll just boil it down in very personal terms.

If you’re buying a house, and you’re not sure whether the seller has title to the house, you’re going to be pretty nervous about buying it. And at minimum, you’d want a much cheaper price to buy that house because you wouldn’t be sure whether or not you’re going to own it at the end. Most of us would just walk away because no matter how much we like the house, we’d say to ourselves the last thing I want is to find out after I’ve bought it that I don’t actually own it.

Well, the same thing is true if I’m buying Treasury bills from the U.S. government, and here I am sitting here — you know, what if there’s a Supreme Court case deciding that these aren’t valid, that these aren’t, you know, valid legal instruments obligating the U.S. government to pay me? I’m going to be stressed, which means I may not purchase. And if I do purchase them, I’m going to ask for a big premium.

So there are no magic bullets here. There’s one simple way of doing it, and that is Congress going in and voting. And the fact that right now there are votes, I believe, to go ahead and take this drama off the table should at least be tested. Speaker Boehner keeps on saying he doesn’t have the votes for it, and what I’ve said is, put it on the floor. See what happens. And at minimum, let every member of Congress be on record. Let them — let them vote to keep the government open or not, and they can determine where they stand and defend that vote to their constituencies. And let them vote on whether or not America should pay its bills or not. And if, in fact, some of these folks really believe that it’s not that big of a deal, they can vote no.

And that’ll be useful information to — for voters to have. And if it fails and we do end up defaulting, I think voters should know exactly who voted not to pay our bills, so that they can be responsible for the consequences that come with it.

Ari Shapiro.

Q: Thank you, Mr. President. You mentioned the Supreme Court, and the term started today with a campaign finance case that sort of picks up where Citizens United left off. You called Citizens United devastating to the public interest, so I wonder if you could weigh in on this latest case.

PRESIDENT OBAMA: Well, the latest case would go even further than Citizens United. I mean, essentially, it would say anything goes; there are no rules in terms of how to finance campaigns. There aren’t a lot of functioning democracies around the world that work this way, where you can basically have millionaires and billionaires bankrolling whoever they want, however they want, in some cases undisclosed. And what it means is ordinary Americans are shut out of the process.

And Democrats aren’t entirely innocent of this in the past. And you know, I had to raise a lot of money for my campaign. So I — there — there’s nobody who operates in politics that has perfectly clean hands on this issue.

But what is also true is that all of us should bind ourselves to some rules that say the people who vote for us should be more important than somebody who’s spending a million dollars, $10 million or a hundred million dollars to help us get elected, because we don’t know what their agendas are. We don’t know what their interests are.

And I’ve continued to believe that Citizens United contributed to some of the problems we’re having in Washington right now. You know, you have some ideological extremist who has a big bankroll, and they can entirely skew our politics.

And there are a whole bunch of members of Congress right now who privately will tell you, I know our positions are unreasonable, but we’re scared that if we don’t go along with the tea party agenda, or the — some particularly extremist agenda, that we’ll be challenged from the right. And the threats are very explicit. And so they toe the line. And that’s part of why we’ve seen a breakdown of just normal routine business done here in Washington on behalf of the American people.

And all of you know it. I mean, I’m not telling you anything you don’t know because it’s very explicit. You report on it. A big chunk of the Republican Party right now is — are in gerrymandered districts where there’s no competition and those folks are much more worried about a tea party challenger than they are about a general election where they’ve got to complete against a Democrat or go after independent votes. And in that environment, it’s a lot harder for them to compromise. All right?

Mark Landler.

Q: Thank you, Mr. President. This week the president of China has visited several of the Asian countries that you were going to visit and have had to skip because of the shutdown.

PRESIDENT OBAMA: Right.

Q: He’s also taken a big role at the two regional summits, both of which your administration has made a pretty big priority of as part of the broader Asian pivot. Does China benefit from the chaos in Washington? And then more broadly, you’ve said in general that this hurts the reputation of the United States overseas. Are there specific things that you can point to where you already have seen some damage?

And the one that occurs to me is the trade deal that you’ve tried to do in Asia. The leaders today announced that they still want to wrap it up, but they no longer are able to say they want to wrap it up by the end of this year.

Had you been there, do you think you could have gotten that additional push?

PRESIDENT OBAMA: I think that’s a great example. And we don’t know, but it didn’t help that I wasn’t there to make sure that we went ahead and closed a trade deal that would open up markets and create jobs for the United States and make sure that countries were trading fairly with us in the most dynamic, fastest growing market in the world. I should have been there.

But you know, I can tell you, because I had to apologize to some of the host countries, that they understood that the most important thing I can do for them and the most important thing I can do for the bilateral relationship and America’s reputation is making sure that we reopen our government and we don’t default.

So I don’t think it’s going to do lasting damage. As I said, if — if we deal with this the way we should, then you know, folks around the world will attribute this to the usual messy process of American democracy, but it doesn’t do lasting damage.

In the short term, I would characterize it as missed opportunities. We continue to be the one indispensable nation. There are countries across Asia who have welcomed our pivot because they want to do business with us, they admire our economy, they admire our entrepreneurs, they know that their growth is going to be contingent on working with us. They care about the security environment that we’ve maintained, helped maintain, and the freedom of navigation and commerce that is so important to them.

So it’s not as if they’ve got other places to go. They want us to be there and they want to work with us.

But, you know, in each of these big meetings that we have around the world, a lot of business gets done. And in the same way that a CEO of a company, if they want to close a deal, aren’t going to do it by phone, you know, they want to show up and look at somebody eye to eye and tell them why it’s important and shake hands on a deal, the same thing is true with respect to world leaders.

You know, and the irony is, our teams probably do more to organize a lot of these multilateral forums and set the agenda than anybody. I mean, we end up being engaged much more than China, for example, in setting the agenda and moving this stuff forward. And so when — it’s almost like me not — not showing up to my own party. I think it creates a sense of concern on the part of other leaders. But as long as we get through this, they’ll understand it, and we’ll be able to, I believe, still get these deals done.

The last point I’d make, though, is, we can’t do it every three months, right? I mean, you know, back in the ’90s we had a government shutdown. That happened one time, and then after that, the Republican Party and Mr. Gingrich realized this isn’t a sensible way to do business. You know, we shouldn’t engage in brinksmanship like this, and then they started having a serious conversation with President Clinton about a whole range of issues, and they got some things that they wanted. They had to give the Democrats some things that the Democrats wanted. But it took on, you know, a sense of normal democratic process.

So here we already went through this once back in 2011. And then at the end of last year, right after my election, we went through something similar with the so-called fiscal cliff, where Republicans wouldn’t negotiate about taxes despite the fact that taxes actually went up anyway even though they refused to negotiate, and they could actually have gotten some things from us that they wanted if they had been willing to engage in normal negotiations.

So we’ve got to keep — we got to stop repeating this pattern. I know the American people are tired of it. And to all the American people, I apologize that you have to go through this stuff every three months, it seems like. And Lord knows I’m tired of it.

But at some point we’ve got to kind of break these habits and — and get back to the point where everybody understands that in negotiations, there is give and there is take, and you do not hold people hostage or engage in ransom taking to get a hundred percent of your way, and you don’t — you — you don’t suggest that somehow a health care bill that you don’t agree with is destroying the republic or is a grand socialist scheme.

You know, if you disagree with certain aspects of it, tell us what you disagree with, and let’s work on it. You know, if you’re concerned about long-term debt, that’s a good thing to be concerned about, but don’t pretend as if America’s going bankrupt at a time when the deficits have been cut in half.

That’s what the American people, I think, expect is just civility, common sense, give and take, compromise.

Those aren’t dirty words. There’s nothing wrong with them. And you know, I think the American people understand, you know, I may — not I may, I have flaws. Michelle will tell you. One of them is not that I’m unwilling to compromise. I’ve been willing to compromise my entire political career.

And I don’t believe that I have the answers to everything and — and it’s my way or the highway. But I’m not going to breach a basic principle that would weaken the presidency, change our democracy and do great damage to ordinary people just in order to go along with what the House Republicans are talking about.

OK.

Q: Can I have just one follow-up? I did — I did ask specifically about China, and I’m wondering whether — to what extent our loss is their gain.

PRESIDENT OBAMA: You know, I’m sure the Chinese don’t mind that I’m there right now, in the sense that, you know, there are areas where we have differences and they can present their point of view and not get as much of push-back as if I were there, although Secretary of State Kerry is there, and I’m sure he’s doing a great job.

But I’ve also said that our cooperation with China’s not a zero- sum game. There are a lot of areas where the Chinese and us agree.

On trade in particular, though, here’s an area where part of what we’re trying to do is raise standards for, for example, intellectual property protection, which sometimes is a big problem in China. And if we can get a — a trade deal with all the other countries in Asia that says you got to protect people’s intellectual property, that’ll help us in our negotiations with China.

Richard McGregor (sp).

Q: Up here.

PRESIDENT OBAMA: There you go, (Rich ?).

Q: Yeah. Can I go back to the issue of debt prioritization?

PRESIDENT OBAMA: Yeah.

Q: What — (off mic) — legal liabilities– (off mic)? What is your legal advice, that foreign creditors must be paid first, particularly as it’s a sovereign credit issue, or –

PRESIDENT OBAMA: Richard, you know, what I’m going to do is I’m going to let Jack Lew, the secretary of the Treasury, make a formal presentation on Thursday before the Senate committee because this is obviously sensitive enough and I think people would be playing close enough attention that details count. And I think prepared remarks from Secretary Lew on that topic would probably be more appropriate.

But as I indicated before, we plan for every contingency. So obviously, you know, worst-case scenario, there are things that we will try to do. But I will repeat, I don’t think any option is good.

Q: Mr. President –

Q: Mr. President –

PRESIDENT OBAMA: Stephen Dennis (sp).

Q: Mr. President, wondering if you could talk a little bit about budget process. In the past you’ve negotiated, along with the debt ceiling, with the blue dogs, for instance, in 2009, 2010, along with a debt ceiling increase then, pay-as-you-go reform. You named a fiscal commission. The Republicans today are talking about let’s have maybe another committee that would work out our differences over the next few weeks. Is that — is that something that you could talk about on the side, something that wouldn’t necessarily be a concession, but something that would be a format for getting a deal done?

PRESIDENT OBAMA: Yeah. I — here’s the thing, Stephen. I know that Speaker Boehner has talked about setting up some new process or some new supercommittee or what have you.

You know, the leaders up in Congress, they can work through whatever processes they want. But the bottom line is either you’re having good faith negotiations in which there’s good — give and take, or you’re not.

Now, there is already a process in place called the budget committees that could come together right now — Democrats have been asking for 19 months to bring them together — make a determination how much should the government be spending next year, the appropriations committees could go through the list and here’s how much we’re going to spending for defense and here’s now much we’re going to spending for education. And that’s a process that’s worked reasonably well for the last 50 years. I don’t know that we need to set up a new committee for a process like that to move forward.

What has changed, or what seems to be motivating the idea that we have to have a new process, is Speaker Boehner, or at least some faction of the Republicans in the House and maybe some in the Senate, are holding out for a negotiation in theory, but in fact basically Democrats give a lot of concessions to Republicans, the Republicans don’t give anything, and then that’s dubbed as compromise.

And the reason that Democrats have to give is because they’re worried that the government is going to stay shut down or the U.S. government’s going to default. And again, that — you can dress it up any way you want. If that’s the theory that the Republicans are going forward with, then it’s not going to work. So let me just give you one specific example.

I’ve heard at least, and I can’t confirm this, that one of the ideas of this new committee is you could talk about reductions in discretionary spending, you could talk about entitlement reform and reductions in mandatory spending, you could talk about how long you’d extend the debt ceiling but you couldn’t talk about closing corporate loopholes that aren’t benefiting ordinary folks economically and potentially, if you closed them, would allow us to pay for things like better education for kids.

Well, you know, I don’t know why Democrats, right now, would agree to a format that takes off the table all the things they care about, and is confined to the things that the Republicans care about. So again, I don’t know that that’s exactly what’s being proposed. My simple point is this: I think Democrats in the Senate and in the House are prepared to talk about anything. I’m prepared to talk about anything. They can design whatever format they want.

What is not fair and will not result in an actual deal is ransom- taking — or hostage-taking and the expectation that Democrats are paying ransom or providing concessions for the mere act of reopening the government or paying our bills. Those are not things that you do for me and they’re not things that you do for the Democrats.

Q: Yes, but is there an — (inaudible) — where it’s not necessarily a concession, where it is — you would negotiate what the negotiations are going to look like? You don’t have to agree to overturn “Obamacare,” but you can actually negotiate what the talks are going to look like so everybody is comfortable, and, you know — you mentioned yourself that this is a tough vote for all these House Republicans. You’re asking them to take a very tough vote for the debt ceiling. Usually, people in both parties want to have some cover, something that they can point to and say –

PRESIDENT OBAMA: Which is fine.

Q: — hey, I want some budget process reform before I approve another trillion dollars in debt.

PRESIDENT OBAMA: Yeah, yeah, what — what — which is fine. And so if they want to do that, reopen the government. Extend the debt ceiling. If they can’t do it for a long time, do it for the period of time in which these negotiations are taking place.

Why is it that we’ve got hundreds of thousands of people who aren’t working right now in order for what you just described to occur? That doesn’t make any sense.

The Small Business Administration gives out a billion dollars’ worth of loans every month to small businesses all across the country. That’s not happening right now. So there are small businesses in every state that are counting on a loan to get their business going, and you’ve got the party of small business saying Small Business Administration can’t do it. That’s what they call themselves. And yet they’re suffering.

You’ve got farmers who are waiting for loans. Right now those loans cannot be processed. The Republican Party says it’s the party that looks out for farmers. I happen to disagree. I think we — farmers have done real good under my administration. But having said that, why would you keep the government shut down and those farmers not getting their loans while we’re having the discussions that you just talked about?

