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July 31, 2011

"Deal" Still Being Negotiated; Seems To Involve A Two-Step Process: First, A Soft Republican Capitulation, Then, A Hard Republican Capitulation

The Republicans have demonstrated that they will not shut down the government under any circumstances. So the Democrats continue to hold the trump card, because there is a step they will take which Republicans will not.

This "compromise," which isn't even agreed to, but is being negotiated as to its major details, simply delays the timing of Republican capitulation until closer to the elections.

Jen Rubin explains the triggers and the sticking points on them:

The second tranche works like this: If a new congressional commission introduces a plan totaling at least $1.5 trillion in cuts by Thanksgiving and its passed by Christmas there are no across-the-board cuts. Or, if a balanced budget amendment is passed and sent to the states, then across-the-board cuts are avoided. However, if there is no commission package passed AND the BBA is not passed and sent to the states, then across-the-board cuts of $1.2 trillion including Medicare and defense (the details of which arent final) go into effect. If the across-the board-cuts go into effect, the debt ceiling is only raised $1.2 trillion (likely insufficient to keep the government operating for long), meaning we could do this all over again, depending on economic growth. In other words, if we went