You know, the Republicans say they’re very concerned about drilling. They say Obama’s been restricting oil production, despite the fact that oil production is at its highest levels that it’s been in years and is continuing to zoom up. But they say, you know, the Democrats are holding back oil production in this country. Well, you don’t — one of the things that happens when government’s shut down is new drilling permits aren’t processed. So why would the Republicans say to the folks who are interested in drilling for oil, sorry, we can’t let those things be processed until we have some negotiations and we have some cover to do what we’re supposed to be doing anyway?

That doesn’t make sense. If — if there’s a way to solve this, it has to include reopening the government and saying America is not going to default; it’s going to pay our bills. They can attach some process to that that gives them some certainty that in fact the things they’re concerned about will be topics of negotiation, if my word’s not good enough. But I’ve told them I’m happy to talk about it. But if they want to specify all the items that they think need to be topic of conversation, happy to do it. They’ll want to say, you know, part of that process is, we’re going to go through, line by line, all the aspects of the president’s health care plan that we don’t like, and we want the president to answer for those things, I’m happy to sit down with them for as many hours as they want. I won’t let them gut a law that is going to make sure tens of millions of people actually get health care, but I’m happy to talk about it.

All right?

Q: Mr. President –

Q: Mr. President –

PRESIDENT OBAMA: Stephen Kalitz (ph).

Q: Thank you, Mr. President.

PRESIDENT OBAMA: I’m just going through my list, guys. Talk to Jay. (Laughter.)

Q: The operation in Africa this weekend suggests that the continent is now the central front in the campaign against terrorism. And if we’re going to see U.S. military operations all around the continent, how does that square with your contention that America cannot be at war forever?

PRESIDENT OBAMA: Well, you know, if you’d look at the speech I gave at the National Defense College several months ago, I outlined how I saw the shift in terrorism around the world and what we have to do to respond to it. And part of what I said is, is that we had decimated core al-Qaida that had been operating primarily between Afghanistan and Pakistan.

But you now have these regional groups, some of which are explicitly tied to al-Qaida or that ideology, some of which are more localized. Few of them have the ability to project beyond their borders, but they can do a lot of damage inside their borders.

And Africa is one of the places where, because in some cases, lack of capacity on the part of the governments, in some cases because it is easier for folks to hide out in vast terrains that are sparsely populated, that you’re seeing some of these groups gather. And we’re going to have to continue to go after them.

But there is a difference between us going after terrorists who are plotting directly to do damage to the United States and us being involved in wars. You know, the risks of terrorism and terrorist networks are going to continue for some time to come. We’ve got to have a long-term plan that is not just military-based. We’ve got to engage in a war of ideas in the region and engage with Muslim countries and — and try to isolate radical elements that are doing more damage to Muslims than they are doing to anybody else. We’ve got to think about economic development because although there’s not a direct correlation between terrorism and the economy, there is no doubt that if you’ve got a lot of unemployed, uneducated young men in societies, that there is a greater likelihood that terrorist recruits are available.

But where you’ve got active plots and active networks, we’re going to go after them. We prefer partnering with countries where this is taking place wherever we can, and we want to build up their capacity, but we’re not going to farm out our defense.

And I have to say, by the way, the operations that took place both in Libya and Somalia were examples of the extraordinary skill and dedication and talent of our men and women in the armed forces. They do their jobs extremely well, with great precision, at great risk to themselves. And I think there are pretty good examples for how those of us here in Washington should operate as well.

OK.

(Cross talk.)

Q: Did the capture of Mr. Libi comply with international law?

PRESIDENT OBAMA: We know that Mr. al-Libi planned and helped to execute a plot that killed hundreds of people, a whole lot of Americans. And we have strong evidence of that. And he will be brought to justice.

Q: Mr. President?

Q: Mr. President?

PRESIDENT OBAMA: Mark Knoller.

Q: Mr. President, while you’re waiting for the shutdown to end, why is it that you can’t go along with any of the bills the House is passing funding the FDA and FEMA, where you were yesterday, and veterans benefits and Head Start? You’ve got to be tempted to sign those bills and get funding to those programs that you support.

PRESIDENT OBAMA: Of course I’m tempted, because you’d like to think that you could solve at least some of the problem if you couldn’t solve all of it.

But here’s the problem. What you’ve seen are bills that come up where wherever Republicans are feeling political pressure, they put a bill forward. And if there’s no political heat, if there’s no television story on it, then nothing happens. And if we do some sort of shotgun approach like that, then you’ll have some programs that are highly visible get funded and reopened, like national monuments, but things that don’t get a lot of attention, like those SBA loans, not being funded.

And you know, we don’t get to select which programs we implement or not. You know, there are a whole bunch of things that the Republicans have said are law that we have to do.

And I don’t get a chance to go back and say, you know what, this cockamamie idea that this Republican congressman came up with I really don’t like, so let’s not — let’s not implement that. Once you have a budget and a government with a set of functions, you make sure that it’s all operating. We don’t get to pick and choose based on which party likes what. So you know, that’s where the budget discussions take place.

Now, if there’s some things that the Republicans don’t like, they should argue for eliminating those programs in the budget, come up with an agreement with the Democrats. Maybe the Democrats will agree and those things won’t be funded. But you don’t do a piecemeal approach like that when you’re dealing with a government shutdown, OK?

Q: Mr. President on the — (inaudible)? On the military death proceedings — (inaudible) –

PRESIDENT OBAMA: I’m going to take — I’m going to take one more question. And right here, you can — your persistence has worked. (Laughter.)

Q: (Inaudible.) Mr. President, you talked about the political dynamic that leaves House Republicans feeling that they don’t want to negotiate with you, they don’t want to come together. I wanted to ask you two things about that. Looking back at the 2011 default discussions and the budget drama, is there anything that you wish that you had done differently in 2011? And after this — what you call this nonsense has ended, what do you expect the political dynamics might — how will they have changed to move forward?

PRESIDENT OBAMA: Well, I think it’s an interesting question. In 2011, I entered into good faith negotiations with John Boehner.

He had just won the speakership. It was at a time when because we were still responding to the recession, deficits were high, people were concerned about it and I thought it was my obligation to meet him halfway, and so we had a whole series of talks. And at that point, at least, nobody had any belief that people would come close to potential default. I don’t regret having entered into those negotiations, and we came fairly close. And whenever I see John Boehner to this day, I still say, you should have taken the deal that I offered you back then, which would have dealt with our long-term deficit problems, would not have impeded growth as much, would have really boosted confidence. But at that time, I think, House Republicans had just taken over. They were feeling their oats and thinking, you know, we don’t have to compromise. And we came pretty close to default, and we saw the impact of that.

I would have thought that they would have learned the lesson from that as I did, which is we can’t put the American people and our economy through that ringer again. So that’s the reason why I’ve been very clear we’re not going to negotiate around the debt ceiling. That has to be dealt with in a reasonable fashion.

And by the way, you know, I often hear people say, well, in the past it’s been dealt with all the time. The truth of the matter is, if you look at the history, people posture about the debt ceiling frequently, but the way the debt ceiling often got passed was, you’d stick the debt ceiling onto a budget negotiation once it was completed because people figured, well, I don’t want to take a bunch of tough votes to cut programs or raise taxes and then also have to take a debt ceiling vote; let me do it all at once.

But it wasn’t a situation in which, you know what, if I don’t get what I want, then I’m going to let us default. That’s what’s changed. And that’s what we learned in 2011.

And so as a consequence, I said we’re not going to do that again, not just for me, but because future presidents, Republican or Democrat, should not be in a position where they have to choose between making sure the economy stays afloat and we avoid worldwide catastrophe, or we provide concessions to one faction of one party in one house.

And — but let me tell you a lesson I did not learn. I — I did not learn a lesson that we shouldn’t compromise. I still think we should. I still think there are all kinds of issues that we should be talking about, and I don’t expect to get a hundred percent of my way. And I’m still very open to having conversations with not just the speaker but any Republican over there. So — go ahead.

Q: (Off mic) — if you enter into a series of short-term funding bills or a debt ceiling bill, you would be back in the same place, presumably, with these — the same members of Congress.

PRESIDENT OBAMA: Again, I think –

Q: So what has changed in the political dynamic if you do the short-term — (inaudible) –

PRESIDENT OBAMA: Well, I think — I think what has changed is they’re aware of the fact that I’m not budging when it comes to the full faith and credit of the United States, that that has to be dealt with, that you don’t d– you don’t pay a ransom, you don’t provide concessions for Congress doing its job and America paying its bills.

And — and I think most people understand that. I mean, you know, I — I was at a small business the other day and talking to a bunch of workers, and I said, you know, when you’re at the plant and you’re in the middle of your job, do you ever say to your boss, you know what, unless I get a raise right now and more vacation pay, I’m going to just shut down the plant; I’m not going to just walk off the job, I’m going to break the equipment — I said, how do you think that would go?

They all thought they’d be fired. And I think most of us think that. You know, there’s nothing wrong with asking for a raise or asking for more time off. But you can’t burn down the plant or your office if you don’t get your way. Well, the same thing is true here. And I think most Americans understand that. All right?

Thank you very much, everybody.

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http://www.youtube.com/watch?v=PF2prUcfeYU [ http://www.whitehouse.gov/blog/2013/10/08/president-obama-delivers-statement-government-shutdown ]; http://stream.wsj.com/story/the-fiscal-cliff/SS-2-87944/SS-2-350132/


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Obama and the Debt


Chris Gash

By SEAN WILENTZ
Published: October 7, 2013

PRINCETON, N.J. — THE Republicans in the House of Representatives who declare that they may refuse to raise the debt limit threaten to do more than plunge the government into default. They are proposing a blatant violation of the 14th Amendment, which states that “the validity of the public debt of the United States, authorized by law” is sacrosanct and “shall not be questioned.”

Yet the Obama administration has repeatedly suppressed any talk of invoking the Constitution in this emergency. Last Thursday Jay Carney, the White House press secretary, said, “We do not believe that the 14th Amendment provides that authority to the president” to end the crisis. Treasury Secretary Jacob J. Lew reiterated the point on Sunday and added that the president would have “no option” to prevent a default on his own.

In defense of the administration’s position, the legal scholar Laurence H. Tribe, who taught President Obama at Harvard Law School [and whom I thought was a bit of a twit, given to proclaiming, and then getting stuck to sticking with, dully dense formalisms as empty as arbitrary], has insisted, as he put it two years ago, that “only political courage and compromise” can avert disaster.

These assertions, however, have no basis in the history of the 14th Amendment; indeed, they distort that history, and in doing so shackle the president. In fact, that record clearly shows that Congress intended the amendment to prevent precisely the abuses that the current House Republicans blithely condone.

Congress passed the 14th Amendment and sent it to the states for ratification in June 1866. Its section on the public debt began as an effort to ensure that the government would not be liable for debts accrued by the defeated Confederacy, but also to ensure that its own debt would be honored.

That was important because conservative Northern Democrats, many of whom had sympathized with the Confederacy, were in a position to obstruct or deny repayment on the full value of the public debt by paying creditors in depreciated paper money, or “greenbacks.” This effective repudiation of obligations already accrued — to, among others, hundreds of thousands of Union pensioners and widows, as well as investors — would destroy confidence in the government and endanger the economy.

As the wording of the amendment evolved during the Congressional debate, the principle of the debt’s inviolability became a general proposition, applicable not just to the Civil War debt but to all future accrued debts of the United States. The Republican Senate leader, Benjamin F. Wade of Ohio, declared that by placing the debt “under the guardianship of the Constitution,” investors would be spared from being “subject to the varying majorities which may arise in Congress.”

Two years later, on the verge of the amendment’s ratification, its champions inside the Republican Party made their intentions absolutely clear, proclaiming in their 1868 party platform that “national honor requires the payment of the public indebtedness in the utmost good faith to all creditors at home and abroad,” and pronouncing any repudiation of the debt “a national crime.”

More than three generations later, in 1935, Chief Justice Charles Evans Hughes, ruling in the case of Perry v. the United States, revisited the amendment and affirmed the “fundamental principle” that Congress may not “alter or destroy” debts already incurred.

House Republicans threatening to refuse to raise the debt ceiling — that is, force a repudiation of debts already accrued — would violate that “fundamental principle” of the Constitution.

Surely the lawyers advising and defending the White House, let alone the president, know as much. Refraining from stating this loudly and clearly, and allowing Congress to slip off the hook, has been a puzzling and self-defeating strategy, leading to the crippling sequester and the politics of chronic debt-ceiling crisis. More important, by failing to clarify the constitutional principles involved, the administration has neglected to do its utmost to defend the Constitution.

That failure has led to another abdication, involving constitutional action as well as constitutional principle. The White House, along with Mr. Tribe, has rightly pointed out that the 14th Amendment does not give the president the power to raise the debt limit summarily.

But arguing that the president lacks authority under the amendment to halt a default does not mean the executive lacks any authority in the matter. As Abraham Lincoln well knew, the executive, in times of national crisis, can invoke emergency powers to protect the Constitution.

Should House Republicans actually precipitate a default and, as expected, financial markets quickly begin to melt down, an emergency would inarguably exist.

In all, the Constitution provides for a two-step solution. First, the president can point out the simple fact that the House Republicans are threatening to act in violation of the Constitution, which would expose the true character of their assault on the government.

Second, he could pledge that, if worse came to worst, he would, once a default occurred, use his emergency powers to end it and save the nation and the world from catastrophe.

Were the president to act with fortitude, Republicans would continue to lambaste him as the sole cause of the crisis and scream that he is a tyrant — the same epithet hurled at Andrew Jackson, Lincoln and Franklin D. Roosevelt.

Lincoln, who became accustomed to such abuse, had some choice words in 1860 for Southern fire-eaters who charged that he, and not they, would be to blame for secession if he refused to compromise over the extension of slavery: “A highwayman holds a pistol to my ear, and mutters through his teeth, ‘Stand and deliver, or I shall kill you, and then you will be a murderer!’ ”

It is always possible that if the administration follows the two-step constitutional remedy, the House might lash out and try to impeach Mr. Obama. Recent history shows that an unreasonable party controlling the House can impeach presidents virtually as it pleases, even without claiming a constitutional fig leaf.

But the president would have done his constitutional duty, saved the country and undoubtedly earned the gratitude of a relieved people. Then the people would find the opportunity to punish those who vandalized the Constitution and brought the country to the brink of ruin.

Sean Wilentz [ http://www.princeton.edu/history/people/display_person.xml?netid=swilentz ] is a professor of history at Princeton University.

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Related

Default Threat Generates Fear Around Globe (October 8, 2013)
http://www.nytimes.com/2013/10/08/us/politics/default-threat-makes-impasse-in-washington-a-global-fear.html

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© 2013 The New York Times Company

http://www.nytimes.com/2013/10/08/opinion/obamas-options.html [ http://www.nytimes.com/2013/10/08/opinion/obamas-options.html?pagewanted=all ] [with comments]


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Meet the Evangelical Cabal Orchestrating the Shutdown


The Conservative Action Project is a right-wing group that has contributed to the recent government shutdown.
(Reuters/Jonathan Ernst)

Lee Fang on October 8, 2013 - 1:17 AM ET

At Ebenezer’s Coffeehouse, a small shop next to Union Station and around the corner from the Heritage Foundation, “fair trade” coffee is dispensed and Christian books are available for customers to read.

A group of political operatives and evangelical firebrands behind the strategy to shut down the government over healthcare reform couldn’t have picked a more unassuming meeting place. Though the more famous “Wednesday meeting” is across town at the offices of Grover Norquist’s Americans for Tax Reform, the shutdown plotters often meet at a weekly lunch held on Wednesday at the event space of Ebenezer’s. (The group also meets regularly on Wednesday mornings at the offices of the Family Research Council.)

This other Wednesday group is a convening of the Conservative Action Project, an ad hoc coalition created in the early years of the Obama administration to reorganize the conservative movement.

The coalition is managed by Heritage and the Council for National Policy. The latter organization, dubbed once as “the most powerful conservative group you’ve never heard of,” is a thirty-year-old nonprofit dedicated to transforming the country into a more right-wing Christian society. Founded by Tim LaHaye, the Rapture-obsessed author of the “Left Behind” series, CNP is now run by Christian-right luminaries such as Phyllis Schlafly, Tony Perkins and Kenneth Blackwell.

Yesterday, The New York Times revealed [ http://www.nytimes.com/2013/10/06/us/a-federal-budget-crisis-months-in-the-planning.html?pagewanted=all (the first item in the post to which this is a reply)] in great detail how the Conservative Action Project has orchestrated the current showdown. The group initially floated the idea of attaching funding for Obamacare to the continuing resolution, and followed up with grassroots organizing, paid advertisements and a series of events designed to boost the message of senators like Ted Cruz.

Though the Heritage Foundation, through its 501(c)(4) Heritage Action sister organization, has played a lead role in sponsoring advertisements and town-hall meetings, tax disclosures reviewed by TheNation.com show that the Council for National Policy has provided a steady stream of funding for the organizing effort.

In my new book published this year, The Machine: A Field Guide the Resurgent Right [ http://themachinebook.com/ ; http://www.amazon.com/Field-Guide-Right-Lee-Fang/dp/1595586393 ], I profiled how the Conservative Action Project came about, and how its existence sparked a schism within the conservative movement. The group has played a background role in several high-profile political debates.

It was this rival Wednesday group that gave rise to the farcical “Ground Zero Mosque” conspiracy in 2010. The Conservative Action Project also played a consequential role in whipping up opposition to a number of key Obama judicial nominees, including judges David Hamilton and Goodwin Liu. Through rapid-fire memos and coalition advocacy, the Conservative Action Project can claim large responsibility for the fact that Obama has been deprived [ http://judicialnominations.org/statistics ] more than any modern American president of appointing judges of his choice for the federal bench.

But like the quagmire that GOP leaders find themselves in today, the hard-charging Conservative Action Project has bristled at establishment criticism in the past. Notably, it was the Conservative Action Project that first courted controversial Senate candidates like Christine O’Donnell and Joe Miller. For my book, I spoke to Colin Hanna, a Conservative Action Project leader, who told me that through weekly meetings with Republican legislators, his coalition members were able to persuade Republican campaign committees to generally back off and allow their insurgent candidates to compete in GOP primaries. O’Donnell later went on to cost the GOP one of its most prized Senate seats.

In another episode that enraged the Republican establishment, Republican Study Commission employees were caught encouraging conservative advocacy groups to attack the debt-ceiling deal negotiated by President Obama and Speaker Boehner in 2011. The story, reported by Politico, noted [ http://www.politico.com/news/stories/0711/60035.html ] that RSC employee Wesley Goodman e-mailed a listserv, “We need statements coming up to the Hill every hour of the day in mounting opposition to the plan.” Goodman now officially works for the Conservative Action Project, according [ ] to his LinkedIn profile.

Many of the leaders involved in this effort are well-known Christian conservative icons, including “Christian Zionist” and former presidential candidate Gary Bauer and Liberty Counsel’s Mat Staver, an activist famous for his over-the-top [ http://www.huffingtonpost.com/2013/10/04/lgbt-history-month-mat-staver_n_4044727.html ] attacks on the gay community.

The group has engaged in clashes with libertarian-leaning GOP leaders, particularly Norquist. That is not to say the group is not well connected with well-heeled interest groups.

The board of the Council for National Policy, the Conservative Action Project’s sponsor, features [ http://990s.foundationcenter.org/990_pdf_archive/720/720921017/720921017_201112_990.pdf ] Michael Grebe, an influential Republican lawyer who leads the Bradley Foundation—a GOP money machine with close ties to Republican National Committee chair Reince Priebus and Governor Scott Walker. The Heritage Foundation’s Ed Meese and Becky Norton Dunlop, both well-respected among mainstream Republicans, are said to be prime players in the effort.

Kevin Gentry, a key employee of Koch Industries’s lobbying subsidiary Koch Public Sector, has served on the board of CNP. Gentry now helped to run the new $250 million fund for conservative advocacy groups called Freedom Partners and manages the twice-annual secret gatherings for Charles Koch’s cohorts. (It was at a CNP gathering that Charles Koch once compared himself to the theologian Martin Luther.)

One CNP official has a surprising connection to President Obama and the shutdown. Since 2009, a consultant named Patrick Pizzella [ http://www.scribd.com/doc/174359025/Patrick-Pizzella ] has helped to ensure [ http://990s.foundationcenter.org/990_pdf_archive/720/720921017/720921017_201112_990.pdf ] that the Conservative Action Project achieves its goals. For a fee of $133,333, he’s been the highest-paid full-time employee since 2009, when the effort began.

In August of this year, President Obama nominated [ http://www.whitehouse.gov/the-press-office/2013/08/01/president-obama-announces-more-key-administration-posts ] Pizzella to be a member of the Federal Labor Relations Authority. The FLRA acts as a miniature National Labor Relations Board for federal workers, helping to arbitrate disputes between federal employees and labor unions. Two months later, 800,000 federal employees now find themselves at home because of Pizzella’s political project.

*

Related

A Blueprint for the GOP's Attempt to Sabotage Obamacare (July 25, 2013)
http://www.thenation.com/blog/175429/blueprint-gops-attempt-sabotage-obamacare

*

Copyright © 2013 The Nation

http://www.thenation.com/blog/176538/meet-evangelical-cabal-orchestrating-shutdown [with comments]


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Catholic Bishops To House: Shut Down The Government Unless We Get Our Way On Birth Control


Cardinal Timothy Dolan, President of the United States Conference of Catholic Bishops

By Ian Millhiser on October 7, 2013 at 2:17 pm

One week before House Republicans shut down the government [ http://thinkprogress.org/economy/2013/09/30/2699221/21-things-republicans-demanded-shutdown-default/ ] in an effort to force President Obama to enact many of their preferred policies, the United States Conference of Catholic Bishops wrote House members requesting that the government be shut down — and potentially that the nation be forced into default — unless religious employers were given a special right to deny birth control coverage to their employees [ http://rhrealitycheck.org/article/2013/10/06/at-any-cost-how-catholic-bishops-pushed-for-a-shutdown-and-even-a-default-over-birth-control/ ]. As Adele Stan reports, a letter [ http://www.usccb.org/issues-and-action/religious-liberty/conscience-protection/upload/omalley-lori-letter-to-house-2013-09-26.pdf ] signed by Cardinal Sean O’Malley of Boston and Archbishop William Lori of Baltimore told lawmakers that, “{w}e have already urged you to enact the Health Care Conscience Rights Act (H.R. 940/S. 1204). As Congress considers a Continuing Resolution and debt ceiling bill in the days to come, we reaffirm the vital importance of incorporating the policy of this bill into such ‘must-pass’ legislation.”

The “Health Care Conscience Rights Act [ http://www.govtrack.us/congress/bills/113/s1204/text ]” permits religious employers to exclude any “item or service to which [they have] a moral or religious objection” from the health insurance package offered to employees.

Shortly after the Obama Administration announced rules requiring most employers to provide birth control to their employees, the Bishops rebelled, offering an unusually expansive [ http://thinkprogress.org/justice/2012/05/21/487913/eight-years-ago-even-republican-judges-rejected-notre-dames-attack-on-contraceptive-access/ ] reading of the Constitution and of a federal religious liberty law to claim that these rules are invalid. Their letter demanding a shut down unless they get their way on birth control, however, is a major escalation from their previous position. It is one thing to request a carve out from a law you do not want to follow while the rest of the nation continues its business around you, but it’s another thing altogether to demand that the government shut down because you are unhappy with the current state of the law. In this regard, the Bishops’ tactic is identical to that of Sen. Ted Cruz (R-TX), who insisted on a shut down unless he got his way on health care [ http://thinkprogress.org/justice/2013/09/23/2662391/senates-asinine-rules-allow-ted-cruz-shut-government/ ].

Except that, unlike Ted Cruz, the Bishops speak on behalf of a church that claims that government has a responsibility to “protect human life and dignity, care for poor and vulnerable people at home and abroad [ http://www.usccb.org/issues-and-action/human-life-and-dignity/federal-budget/upload/letters-to-congress-shutdown-2013-09-30.pdf ], and advance the universal common good.” Because of the government shutdown, mothers and young children risk losing their benefits under the Women, Infants, and Children (WIC) nutrition program. Many Head Start programs halted educational services to low-income children [ http://swampland.time.com/2013/10/04/poor-families-taking-a-hit-from-government-shutdown/ ]. And federal funds are shut off to many domestic violence programs [ http://thinkprogress.org/economy/2013/10/04/2732211/domestic-violence-shutdown/ ].

And that’s nothing compared to what happens if Congress does not raise the debt ceiling fast enough to ward off a default.

According to the Treasury Department, a default could lead to “a recession more severe than any seen since the Great Depression [ http://thinkprogress.org/economy/2013/10/07/2741191/debt-ceiling-shutdown-explainer/ ]” — potentially plunging millions into poverty along the way. Thanks to the last recession that we are still recovering from, 3 million more people lived in poverty in 2012 than in 2009 [ http://www.post-gazette.com/stories/business/news/post-recession-poverty-persists-through-2012-703754/ ]. A debt default could make Americans pine for the days shortly after Lehman Brothers collapsed.

And yet, the United States Conference of Catholic Bishops were willing to risk all of this in order to make it harder for many women to obtain birth control. They read Jesus’ plea that “whatever you did for one of the least of these brothers and sisters of mine, you did for me,” and they decided instead to take the “least of these brothers and sister” hostage over contraception.

© 2013 Center for American Progress Action Fund

http://thinkprogress.org/justice/2013/10/07/2743471/catholic-bishops-to-house-shut-down-the-government-unless-we-get-our-way-on-birth-control/ [with comments]


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The Myth of States' Rights

By Leon Friedman
Posted: 10/08/2013 9:59 am

One of the basic legends of our political system is that our liberties are protected because Congress has only limited power to pass laws, and, as a result, it has not been in a position to infringe our rights. Another part of the legend is that the power of the States' to offset federal encroachments is an important safeguard of those liberties. In practice, the opposite is true. For most of our history, the federal government has been the progressive force in our society, passing voting rights and civil rights acts and other laws regulating the worst excesses of the business community. Since the restrictions in the Bill of Rights already protect our basic rights, there is no valid reason today for limiting the power of the federal government to pass necessary legislation. On the other hand, the States have not been the great protectors of liberty, but they have been the instruments of repression in our history.

At the very start of his opinion upholding the constitutionality of the Patient Protection and Affordable Care Act (otherwise known as Obamacare), Chief Justice Roberts noted [ http://www.ucs.louisiana.edu/~ras2777/conlaw/nfib.htm ]: "Rather than granting general authority to perform all the conceivable functions of government, the Constitution lists, or enumerates, the Federal Government's powers" which the government cannot exceed. Roberts also noted that limiting the ability of the federal government to legislate generally is different from the specific prohibition on the use of governmental power, such as those contained in the Bill of Rights [ http://www.ucs.louisiana.edu/~ras2777/conlaw/nfib.htm ]. "These affirmative prohibitions come into play, however, only where the Government possesses authority to act in the first place. If no enumerated power authorizes Congress to pass a certain law, that law may not be enacted, even if it would not violate any of the express prohibitions in the Bill of Rights or elsewhere in the Constitution."

Why should that be so? States can pass any law they want, so long as it does not violate any provisions of the state or federal constitution or laws. In England, France, Germany and the other democracies around the world, the national governments can also pass any law, so long as the law does not violate any constitutional or treaty provision. They have "general authority to perform all the conceivable functions of government." So Massachusetts or England could pass a health care law almost identical to the federal law. But the federal government could pass such a law only if it could be based upon one of the enumerated powers in the Constitution, such as the Commerce Clause or the taxing power. Why should our national government lack the power to act unless it could rely upon specific language in the Constitution formed in 1787?

The reason for this distinction is based upon history. The delegates who came to Philadelphia to draft the Constitution in 1787 recognized the troubles that existed under the Articles of Confederation. The chief complaint was the Confederation's inability to protect the nation against foreign invasion. In the opening address of the Convention, Governor Edmund Randolph of Virginia complained about the "Imbecility of the Confederation... conspicuous when called upon to support a war." He supplied [ http://avalon.law.yale.edu/18th_century/mchenry.asp ] the answer: "Nothing short of a regular military force will answer the end of war, and this only to be created and supported by money."

Thus the most important purpose of a new national government was to defend the people of the country against a foreign invasion, as well as to prevent uprisings in the States, such as Shay's Rebellion in 1786. Therefore we needed a central government capable of enlisting its own army (as opposed to the State militias) and able to tax and raise enough money to support that army. But a national government with a "standing army," that is, a permanent military force was a problem. Madison warned [ http://www.thefederalistpapers.org/founders/james-madison-quotes ]: "a standing military force with an overgrown Executive will not long be safe companions to liberty." When the Constitution was finally drafted, six of the 18 enumerated powers in Article I, Section 8 dealt with control of the military. And the Constitution authorized State militias to be formed that could resist tyrannical military action by the federal government.

Thus the chief reason for creating a strong national government -- the organization and support of a military force to protect the country -- was also a source of danger. The delegates wanted to limit the power of the national government so it could not use its military force to abridge their liberties. They granted it only those powers necessary to fulfill its mission of protection, and also to "produce certain blessings," such as operating post offices and building national roads, as Governor Randolph suggested [ http://avalon.law.yale.edu/18th_century/mchenry.asp ].

Justice Scalia continues to insist that limiting federal power and allowing the States to offset and control the federal government is necessary to protect our liberty. In the case striking down the Brady Handgun Act on the ground that in interfered with the rights of the states, Scalia wrote [ http://avalon.law.yale.edu/18th_century/mchenry.asp ]: "This separation of the two spheres is one of the Constitution's structural protections of liberty." Quoting from another case, he wrote [ http://web.utk.edu/~scheb/decisions/Lopez.htm ]: "Just as the separation and independence of the coordinate branches of the Federal Government serve to prevent the accumulation of excessive power in any one branch, a healthy balance of power between the States and the Federal Government will reduce the risk of tyranny and abuse from either front."

Is there really any risk of tyranny from the federal government? Is there any chance that an ambitious general will call out the army and take away our liberties? We do have national elections for federal office every two years, just as the States do, as well as a vigorous federal judiciary ready and eager to enforce the Bill of Rights against the federal government. The idea that the federal government should have fewer legislative powers than the States is based on nothing more than a perceived problem that existed 226 years ago, and no longer has any force today. Thus the Supreme Court should interpret the 18 enumerated powers in the Constitution in a manner that allows Congress to pass any necessary legislation that advances the general welfare.

On the other hand, the banner of States' rights has been used to perpetrate and defend the greatest evils in our nation's history. Slavery was justified on the ground that each State should be free to determine its own economic practices. In the 1890's, corrective federal legislation against monopolies (such as the Sherman anti-trust act) was attacked on the grounds that the States and not the federal government had the sole right to regulate business. In the 1930's, important New Deal measures that would have alleviated the worst problems of the depression were challenged and struck down by the Supreme Court on the grounds that the new laws invaded the prerogatives of the States. After the Civil War, the Southern states used every means possible to keep the black population in a subservient position and engaged in "massive resistance" to school desegregation orders issued by federal courts on the grounds that the States should control education. And more recently since 1992, the Supreme Court invalidated parts or all of fifteen federal laws - including many civil rights laws - on the grounds of States' rights. So the Court held [ http://www.law.cornell.edu/supct/html/99-5.ZO.html ] that Congress did not have the power to pass the Violence Against Women Act since such a law invaded States' rights. In addition, other decisions [ http://supreme.justia.com/cases/federal/us/528/62/case.html ] deprived State employees of the right to sue their employer -- the State -- for discrimination on the grounds of age or disabilities because States have immunity from lawsuits brought against them in federal court. And a significant portion of the Affordable Care Act that would have expanded [ http://www.ucs.louisiana.edu/~ras2777/conlaw/nfib.htm ] Medicaid coverage to a broader range of poor people was struck down as an invasion of States' rights.

Underneath the exhortations of the Tea Party supporters to restrict federal power is the belief that the federal government is trying too hard to support the poor and the powerless. In practice, the assertion of states' rights really means resistance to progressive federal laws designed to alleviate the inequality in our society. We must look more closely at the real reason why States rights are asserted to block action by the federal government.

Leon Friedman [ http://law.hofstra.edu/directory/faculty/fulltime/friedman/ ] is a professor of constitutional law at the Maurice A. Deane School of Law at Hofstra University and the editor of and a contributor to "The Justices of the United States Supreme Court: Their Lives and Major Opinions [ http://www.amazon.com/Justices-United-States-Supreme-Court/dp/0791013774 ]".

Copyright © 2013 TheHuffingtonPost.com, Inc.

http://www.huffingtonpost.com/leon-friedman/the-myth-of-states-rights_b_4057947.html [with comments]


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Racism and Cruelty Drive GOP Health Care Agenda


AP/Eric Gay

By Robert Scheer
Posted on Oct 8, 2013

Before he was disgraced into resigning his presidency over the Watergate burglary scandal, Richard Nixon had successfully engineered an even more odious plot known as his Southern Strategy. The trick was devilishly simple: Appeal to the persistent racist inclination of Southern whites by abandoning the Republican Party’s historic association with civil rights and demonizing the black victims of the South’s history of segregation.

That same divisive strategy is at work in the Republican rejection of the Affordable Care Act. GOP governors are largely in control of the 26 states, including all but Arkansas in the South, that have refused to implement the act’s provision for an expansion of Medicaid to cover the millions of American working poor who earn too much to qualify for the program now. A New York Times analysis of census data concludes [ http://www.nytimes.com/2013/10/03/health/millions-of-poor-are-left-uncovered-by-health-law.html?pagewanted=all ] that as a result of the Republican governors’ resistance, “A sweeping national effort to extend health coverage to millions of Americans will leave out two-thirds of the poor blacks and single mothers and more than half of the low-wage workers who do not have insurance, the very kinds of people that the program was intended to help. ...”

Why anyone who claims to be pro-life would want to deny health care to single mothers is an enduring mystery in the morally mischievous ethos of the Republican Party. But the exclusion of a working poor population that skews disproportionately black in the South is simply a continuation of the divide-and-conquer politics that have informed Republican strategy since Nixon.

The game plan of gutting the Affordable Care Act despite its passage into law and before its positive outcomes are demonstrated can be traced to a “blueprint to defunding Obamacare” initialed by the GOP conservative leadership under the aegis of Heritage Action for America. Ironically that is the political front of the Heritage Foundation, the leading GOP think tank that is credited by some architects of Obamacare as the initial inspiration of their health care program. The difference is that whereas the Heritage Foundation was pushing a mild health care reform based on increased profit for private insurers, as in the plan Mitt Romney introduced in Massachusetts, the Republicans object to the provisions in this president’s program that broaden access for the needy.

They were abetted in this decision by a Supreme Court ruling last year granting the states the option of not expanding Medicaid to cover the uninsured under the new act. As a consequence, 8 million of our fellow Americans with annual incomes of less than $19,530 for a family of three have been prevented from obtaining the health care coverage that we as a nation decided to grant them.

It might seem odd for governors to reject a program to help those living in their state that is fully funded by the federal government for the first few years and then 90 percent covered by the feds thereafter. But turning down a federal program to aid your own state’s population makes perfect sense when connected with the racist appeal initiated by Nixon that has turned the once Democratic South into a rock solid Republican bastion. There are certainly many whites among the 435,000 cashiers, 341,000 cooks and 253,000 nurses aides who the Times estimated will be denied needed health care in the states controlled by Republican governors who have decided to veto the most important provision of the Affordable Care Act.

In the end, this is a replay of the civil rights drama that gripped the nation more than half a century ago, but back then the Republican Party, following the enlightened leadership of Dwight Eisenhower, was on the humanitarian side of the equation. Now the elected leaders of a party that has been on the side of emancipation since the presidency of Abraham Lincoln acts to deny the basic human right to life-sustaining health care to the Southern progeny of slaves. As the Times study noted: “In all, 6 out of 10 blacks live in the states not expanding Medicaid. In Mississippi, 56 percent of all poor and uninsured adults are black, though they account for just 38 percent of the population.”

But that also means that almost 44 percent of the poor and uninsured in Mississippi are white, and the gutting of this program that hurts them is evidence of the false consciousness that informs racist appeals. As the Times points out, someone, black or white, making $11,000 a year frying chicken in a convenience store falls into the gap of making too much to qualify for the state’s existing Medicaid program but not enough to be subsidized under the new health care plan as the state defines it. For those who lose out, there’s what the Republican die-hards call tough love. That’s not love. It’s hate.

© 2013 Truthdig, LLC

http://www.truthdig.com/report/item/racism_and_cruelty_drive_gop_health_care_agenda_20131008 [with comments] [also at http://www.thenation.com/article/176540/racism-and-cruelty-whats-behind-gops-healthcare-agenda (with comments) and http://www.huffingtonpost.com/robert-scheer/racism-and-cruelty-drive_b_4061606.html (with comments)]


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Anger Can Be Power

By THOMAS B. EDSALL
October 8, 2013, 11:20 pm

These are extraordinary times. The depth and strength of voters’ conviction that their opponents are determined to destroy their way of life has rarely been matched, perhaps only by the mood of the South in the years leading up to the Civil War.

In a recent column [ http://www.bloomberg.com/news/2013-10-04/why-republicans-shut-down-the-government.html ] for Bloomberg View, my friend Frank Wilkinson put together a concise explanation:

A lot of Americans were not ready for a mixed-race president. They weren’t ready for gay marriage. They weren’t ready for the wave of legal and illegal immigration that redefined American demographics over the past two or three decades, bringing in lots of nonwhites. They weren’t ready — who was? — for the brutal effects of globalization on working- and middle-class Americans or the devastating fallout from the financial crisis.

Their representatives didn’t stop Obamacare. And their side didn’t “take back America” in 2012 as Fox News and conservative radio personalities led them to believe they would. They feel the culture is running away from them (and they’re mostly right). They lack the power to control their own government. But they still have just enough to shut it down.

Animosity toward the federal government has been intensifying at a stunning rate. In a survey [ http://www.gallup.com/poll/164591/americans-belief-gov-powerful-record-level.aspx ] released on Sept. 23, Gallup found that the percentage of Republicans saying the federal government has too much power — 81 percent — had reached a record-setting level.

The movement to the right on the part of the Republican electorate can be seen in Gallup surveys [ http://www.gallup.com/poll/152021/conservatives-remain-largest-ideological-group.aspx ] calculating that the percentage of Republicans who identify themselves as conservative grew between 2002 and 2010 by 10 percentage points, from 62 to 72 percent. During the same period, the percentage of Republicans who identify themselves as moderates fell from 31 to 23 percent.

These trends date back to the 1970s. Surveys [ http://www.electionstudies.org/nesguide/2ndtable/t3_1_3.htm ] conducted by American National Election Studies found that the percentage of self-described conservative Republicans rose from 42 in 1972 to 65 percent in 2008, while the percentage of moderate Republicans fell from 26 to 16 percent. Liberal Republicans — remember them? — fell from 10 to 4 percent.

Take the findings [ http://www.pewresearch.org/fact-tank/2013/09/19/boehners-hard-line-on-budget-is-in-step-with-gop-primary-voters/ ] of a Pew Research Center survey released four weeks ago. They show that discontent with Republican House and Senate leaders runs deep among Republican primary voters: two-thirds of them disapprove of their party’s Congressional leadership — John Boehner, the speaker of the House, and Mitch McConnell, the Senate minority leader.

Sometimes you have to turn to the know-your-enemy people to understand what’s going on. The Democratic pollster Stan Greenberg of Greenberg Quinlan Rosner is one of the keenest observers of the contemporary Republican electorate. He is conducting an ongoing study [ http://www.democracycorps.com/Republican-Party-Project/ ] called the “The Republican Party Project” for the liberal nonprofit organization Democracy Corps. Greenberg’s premise is that “you cannot understand the government shutdown unless you understand the G.O.P. from the inside.”

Greenberg puts Republicans into three categories [ http://www.democracycorps.com/attachments/article/949/Dcor.rpp.graphs.072313.web.pdf ] (Figure 1): evangelical and religiously observant voters (47 percent); libertarian-leaning Tea Party supporters (22 percent); and moderates (25 percent).


Fig. 1: Evangelical and religiously observant voters (47 percent); libertarian-leaning Tea Party supporters (22 percent); and moderates (25 percent).
DemocracyCorps.com

Last week Greenberg released [ http://www.democracycorps.com/Republican-Party-Project/inside-the-gop-report-on-focus-groups-with-evangelical-tea-party-and-moderate-republicans/ ] the results of six focus groups conducted with evangelical and other religiously observant Republicans (in Roanoke, Va., and Colorado Springs, Colo.), Tea Party supporters who are not evangelicals (Raleigh, N.C., and Roanoke), and moderate Republicans (Raleigh and Colorado Springs).

One of the key factors pushing Republicans to extremes, according to Greenberg’s report, is the intensity of animosity toward Obama. This animosity among participants in all six focus groups is reflected in Figure 2, which represents a “word cloud [ http://visual.ly/learn/word-clouds ]” of focus group references to the president, with the size of each word in the cloud proportional to the frequency with which it was used.


Fig. 2
DemocracyCorps.com

In the six focus groups of Republican voters, according to Greenberg’s report, “few explicitly talk about Obama in racial terms,” but

the base supporters are very conscious of being white in a country with growing minorities. Their party is losing to a Democratic Party of big government whose goal is to expand programs that mainly benefit minorities. Race remains very much alive in the politics of the Republican Party.

Voters like this, according to the report, are convinced that they have lost the larger battle:

While many voters, including plenty of Democrats, question whether Obama is succeeding and getting his agenda done, Republicans think he has won. The country as a whole may think gridlock has triumphed, particularly in the midst of a Republican-led government shutdown, but Republicans see a president who has fooled and manipulated the public, lied, and gotten his secret socialist-Marxist agenda done. Republicans and their kind of Americans are losing.

In his report for the Democracy Corps, Greenberg describes the Republican base electorate as fearful of being strategically outmaneuvered:

They think they face a victorious Democratic Party that is intent on expanding government to increase dependency and therefore electoral support. It starts with food stamps and unemployment benefits; expands further if you legalize the illegals; but insuring the uninsured dramatically grows those dependent on government. They believe this is an electoral strategy — not just a political ideology or economic philosophy. If Obamacare happens, the Republican Party may be lost, in their view.

Conservative troops blame moderate Republican for what they see as Democratic victories. The Republican base

thinks they are losing politically and losing control of the country – and their starting reaction is “worried,” “discouraged,” “scared,” and “concerned” about the direction of the country – and a little powerless to change course. They think Obama has imposed his agenda, while Republicans in D.C. let him get away with it.

Figure 3 represents a second word cloud generated by Greenberg’s data showing which words came up most often in all six focus groups:


Fig. 3
DemocracyCorps.com

Greenberg’s study found that in the view of many, if not most, Republicans

the Democratic Party exists to create programs and dependency – the food stamp hammock, entitlements, the 47 percent. And on the horizon — comprehensive immigration reform and Obamacare. Citizenship for 12 million illegals and tens of million getting free health care is the end of the road.

“These voters think they are losing the country,” Greenberg said during an Oct. 3 conference call with reporters.

Among Greenberg’s other findings from his focus groups:

- The participants “are very conscious of being white in a country that is increasingly minority.”

- Republican voters are threatened by Obama and the Democratic Party, but they are angry at their own party leaders. “The problem in D.C. is not gridlock; Obama has won; the problem is Republicans failing to stop him.”

- Together, evangelicals and Tea Party supporters comprise more than half the party. Moderates, about a quarter of Republicans, “are very conscious of being illegitimate within their own party.”

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The evangelical and Tea Party wings of the Republican Party combine into a clear majority of Republican voters, and according to Greenberg, they have a mutually reinforcing relationship:

Social issues are central for Evangelicals and they feel a deep sense of cultural and political loss. They believe their towns, communities, and schools are suffering from a deep “culture rot” that has invaded from the outside. The central focus here is homosexuality, but also the decline of homogenous small towns. They like the Tea Party because they stand up to the Democrats.

Tea Party supporters, according to Greenberg’s research, have a more libertarian edge, but their worldview is compatible with the evangelical agenda:

Big government, Obama, the loss of liberty, and decline of responsibility are central to the Tea Party worldview. Obama’s America is an unmitigated evil based on big government, regulations, and dependency. They are not focused on social issues at all. They like the Tea Party because it is getting “back to basics” and believe it has the potential to reshape the G.O.P.

John Boehner is just the kind of Republican leader the hard right dislikes – a deal maker, a compromiser. The Republican primary electorate, with its hold on a solid block of Republican representatives and its ability to recruit and promote challengers, now has Boehner trapped. Personally inclined to find his way out of the face-to-face confrontation – he is, after all, a career politician loath to shut down the government — Boehner has been forced into a confrontation, with less and less room for negotiation with his own party’s warring flanks and with Democrats.

Two days after Obama’s re-election, when Republicans lost eight seats but retained their House majority (232 to 200, with three vacancies), Boehner was asked by Diane Sawyer [ http://nbcpolitics.nbcnews.com/_news/2012/11/08/15029606-boehner-obamacare-is-the-law-of-the-land?lite ] on ABC, “You have said next year that you would repeal the health care vote. That’s still your mission?” Boehner replied: “Well, I think the election changes that. It’s pretty clear that the president was re-elected, Obamacare is the law of the land.”

That same day, Michael O’Brien of NBC News suggested that [ http://www.60secondactivist.com/node/701/1401 ]

The speaker’s pronouncement, if nothing else, signifies a pivot away from Republicans’ efforts to showcase for conservatives their doggedness in looking to repeal Obamacare.

Nearly a year later, on Oct. 6, Boehner admitted that he had been forced to capitulate by constituent pressures on Republican members of the House. Appearing again on ABC [ http://abcnews.go.com/ThisWeek/week-transcript-house-speaker-john-boehner/story?id=20476180&page=2 ], this time with George Stephanopoulos, Boehner said, “I and my members decided the threat of Obamacare and what was happening was so important that it was time for us to take a stand.”

Stephanopoulos asked, “Did you decide it or was it decided for you?” Boehner’s answer:

I, working with my members, decided to do this in a unified way. George, I have 233 Republicans in the House. And you’ve never seen a more dedicated group of people who are thoroughly concerned about the future of our country. They believe that Obamacare, all these regulations coming out of the administration, are threatening the future for our kids and our grandkids. It is time for us to stand and fight.

A determined minority can do a lot in our system. It has already won the battle for the hearts and minds of the Republican House caucus. That is not a modest victory.

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How Did Conservatives Get This Radical?
http://opinionator.blogs.nytimes.com/2013/09/24/how-did-conservatives-get-this-radical/

Giving Congress Information
http://opinionator.blogs.nytimes.com/2013/02/13/giving-congress-information/

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http://opinionator.blogs.nytimes.com/2013/01/23/can-republicans-change-their-spots/

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http://opinionator.blogs.nytimes.com/2013/01/16/the-latest-in-anti-politics/

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© 2013 The New York Times Company

http://opinionator.blogs.nytimes.com/2013/10/08/anger-can-be-power/ [with comments]


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Boehner Admits 100% Responsibility for Shutdown

10/09/2013
http://www.huffingtonpost.com/jon-hotchkiss/boehner-admits-100-respon_b_4071520.html [with comments]; the YouTube, embedded, at http://www.youtube.com/watch?v=SGG1PZEqllY


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Dems accuse John Boehner of ‘bait and switch’


Dems say Boehner executed a 'classic bait-and-switch operation.'
M.Scott Mahaskey/POLITICO

By BURGESS EVERETT | 10/8/13 11:08 AM EDT

Senior Senate Democrats on Tuesday morning accused House Speaker John Boehner and his Republican majority of executing a “classic bait-and-switch operation” that led to a government shutdown.

Senate Majority Leader Harry Reid has for days now divulged details of a private meeting between him and Boehner in September in which Reid says Boehner promised to pass a bill funding the government at lower spending levels than preferred by Democrats on the condition that it not water down Obamacare. The Senate has sent such a bill over to the House, but Boehner has declined to put it on the floor and said if he did, it wouldn’t have the votes to pass.

Democrats dispute Boehner’s math — and his negotiating promises both on government funding levels and asking the Senate to pass a budget after four years without one. After Democrats passed a budget in the spring, Senate Republicans have blocked a conference on the budgetary visions of the House and Senate, wary of a backroom deal to raise the debt ceiling with structural spending reductions.

“I saw how hard he worked to pass a continuing resolution at the number the Republican leadership of the House asked for, based on the assurances that they would use it,” said Sen. Patrick Leahy (D-Vt.). “I’d ask my friend, the majority leader, was that sort of a classic bait and switch operation? Because if it is, I think of another one where they asked us to pass a budget.”

Leahy continued: “The Republicans had demanded we pass one. They then refused to let us go to conference with a Republican-led House. Are these bait-and-switch?”

Reid said Leahy’s “description of what happened is absolutely true” and reiterated that he would not open budgetary negotiations requested by Boehner until the week-long shutdown ends and the debt ceiling has been raised.

“Open the government, we’ll get back to the so-called negotiations he talks about,” Reid said of Boehner.

© 2013 POLITICO LLC

http://www.politico.com/story/2013/10/government-shutdown-debt-ceiling-john-boehner-97987.html [with comments]


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The Shutdown Blame Game
The Daily Show with Jon Stewart
Tuesday October 8, 2013
House Republicans take a stand against Obamacare and personal responsibility. (03:20)
http://www.thedailyshow.com/watch/tue-october-8-2013/the-shutdown-blame-game [with comments]


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This Graph Explains Why Obama Rejected the Piecemeal Approach to Funding Government

The piecemeal approach is a plan to both fund government as soon as possible and leave government unfunded as long as possible

Derek Thompson
Oct 8 2013, 5:25 PM ET

The government is still shut down, as thousands of workers go without pay, food goes without inspection, and sick patients go without clinical trials. Meanwhile, Republicans have offered to restore funding on a piece-by-piece basis that would pay some of those workers and treat some of those patients.

The president has said no. But why, CBS White House Correspondent Mark Knoller asked at the press conference today [the first item in this post].

Obama responded that while he's "certainly tempted" to take up the GOP offers, he didn't want to fund slivers of the government, one at a time. On the one hand, funding the discretionary budget bit by bit spares the most headline-y victims and lessens the pain of shutdown. On the other hand, the piecemeal approach ... well, spares the most headline-y victims and lessens the pain of shutdown, prolonging the crisis, itself.

So, depending on how you look at it, the piecemeal approach is both a plan to fund government as soon as possible and a plan to leave government unfunded as long as possible.

There is a graph for this, of course. Michael Linden [ http://www.americanprogress.org/issues/budget/news/2013/10/08/76524/house-republicans-piecemeal-approach-to-funding-the-government-makes-no-sense/ ] counts up the six piecemeal non-defense appropriations bills passed by the House (and unsigned by the president) and the eight other bills the House wants to pass in the coming weeks. "Together, these 14 bills allocate approximately $83.1 billion in funding," Linden writes. That would leave 82 percent of the $470 billion non-defense discretionary government unfunded.

In other words (and colors), Obama wants to fund the whole pie below. The GOP, which would like to pair government funding with Obamacare's defunding or delay, is asking him to fund the blue slices only. The White House's logic is that passing the blue stuff makes it more likely that we go even longer without the larger, redder part of the pie.



This isn't three-dimensional chess, exactly. It's not even chess. It's just a radical wing of the Republican party exerting on House members while holding the rest of government hostage. Meanwhile, the list of casualties deepens: the roads, the patients, the kids, the border, the veterans, the economic data, the product-safety inspections ...

Copyright © 2013 by The Atlantic Monthly Group (emphasis in original)

http://www.theatlantic.com/business/archive/2013/10/this-graph-explains-why-obama-rejected-the-piecemeal-approach-to-funding-government/280408/ [with comments]


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The International Fallout

Editorial
Published: October 7, 2013

The Republican-induced government shutdown and the party’s threats to create another crisis next week over the debt ceiling are causing harm internationally as well as at home. They are undermining American leadership in Asia, impeding the functioning of the national security machinery, upsetting global markets and raising questions about the political dysfunction of a country that has long been the world’s democratic standard-bearer.

The biggest foreign policy casualty, so far, may be the cancellation last week [ http://www.nytimes.com/2013/10/05/world/asia/with-obama-stuck-in-washington-china-leader-has-clear-path-at-asia-conferences.html ] of President Obama’s trip to Asia, which the president’s press secretary said was necessary [ http://www.nytimes.com/news/fiscal-crisis/2013/10/03/obama-cancels-two-more-asia-trips/ ] so he could deal with the shutdown and the political stalemate in Congress. Even though he sent Secretary of State John Kerry in his place, this was the third time that Mr. Obama had canceled or postponed a trip to Asia, further hampering his efforts to make the region a centerpiece of his foreign policy.

In Mr. Obama’s absence, China was able to grab the spotlight [ http://www.nytimes.com/2013/10/08/world/asia/asia-pacific-economic-cooperation-summit.html ]. China’s leader, Xi Jinping, who became the first foreigner to address the Indonesian Parliament, offered billions of dollars in trade to that country. Mr. Xi then visited Malaysia (another stop President Obama had planned) and announced a “comprehensive strategic partnership,” including an upgrade in military ties. Mr. Obama should reschedule his trip as soon as he comfortably can.

The fiscal chaos has also given China, America’s largest creditor, an opportunity to scold the United States. On Monday, in the Chinese government’s first public response to the stalemate in Washington, Vice Finance Minister Zhu Guangyao urged the United States to “earnestly take steps” to avoid a debt default to ensure the safety of Chinese investments and the global economic recovery.

Other financial leaders also felt compelled to speak out, including South Africa’s finance minister, Pravin Gordhan, who warned that the global community has much to fear. “This is clearly an issue that might go to the brink,” he told Reuters. On Monday, most global markets were lower, and the price of oil dropped as traders became increasingly anxious about the standoff in Washington, particularly over the debt ceiling.

The shutdown of the American government is being felt in other ways as well. A round of negotiations between the United States and Europe on the world’s largest free-trade deal, set for next week in Brussels, was canceled because the United States trade representative, Michael Froman [ http://www.ustr.gov/about-us/biographies-key-officials/united-states-trade-representative-michael-froman ], said he lacked the staffing and the finances to make the trip.

And while Republicans accused the Obama administration of being ill prepared for the 2012 attack in Libya that killed four Americans, including the ambassador, the shutdown they have imposed has halted vital training for State Department security officers and improvements to American embassies.

The director of national intelligence, James Clapper Jr., told a Senate committee that furloughing 70 percent of the intelligence agencies’ civilian employees was “extremely damaging” to intelligence-gathering efforts. And, at a time when the United States is about to begin a critical round of negotiations with Iran on the nuclear program, Wendy Sherman, an undersecretary of state, has said that the shutdown has “totally depleted” the government’s ability to enforce sanctions against Iran.

The shutdown is taking a toll that looks even more self-defeating when the consequences beyond America’s shores are taken into account.

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Related

Obama’s Absence Leaves China as Dominant Force at Asia-Pacific Meeting (October 8, 2013)
http://www.nytimes.com/2013/10/08/world/asia/asia-pacific-economic-cooperation-summit.html

Cancellation of Trip by Obama Plays to Doubts of Asia Allies (October 5, 2013)
http://www.nytimes.com/2013/10/05/world/asia/with-obama-stuck-in-washington-china-leader-has-clear-path-at-asia-conferences.html

Related in Opinion

Editorial: Politicians for Sale (October 8, 2013)
http://www.nytimes.com/2013/10/08/opinion/politicians-for-sale.html

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© 2013 The New York Times Company

http://www.nytimes.com/2013/10/08/opinion/the-international-fallout.html


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Suicide of the Right


The face of the Republican Party: John Boehner is stuck in a badly unequal fight with the president, badly damaging the GOP’s brand.
Photo: AP

By John Podhoretz
October 8, 2013 | 10:31pm

Every piece of evidence we have so far on the government shutdown shows the public is blaming Republicans most of all for the standoff. On Monday, an ABC poll showed 71 percent fault the GOP; 61 percent fault Congressional Democrats; 51 percent fault President Obama.

Yes, Democrats look bad. Yes, Obama is probably doing himself no favors by saying he won’t negotiate when the public wants politicians in Washington to work together.

But Republicans look considerably worse. And for the Right, the Republican Party is the only game in town.

This is what my fellow conservatives who are acting as the enablers for irresponsible GOP politicians seem not to understand. They like this fight, because they think they’re helping to hold the line on ObamaCare and government spending. They think that they’re supported by a vast silent majority of Americans who dislike what they dislike and want what they want.

I dislike what they dislike. I want what they want. But I fear they are very, very wrong about the existence of this silent majority, and that their misperception is leading them to do significant damage to the already damaged Republican “brand.” (Forgive me for making use of that horribly overused term, but it’s the only one that fits.)

The belief that the public is with them is based on two data points: First, twice as many people say they’re conservative as say they are liberal. And second, ObamaCare is viewed unfavorably by a majority of the American people.

Both are true.

But it has been true for more than 20 years that Americans are twice as likely to call themselves conservative — and in that time Republicans have lost the popular vote in five out of six national elections. The statistic tells us little about how Americans vote or what they vote for.

And it is true that, according to Real Clear Politics, Americans disapprove of ObamaCare, 51 percent to 40 percent. It is unpopular. But it is not wildly, devastatingly unpopular — though given the fact that it is now rolling out and appears to be as incompetently executed as it was badly conceived, it may yet become so.

If ObamaCare had been as unpopular as conservatives believed, their plan for the shutdown — that there would be a public uprising to force Democratic senators in close races in 2014 to defund it — would’ve worked. It didn’t. Not a single senator budged.

Their tactic failed, and now what they are left with is House Speaker John Boehner basically begging the president of the United States to negotiate with him.

One thing we know for sure is that it’s not an equal fight, this fight between a man who received 65 million votes nationwide and a man who received 246,000 votes in one congressional district in Ohio.

Meanwhile, Boehner is basically the face of the US Congress in the eyes of the public. John Boehner is also the effective head of the Republican Party. And the US Congress is viewed favorably by . . . 11 percent of Americans [oops, make that 5 percent, but hey, who's counting ({linked in} http://investorshub.advfn.com/boards/read_msg.aspx?message_id=92831961 and following)].

Eleven percent.

When I interact with these conservatives, they say they don’t care about the GOP; what they care about are conservative ideas.

They’re right not to assign special glory or power to a political organization and to hold ideas above party. But here’s the condundrum: There is only one electoral vehicle for conservative ideas in the United States — the Republican Party.

It’s one thing to refuse to waste your time buffing and polishing the vehicle so that it looks nice and pretty; that’s what political hacks do, and ideologues have every right to disdain such frippery.

But if, in the guise of making the vehicle function better, you muck up the engine, smash the windshield, put the wrong tires on it and pour antifreeze in the gas tank, you are impeding its forward movement. You’re ruining it, not repairing it.

It may not have been a very good vehicle in the first place, and you may think it couldn’t drive worse, but oh man, could it ever. And it’s the only one you’ve got.

© 2013 NYP Holdings, Inc

http://nypost.com/2013/10/08/suicide-of-the-right/ [with comments]


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Business Groups See Loss of Sway Over House G.O.P.


"We have got to quit worrying about the next election, and start worrying about the country," said Representative Randy Neugebauer, Republican of Texas.
Pablo Martinez Monsivais/Associated Press


"It's clearly this faction within the Republican Party that's causing the issue right now," said David M. Cote, chief executive of Honeywell.
Chip Somodevilla/Getty Images


"What we want is a conservative business person, but someone who in many respects will be more realistic, in our opinion," said Bruce Josten, a lobbyist for the U.S. Chamber of Commerce.
Jonathan Ernst/Reuters

By ERIC LIPTON, NICHOLAS CONFESSORE and NELSON D. SCHWARTZ
Published: October 9, 2013

WASHINGTON — As the government shutdown grinds toward a potential debt default, some of the country’s most influential business executives have come to a conclusion all but unthinkable a few years ago: Their voices are carrying little weight with the House majority that their millions of dollars in campaign contributions helped build and sustain.

Their frustration has grown so intense in recent days that several trade association officials warned in interviews on Wednesday that they were considering helping wage primary campaigns against Republican lawmakers who had worked to engineer the political standoff in Washington.

Such an effort would thrust Washington’s traditionally cautious and pragmatic business lobby into open warfare with the Tea Party [ http://topics.nytimes.com/top/reference/timestopics/subjects/t/tea_party_movement/index.html ] faction, which has grown in influence since the 2010 election and won a series of skirmishes with the Republican establishment in the last two years.

“We are looking at ways to counter the rise of an ideological brand of conservatism that, for lack of a better word, is more anti-establishment than it has been in the past,” said David French, the top lobbyist at the National Retail Federation. “We have come to the conclusion that sitting on the sidelines is not good enough.”

Some warned that a default could spur a shift in the relationship between the corporate world and the Republican Party [ http://topics.nytimes.com/top/reference/timestopics/organizations/r/republican_party/index.html ]. Long intertwined by mutual self-interest on deregulation and lower taxes, the business lobby and Republicans are diverging not only over the fiscal crisis, but on other major issues like immigration reform, which was favored by business groups and party leaders but stymied in the House by many of the same lawmakers now leading the debt fight.

Joe Echevarria, the chief executive of Deloitte, the accounting and consulting firm, said, “I’m a Republican by definition and by registration, but the party seems to have split into two factions.”

While both parties have extreme elements, he suggested, only in the G.O.P. did the extreme element exercise real power. “The extreme right has 90 seats in the House,” Mr. Echevarria said. “Occupy Wall Street has no seats.”

Moreover, business leaders and trade groups said, the tools that have served them in the past — campaign contributions, large memberships across the country, a multibillion-dollar lobbying apparatus — do not seem to be working.

“There clearly are people in the Republican Party at the moment for whom the business community and the interests of the business community — the jobs and members they represent — don’t seem to be their top priority,” said Dan Danner, the head of the National Federation of Independent Businesses, which spearheaded opposition to President Obama [ http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html ]’s health care law [ http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/health_insurance_and_managed_care/health_care_reform/index.html ] among small businesses. “They don’t really care what the N.F.I.B. thinks, and don’t care what the Chamber thinks, and probably don’t care what the Business Roundtable thinks.”

The lawmakers seem to agree. Representative Randy Neugebauer, Republican of Texas and a Tea Party caucus member, said in an interview on Wednesday that if American corporations wanted to send their money elsewhere, that was their choice.

“We have got to quit worrying about the next election, and start worrying about the country,” said Mr. Neugebauer, who sits on the House Financial Services Committee and is a recipient of significant donations from Wall Street.

Few of the most conservative House lawmakers draw substantial support from business political action committees, and business lobbyists acknowledged that the mere suggestion they were considering backing primary challenges next year could enhance grass-roots support for the very lawmakers they want to defeat. But the dysfunction in Washington has now turned so extreme, they said, that they had few other options.

“What we want is a conservative business person, but someone who in many respects will be more realistic, in our opinion,” said Bruce Josten, the top lobbyist at the U.S. Chamber of Commerce, the single biggest lobbying organization in Washington.

In the two previous battles over the debt limit [ http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html ], many chief executives were reluctant to take sides, banding together in groups like Fix the Debt, which spent millions of dollars on a campaign urging Democrats and Republicans to work toward a “grand bargain” on the budget. But with shutdown a reality, and the clock ticking toward default, some of those same executives now place the blame squarely on conservative Republicans in the House.

“It’s clearly this faction within the Republican Party that’s causing the issue right now,” said David M. Cote, the chief executive of Honeywell and a steering board member of Fix the Debt.

The rift, these industry executives acknowledge, reflects longstanding tensions that sometimes emerge between the agendas of corporate executives and those embraced by the conservative wing of the Republican Party.

“We ask them to carry our water all the time,” said one corporate sector lobbyist, who demanded anonymity in order to speak frankly about the relationship with Republicans. “But we don’t necessarily support them 100 percent of the time. And what has happened is the rise of an ideological wing that is now willing to stand up to business interests.”

Despite their diminished leverage, business leaders said they would step up their appeals for an agreement.

Most of the officials said they agree in principle with conservative lawmakers about the need to cut federal spending or roll back parts of Obamacare, but said using the threat of shutdown — or worse, of a debt default — to extract those concessions was both ineffective and dangerous.

Mr. Josten said he had been on Capitol Hill every day this week counseling compromise.

“The name calling, blame gaming — using slurs like jihadist, terrorist, cowards, that kind of language — it does not get you to a deal,” Mr. Josten said of the advice he is giving to Democrats and Republicans. “The problem is everybody is in the same corner here and everybody has to try to save some face.”

To some extent, the Chamber itself, along with other lobbying groups, helped create the conditions for Washington’s impasse.

After the 2010 elections, the Chamber and other business interests funneled millions of dollars into Republican redistricting efforts around the country, helping draw overwhelmingly safe Republican districts whose occupants — many among the most conservative House members — are now far less vulnerable to challenges from more moderate Republicans.

The Chamber spent more than $32 million on the 2012 election, nearly all of it backing Republicans. Similarly, the American Banking Association sent 80 percent of its $2.6 million in political action committee donations to Republicans in the last election cycle, compared with 58 percent in 2008, according to data compiled by the Center for Responsive Politics, out of dissatisfaction with Democratic efforts to impose more financial regulations [ http://topics.nytimes.com/topics/reference/timestopics/subjects/c/credit_crisis/financial_regulatory_reform/index.html ].

Now the group’s president, Frank Keating, a former Republican governor from Oklahoma, is among those lamenting Congress’s failure to achieve a deal to avert default. On Thursday, he will testify before the Senate banking committee that “ordinary Americans will bear the brunt of the damage if our leaders do not prevent the United States from defaulting on its debt for the first time in history,” according to an advance copy of his remarks.

To break through to lawmakers, some national trade groups are deploying local business owners, who they believe may have more clout with conservatives than big-name chief executive officers. The National Retail Federation has already begun such efforts in states like Oklahoma and Kentucky, where the Republican Party dominates.

A spokeswoman for the National Association of Manufacturers, Erin Streeter, said the group had decided to sponsor a fund-raising event for Representative Mike Simpson, Republican of Idaho, who is among the 20 House Republicans who have said they will support a budget bill — or at least a temporary measure to reopen the government — without removing funds from the health care program. Mr. Simpson is facing a primary challenge from a more conservative, Tea Party-backed Republican.

“We need to be more aggressive,” Ms. Streeter said.

Michael J. Driscoll, a former managing director of Bear, Stearns & Co. and lifelong Republican from New York, said he would not be surprised if Wall Street executives began to shift some of the giving away from House lawmakers.

“One thing about Wall Street, it is very aware of who is working in their best interest,” he said.

But other lobbyists cautioned that while individual Republican lawmakers may lose financial support, the business community was unlikely to turn its back on the party over all and that donations would continue to flow to campaign committees set up by Republican leaders in the House, including from Wall Street.

“The reason the business community is overwhelmingly pro-Republican is because of the policy positions generally held by the Democratic Party,” said Dirk Van Dongen, president of the National Association of Wholesalers-Distributors. “But there’s a lot of talk around town about the need for Republicans to get into primaries and protect people who are being attacked because they are only 96 percent pure.”

“I, for one, think that would be a healthy exercise,” he added.

Eric Lipton reported from Washington, and Nicholas Confessore and Nelson D. Schwartz from New York.

© 2013 The New York Times Company

http://www.nytimes.com/2013/10/10/us/business-groups-see-loss-of-sway-over-house-gop.html [with comments]


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Hard-line conservatives see victory in debt limit standoff



A faction of the Republican Party believes it cannot lose the battle over raising the US government's borrowing limit - either they dismantle the Democrats' healthcare reform, or the country has to live within its means for a while. But will the rest of the party stick with them?

By Anthony Zurcher
BBC News, Washington
7 October 2013 Last updated at 20:51 ET

It is a high-stakes gambit - the US has never before breached its authority to borrow money to fund its obligations, and most experts warn it could be catastrophic.

But a group of hard-line conservatives in Congress think it is worth the risk.

Republican Silver Bullet

Dozens of Republican politicians, such as Steve King of Iowa, Tim Huelskamp of Kansas, and Mick Mulvaney of South Carolina, have suggested in interviews [ http://www.nationaljournal.com/daily/republicans-downplay-default-dismiss-debt-deadline-20131006 ] that the US government could prioritise its payments in the event of a debt limit breach, choosing to fund some government expenses - while drastically cutting others.

"If you don't raise the debt ceiling, what that means is you have a balanced budget," Republican Senator Rand Paul of Kentucky said on CNN [ http://www.realclearpolitics.com/video/2013/10/03/sen_rand_paul_us_wont_default_if_debt_ceiling_is_not_raised.html ] last week. "It doesn't mean you wouldn't pay your bills."

The strategy hinges on convincing President Barack Obama that conservatives are willing to break the debt ceiling and devastate the Democratic Party's government priorities, while assuring Republican big-business backers that this would not destroy the economy.


Senator Rand Paul says the US will continue to pay its bills even if it hits the debt ceiling

It is a fine line, but conservative grass-roots groups think they have found the silver bullet to kill Mr Obama's 2010 healthcare reform law, which Republican Representative John Fleming of Louisiana called in typical remarks "the most dangerous piece of legislation ever passed in Congress".

If the debt limit is breached so that "Obamacare" can be destroyed and Americans be taught they can live with less government, so be it.

"Liberals might be so concerned about settling this issue because they do not want Americans to realize that we can survive just fine with a lot less government spending," Jeffrey Dorfman writes in Forbes [ http://www.forbes.com/sites/jeffreydorfman/2013/10/03/dont-believe-the-debt-ceiling-hype-the-federal-government-can-survive-without-an-increase/ ]. "Perhaps we will be better off in the long run if government gets a little taste of what so many families have been experiencing for years: staying within a budget."

First-term Republican Representative Ted Yoho of Florida said in an interview with the Washington Post [ http://www.washingtonpost.com/politics/for-ted-yoho-government-shutdown-is-the-tremor-before-the-tsunami/2013/10/04/98b5aa8c-2c3c-11e3-8ade-a1f23cda135e_print.html ] that hitting the debt limit would "bring stability to the world markets", as it would prove the country is serious about balancing its budget.

'It's stupid'

Without the risk of a sovereign debt default, and with Democratic interests feeling the pain of a predicted 32% cut in overall government spending, the theory goes, Republicans would finally have a negotiating advantage.

"We hit the debt ceiling, and the world won't end," says Dean Clancy, vice-president of public policy for FreedomWorks, a conservative grassroots activism group.

"Once the public and Wall Street understand that default is not really a possibility, the president's leverage will be greatly diminished and a bipartisan compromise will be achievable."

Other Republicans counter that such a strategy is both impractical and dangerous. Even if the treasury department could figure out how to prioritise payments, the uncertainty created by such an action would devastate financial markets.

"The issue here is honouring our debt obligations," says Bill Hoagland, a senior vice-president at the Bipartisan Policy Center who served as a budget aide to former Republican Senate Majority Leader Bill Frist.

"It's stupid, and it's unbelievable we're even having this conversation."

Speaker of the House John Boehner, a reluctant recruit to the current budget fight over healthcare reform, has shown hesitation to take the plunge with the conservative caucus once more.

Although he continues to assert that his party is united, there were reports in the media [ http://talkingpointsmemo.com/dc/how-boehner-is-quietly-defusing-the-debt-limit-fight ] last week that he told nervous colleagues that he would not allow a default on the debt - even if that meant relying on Democratic support to pass a debt limit increase.

Civil war


House Speaker John Boehner says his Republican caucus is united

According to Republican campaign strategist and pollster Matthew Towery, the hard-line conservatives will soon learn their plan is unworkable.

As in the economic crisis of 2008, when Congress did not pass an economic rescue bill until the stock market took a 700-point drop, rank-and-file Republicans will turn once the financial markets show signs of stress, he says.

"The president has blatantly stated that Wall Street should be concerned," Mr Towery says. "He wants a drop, as he knows what that would do. They would have to take immediate action."

At that point, enough Republicans would come around to give Mr Boehner cover to bring a debt limit increase to a vote in the House.

"The [Republican] House majority has a pack mentality until things start to go wrong," Mr Towery says. "Once that happens, Boehner not only will have the votes, he'll probably get a majority of the conference to go along with him."

As the debt limit approaches, what has been termed a Republican "civil war" between hard-line conservatives and the party establishment may be approaching its end game.

The conservative caucus has proven it is willing to continue to escalate the standoff until it achieves unconditional victory. With strong backing from voters at home and a view the "Obamacare" healthcare reform is an existential threat to the country, compromise is not an option.

At some point, however, the rest of the Republican Party may decide it is ready to get off this ride.

"I think Republicans just want out of this mess altogether," Mr Towery says.

BBC © 2013

http://www.bbc.co.uk/news/world-us-canada-24393350 [with comments]


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The GOP’s Top 10 Debt Ceiling Denialists

A clique of GOP lawmakers say the debt ceiling crisis is a hoax. They could tank the economy and make a deal impossible, writes Patricia Murphy.
Oct 7, 2013
http://www.thedailybeast.com/articles/2013/10/07/the-gop-s-top-10-debt-ceiling-denialists.html [with comments]


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Republican Debt-Ceiling ‘Truthers’ Are Risking Financial Disaster

Worried about a default if the U.S. hits its debt ceiling? We can just ‘prioritize’ our payments, say some Republicans. Jamelle Bouie on why they’re wrong—but they’re not even the biggest GOP fantasists.
Oct 8, 2013
http://www.thedailybeast.com/articles/2013/10/08/republican-debt-ceiling-truthers-are-risking-financial-disaster.html [with comments]


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Analysis: What default? Republicans downplay impact of U.S. debt limit

Oct 8, 2013
http://www.reuters.com/article/2013/10/08/us-usa-fiscal-default-analysis-idUSBRE99700P20131008 [with comments]


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Debt Ceiling: Senate Republicans Flirt With Default
10/08/2013
http://www.huffingtonpost.com/2013/10/07/debt-ceiling-default_n_4060536.html [with embedded video report, and (over 6,000) comments]


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The Surreal Logic Of The Debt Ceiling Deniers
10/08/2013
http://www.huffingtonpost.com/2013/10/08/debt-ceiling-deniers_n_4065363.html [with embedded video report, and comments]


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GOP unity frays, frustration builds


'The only person in town who can cause default is President Barack Obama,' Steve Scalise says.
AP Photo

By JAKE SHERMAN | 10/8/13 8:03 PM EDT Updated: 10/8/13 9:33 PM EDT

A reality is beginning to dawn on — and eat away at — many House Republicans: They aren’t at all sure of their party's strategy to re-open government and lift the debt ceiling.

After forcing leadership to pick a fight it didn’t want to pick, sitting through hours of meetings with lots of internal hand-wringing and failing to force Democrats to negotiate, the path to avoid a prolonged government shutdown and the first debt default in American history is completely uncertain.

“If anybody tells you it’s clear to anybody let me know,” said Rep. Pete Sessions of Texas, the chairman of the Rules Committee and a member of Republican leadership. “I’ll call them collect.”

Now, the party is flagging in polls one week into the first government shutdown in nearly two decades. And they’re just eight days ahead of the deadline set by the Treasury to lift the debt ceiling. A slew of House Republicans are now saying they believe they won’t bear responsibility for a default.

“The only person in town who can cause default is President Barack Obama,” said Republican Study Committee Chairman Steve Scalise of Louisiana.

In the many legislative wrestling matches since Republicans took the House in 2011, there has always been the faint signs of an endgame. Either Obama would cut a deal with Speaker John Boehner or Senate Minority Leader Mitch McConnell (R-Ky.) would work something out with Vice President Joe Biden.

But this time, as Wall Street lights up the phones of rank-and-file House Republicans and public sentiment turns sharply against the party, things are stuck in neutral. It’s a dynamic that’s worrying senior Republican lawmakers and aides.

“We’re trying everything we know how to do to entice them to negotiating, talking this thing through and solving the problem, but we get no response,” Appropriations Chairman Hal Rogers (R-Ky.) told POLITICO, referring to Democrats and Obama.

There was some hope that Tuesday’s attempt by the House GOP to create a bicameral, bipartisan deficit and debt committee — along the lines of the failed supercommittee — would do the trick. But just hours after it was announced, Obama issued a veto threat, saying he would reject the plan. It all happened so quickly that several Republicans told POLITICO they were unsure of exactly what their leadership was proposing. And GOP leadership sought to distinguish the panel from the supercommittee.

The White House and House Republicans are further apart than ever before. Obama said Boehner should open up the government and lift the debt ceiling and then the two parties could negotiate. Boehner called that an “unconditional surrender.” The comments elicited cheers from House Republicans, but at least a half-dozen GOP lawmakers told POLITICO that Congress is dangerously close to a default.

Boehner, for the time being, is playing it cool. He has told Republicans in closed sessions and in conversations on the House floor that he has “something up his sleeve.” No one is sure what he’s talking about, and he hasn’t revealed his strategy. Several Republicans he is close with says he’s keeping his cards close to his chest.

And, in a worrisome sign, GOP unity is beginning to fray, little by little. Conservative Republicans are beginning a push to force leadership to handle the debt ceiling and the government shutdown separately — a logistical challenge since the debt limit must be lifted by Oct. 17 and the government has been shut down for a week. This will be a major topic at Wednesday’s Republican Study Committee meeting.

“They don’t need to be tied together,” RSC Chairman Scalise told POLITICO Tuesday. “The debt ceiling will have to be dealt with, but it’s got to be dealt with in a way that also puts reforms into place.”

Conservatives — including senior members of the RSC — have begun talking about short-term debt ceiling plans, but only with legislative add-ons like repealing health insurance subsidies for members of Congress, aides and the White House; or a debt prioritization plan in case of default.

And as Republican leadership tries to broaden the debate beyond Obamacare to other areas of mandatory spending, many in the rank and file want to keep focus on the health care law. That’s a major reason they’re pushing party leaders to keep a government funding bill separate from debt ceiling legislation, worried that Obamacare could get lost in such a big fiscal package.

“It’s keeping the focus on Obamacare, which is the face of spending and bigger government,” said Rep. Marlin Stutzman (R-Ind.). “That’s our focus. I think we need to keep the debt ceiling and the CR separate. I don’t think they need to be morphed into each other. I think for the discussion we’re better served if they stay separate.”

To be sure, Republican leadership thinks the Democrats’ position is unsustainable and will break at some point.

“We’re trying to substantively engage the White House and Senate Democrats on the issues that face the country. Their unwillingness to sit down and negotiate now is not sustainable,” said Chief Deputy Whip Peter Roskam (R-Ill.). “They may redefine ‘negotiate.’ But at some point, they’ll come to the table and we’ll … come up with things that yield a good result. But they need to get off the position that, ‘We won’t talk to you.’ It’s dysfunctional and irrational.”

House Republicans say they’ll keep up their barrage to try to force Democrats to negotiate. On Tuesday, they passed a bill to fund Head Start programs. On Wednesday, there will be more bills to restart slices of the government.

Many Republicans believe the only way to solve the impasse is a massive budget deal that would fund government, lift the debt limit and enact budgetary reforms. But in a meeting Tuesday, Boehner attempted to pull back on that, saying he wanted to “put points on the board” instead of crafting a large-scale deal.

Right now, there doesn’t appear to be any incentive to back down. Republicans largely say they aren’t feeling any pressure from their constituents and instead say that people contacting their office are urging them to keep up the fight.

“When I was home, I talked with people in our office that called in, I don’t get the sense that 70 percent [of people blame us],” said Rep. Jim Jordan (R-Ohio). “It’s a tough position for the president of the United States to say ‘it’s OK to treat people differently under Obamacare and I’m going to keep doing that and not talk to you guys about any way we’ll change that.’”

Rep. Jason Chaffetz (R-Utah) said his party knows that they won’t get everything they want, “but we better start talking.”

“Let’s start talking before we start running,” Chaffetz said.

© 2013 POLITICO LLC

http://www.politico.com/story/2013/10/republican-unity-frustration-debt-ceiling-government-shutdown-98032.html [with comments]


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GOP debt ceiling deniers imperil economy

The Rachel Maddow Show
October 8, 2013

Alan Krueger, professor of Economics and Public Affairs at Princeton University and former chairman of President Obama's Council of Economic Advisers, talks with Rachel Maddow about concerns over the catastrophic damage that could be caused by reckless Republicans who deny the consequences of failing to raise the debt ceiling.

© 2013 NBCNews.com

http://video.msnbc.msn.com/rachel-maddow/53223366 [show links at http://maddowblog.msnbc.com/_news/2013/10/08/20876228-links-for-the-108-trms (with comments); the above YouTube of the segment at http://www.youtube.com/watch?v=E2AllmZSBLM ]


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104 Republicans Who Are In Congress Today Voted To Increase The Debt Ceiling Under Bush Without Hostage Threats

October 9, 2013
http://thinkprogress.org/economy/2013/10/09/2754141/republicans-clean-debt-limit-2004/ [with comments]


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House Republicans’ Ransom Demands Falling


A hundred thousand dollars and a fueled-up jet? Fifty thousand and a half-fueled car? A free bus ticket and a gift certificate for TCBY?

By Jonathan Chait
10/9/2013 at 10:00 AM

One way to understand the dysfunction within the Republican Party is to think of it as a hostage scheme that spun out of control. The plan, originally formulated by Paul Ryan and other party leaders, involved a more aggressive reprise of the 2011 negotiations, where Republicans would use the threat of default, along with sequestration, to force President Obama to accept unfavorable budget terms. The plan was hijacked by Ted Cruz and transformed into a scheme using a less effective hostage threat (shutting down the government rather than defaulting) but tethered to the much more grandiose ransom of repealing Obamacare. As the Cruz scheme disintegrates around the Republicans, the original leaders are attempting to reassert control and revert to the original plan.

The subtext of op-eds today by Eric Cantor [ http://www.washingtonpost.com/opinions/eric-cantor-divided-government-requires-bipartisan-negotiation/2013/10/08/98f6b7e6-3062-11e3-bbed-a8a60c601153_story.html ] and Paul Ryan [ http://online.wsj.com/article/SB10001424052702303442004579123943669167898.html ] is a promise to ratchet down their ransom terms. Neither op-ed mentions any demands related to Obamacare. Ryan proposes to trade higher short-term discretionary government spending for permanent cuts to tax rates and retirement programs. “We can work together,” he writes. “We can do some good.”

The policy demands in Ryan’s op-ed are sufficiently vague that, if viewed as an opening bid, they would not completely preclude some kind of deal if he actually wants to bargain. The trouble is that Ryan’s entire history strongly suggests he does not want to deal. Every major attempt to create bipartisan budget negotiations has been quashed by Ryan. He voted against the Bowles-Simpson proposal, kiboshed a 2011 agreement [ http://www.nytimes.com/2012/08/13/us/politics/family-faith-and-politics-describe-life-of-paul-ryan.html?hpw&pagewanted=all&_r=0 ] between John Boehner and President Obama, then single-handedly blew up [ http://www.washingtonpost.com/blogs/right-turn/post/gang-of-six-reaction/2011/03/29/gIQAdtWKQI_blog.html ] a bipartisan Senate budget deal.

Obama’s reelection has not prompted Ryan to veer from this strategy. Last spring, the president tried to spur bipartisan negotiations by compromising with himself in his budget, including cuts to Social Security and Medicare along with reducing tax deductions. Ryan waved it away [ http://www.humanevents.com/2013/04/10/paul-ryan-statement-on-obama-budget/ ] and made no counteroffer. Instead, working through what Republicans called the “Jedi Council,” Ryan crafted a strategy [ http://www.nationalreview.com/node/356602/print ] of using the debt ceiling to extract unreciprocated concessions. He spent much of the year repeatedly turning down a budget conference on the assumption that he could get a better deal by threatening default. He confidently assured Republicans that Obama would fold and bargain for the debt ceiling. (National Review’s Jonathan Strong two weeks ago [ http://www.nationalreview.com/corner/359818/paul-ryan-cr-fight-will-inevitably-roll-debt-ceiling-fight-jonathan-strong ]: “I asked Ryan if he believes President Obama’s steadfast vows that he won’t negotiate over the debt ceiling. His reaction? You’ve got to be kidding me. ‘Oh, nobody believes that.’”)

Is it possible Ryan has undergone some deep-rooted mental conversion and now wants a regular, bipartisan budget negotiation where the two parties make trade-offs? It’s possible, sure. But then why would he be demanding that the debt ceiling and the government shutdown be part of the negotiations? This is very simple: If the implicit or explicit alternative to an agreement is that you blow up the world economy, then you’re not negotiating — you’re extorting [ http://nymag.com/daily/intelligencer/2013/10/let-me-explain-how-extortion-works-republicans.html (about 30% of the way down in the post to which this is a reply)].

Still, Cantor and Ryan are clearly retreating. Cracks are forming everywhere in the Republican line. A senior House Republican floated to CNN [ http://politicalticker.blogs.cnn.com/2013/10/08/senior-house-gop-source-short-term-debt-ceiling-may-be-way-out/ ] a short-term debt-ceiling hike. Wall Street is starting to wake up to the danger of the debt-ceiling threat and is pressuring [ http://www.politico.com/story/2013/10/republican-unity-frustration-debt-ceiling-government-shutdown-98032.html (item third above)] House Republicans not to carry it out. Republicans are privately expressing “grave reservations [ http://www.washingtonpost.com/business/economy/investors-show-growing-concern-about-debt-limit-crisis/2013/10/08/de33881e-3032-11e3-bbed-a8a60c601153_story_1.html ]” about the debt-limit threat. The Senate is close to enough votes [ http://www.bloomberg.com/news/2013-10-08/some-senate-republicans-open-to-clean-debt-ceiling-plan.html ] to break a filibuster and pass an extension of the debt limit, and in the unlikely event moderate Republicans back away and Republicans decide to filibuster anyway, Democrats may nuke the filibuster [ http://www.politico.com/story/2013/10/nuclear-option-debt-ceiling-98025.html ] to pass a debt-limit hike.

So a Senate bill to hike the debt limit appears near certain. It’s likewise certain that the House will pass nothing. The House GOP’s implacable wing will block any debt-limit bill, even one filled with all their demands. The only way Republicans could pass a debt-limit increase of any kind is with Democratic votes, which in turn means the bill won’t be able to attach any conditions. The House Republican leadership is trapped, having sold their party on promises of a ransom they cannot deliver.

The single most implausible element of the House leadership’s "let’s negotiate" gambit is the premise that a bipartisan budget deal would satisfy the Republican base. Any bipartisan deal, even one heavily slanted to the Republican side, would enrage conservatives. Even the tiniest concession — easing sequestration, closing a couple of token tax loopholes — would be received on the right as a betrayal. Loss aversion is a strong human emotion, and especially strong among movement conservatives. Concessions given away will dwarf any winnings in their mind. Boehner, Ryan, and Cantor have spent months regaling conservatives with promises of rich ransoms to come. Coming back with an actual negotiated settlement would enrage the right.

The most enjoyable outcome would be to watch all of them — Boehner, Ryan, Cantor — be eaten alive by the wolves they’ve nurtured. But of course, the threat of this outcome is the very thing that may encourage them to allow an economic crisis — a man forced to choose between saving his job and saving his country is dangerous, especially if that man is John Boehner.

But the current Republican line does suggest a way out: if Republicans “win” a promise to negotiate the budget, with the debt ceiling not being subject to the outcome of the negotiations. That this has actually been Obama’s goal all along, and the thing Republicans have been trying to avoid, does not mean Republicans can’t talk themselves into it. The negotiation would probably end in a stalemate, or possibly a few small changes, but by the time it was finished the crisis would be over and conservative activists would have moved on to other issues — a new Obama scandal, maybe.

The insistent talking point that Obama won’t negotiate is a preposterous form of propaganda. But it has been taken up by a number of eager conservative pundits who seem to actually believe it. What if conservatives can be made to believe their own talking point — to believe that forcing Obama to negotiate the budget is the party’s actual goal here? Conservative self-delusion got us into this crisis. It could also get us out.

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Related

John Boehner Too Embarrassed to Defend His Own Extortion Demands.
http://nymag.com/daily/intelligencer/2013/10/boehner-too-embarrassed-to-defend-extortion.html

Obama Has a Shutdown Message Problem — Here’s How to Fix It.
http://nymag.com/daily/intelligencer/2013/10/how-to-fix-obama-shutdown-message-problem.html

Senator Rob Portman’s Compromise: Obama Can Keep His Daughters, I’ll Take Everything Else.
http://nymag.com/daily/intelligencer/2013/10/portmans-compromise-obama-can-keep-daughters.html

Nelly Is Rooting for the Shutdown to Continue So He Doesn’t Have to Pay Taxes
http://nymag.com/daily/intelligencer/2013/10/nelly-taxes-shutdown-video.html

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Copyright © 2013, New York Media LLC (emphasis in original)

http://nymag.com/daily/intelligencer/2013/10/house-republicans-ransom-demands-falling.html [with comments]


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Government Standoff Shakes Trust in U.S. Debt



By NATHANIEL POPPER
October 9, 2013, 8:44 pm

In good times and bad, the world’s financial system has long been able to rely on one thing: that the United States government would pay back its debt on time.

This assumption has made short-term government debt the most basic building block of the financial system, as reliable as a dollar bill.

In recent days, however, the fiscal impasse in Congress has been testing investors’ confidence. As a result, investors have been shifting their money out of the $1.7 trillion market for the short-term government debt known as Treasury bills [ http://topics.nytimes.com/top/reference/timestopics/organizations/t/treasury_department/treasury_securities/index.html ], worried, for the moment at least, that they may not be the risk-free asset they have known.

Indeed, it now costs more for the United States to borrow money for a month than it does for the average highly rated American company to do so.

“These bills are like the center of gravity for the financial universe — they really are,” said Lee A. Sachs, a former Treasury [ http://topics.nytimes.com/top/reference/timestopics/organizations/t/treasury_department/index.html ] official who now runs the lending firm Alliance Partners. “Defaulting on these would be like the laws of physics being repealed.”

Many investors are cautious about reading too much into the recent changes in the Treasury bill market, given that it is one narrow corner of the financial world. More visible markets, like stocks, are still showing relatively little concern about a default.

But traders and bankers are watching movements in the price of Treasury bills because they could show the first tremors of a potential earthquake if Congress fails to raise the government’s borrowing limit. Treasury Secretary Jacob J. Lew [ http://topics.nytimes.com/top/reference/timestopics/people/l/jacob_j_lew/index.html ] has said that after Oct. 17, the Treasury will no longer be able to borrow more money and may not be able to pay all of its bills.

No one is questioning yet whether the government will, at some point, pay back all the money it has borrowed. Investors are, however, entertaining doubts about whether Washington will pay back money on the date it has promised, a fundamental expectation that helps lubricate day-to-day transactions in the financial system.

“That is a very big change in perception,” said Clifford D. Corso, chief executive of the trading firm Cutwater Asset Management. “So much of the world relies on that certainty of date of payment. That chain is a very large and dangerous one to monkey around with.”


A pressman picks up stacks of $20 bills at the Bureau of Engraving.
Paul J. Richards/Agence France-Presse — Getty Images

The clearest sign of the changing perceptions has come in the prices for the bills that the Treasury Department is supposed to repay in the days right after the debt ceiling [ http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html ] is set to be reached.

Normally, as the day of repayment for a Treasury bill gets closer, the chances of getting repaid go up and the bill becomes worth more to investors. Now, however, the opposite is happening, and the bills are becoming worth less than they were previously, making them available for a discount on their face value.

The discount on bills to be paid on Oct. 24 has grown by 400 percent since the beginning of the month; on Wednesday, it jumped 24 percent. That has brought the price that the government has to pay to borrow money for a month to three times what the average AA-rated American company has to pay, according to Federal Reserve data. Typically, the United States government can borrow money for less than big corporations.

Confidence in investments widely considered to have little or no risk has been periodically shattered in the recent past. Until 2008, most investors thought they could not lose money on mortgage-backed bonds that carried a rating of AAA. Last year, investors were forced to rethink their belief that countries in the European Union [ http://topics.nytimes.com/top/reference/timestopics/organizations/e/european_union/index.html ] would always repay their debt.

The trust in debt issued by the United States, however, has always run deeper because of the size of the economy and the presumed ability of the government to print as much money as it needs. This has meant that during the last two big crises, most investors sought out Treasury debt as the ultimate safe haven.

So far, despite mounting worries over the standoff in Washington, investors have not been turning away from Treasury debt altogether. They have largely remained confident that the government will pay back its longer-term debt on time, keeping the prices of those bonds stable.

But any debt set to come due in late October or November has recently become much less popular. And the concern has been stretching further into the future. On Wednesday, investors were even shunning bonds due for payment in December.

A primary way that banks and companies use Treasury bills is in managing their day-to-day needs for cash. Banks that need cash borrow against their Treasury bills overnight, in what is known as a repurchase agreement.

Mr. Corso, who helps facilitate these transactions, said that institutions making these trades have recently been refusing to accept Treasury bills due in October and November as collateral. The mutual giant Fidelity Investments is among the market participants that have said they are avoiding debt around the dates of a possible default.

But most investors say that the current issues are only a shadow of the problems that would be likely to hit if the government actually failed to pay any of its debt on time.

The Secretary General of the Organization for Economic Cooperation and Development [ http://topics.nytimes.com/top/reference/timestopics/organizations/o/organization_for_economic_cooperation_and_development/index.html ], Angel Gurria, said on Wednesday that “putting the world’s primary risk-free asset into doubt would have negative repercussions throughout the global financial system. These effects would of course feed back on the U.S. economy.”

In the longer term, the fear is that a default would dent the willingness of foreign investors to use Treasury bonds as a place to park their money. Their desire to do so today has made the dollar the world’s most widely used currency.

In remarks prepared for a hearing on Thursday, the head of the industry group for mutual funds [ http://topics.nytimes.com/your-money/investments/mutual-funds-and-etfs/index.html ], Paul Schott Stevens, said that if a payment was delayed for as little as a few days, “investors will learn a lesson that cannot and will not be unlearned.”

“That lesson is simple: Treasury securities are no longer as good as cash,” Mr. Schott Stevens said.

Even if members of Congress do come to a compromise before a missed payment, the current turmoil could do long-term damage to the investor confidence.

Andrew Milligan, the Scottish head of global strategy at Standard Life Investments, said: “I came to the U.S. markets for certainty, but I’m not getting that.”

“At the margin,” he said, “people are looking for other places to keep their cash.”

*

Related Articles

Complacency on Wall Street Could Be Worse Than a Panic
http://dealbook.nytimes.com/2013/10/09/complacency-on-wall-street-could-be-worse-than-a-panic/

Dancing on the Edge of Default
http://dealbook.nytimes.com/2013/10/04/dancing-on-the-edge-of-default/ [at/see (linked in) http://investorshub.advfn.com/boards/read_msg.aspx?message_id=92810492 and preceding (and any future following]

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Copyright 2013 The New York Times Company

http://dealbook.nytimes.com/2013/10/09/government-standoff-shakes-trust-in-u-s-debt/ [with comments]


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GOP's big money backers sow party confusion

The Rachel Maddow Show
October 9, 2013

Ryan Grim, Washington Bureau Chief for The Huffington Post, talks with Rachel Maddow about confusion among Republicans about what ransom to demand for turning the federal government back on and not crashing the world economy, and new mixed messages from the big money party backers.

© 2013 NBCNews.com

http://video.msnbc.msn.com/rachel-maddow/53240476 [show links at http://maddowblog.msnbc.com/_news/2013/10/10/20893158-links-for-the-109-trms (with comments)]


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Maine's LePage sees crisis in shutdown

The Rachel Maddow Show
October 9, 2013

Rachel Maddow reports that Maine's colorful Republican governor Paul LePage has declared a state emergency in response to the shutdown of the federal government, potentially allowing him to suspend some state rules and regulations.

© 2013 NBCNews.com

http://video.msnbc.msn.com/rachel-maddow/53240575 [show links at http://maddowblog.msnbc.com/_news/2013/10/10/20893158-links-for-the-109-trms (with comments)]


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Democrats see hope in GOP shutdown backlash

The Rachel Maddow Show
October 9, 2013

Bill Burton, former Obama administration deputy press secretary, talks with Rachel Maddow about how Democrats are trying to capitalize on the public displeasure with the Republican shutdown of the federal government and threats to the economy, and whether there is any serious chance of Democrats retaking the House in 2014 as a result.

© 2013 NBCNews.com

http://video.msnbc.msn.com/rachel-maddow/53240497 [show links at http://maddowblog.msnbc.com/_news/2013/10/10/20893158-links-for-the-109-trms (with comments); the above YouTube of the segment at http://www.youtube.com/watch?v=UT1D2AVeAFY ]


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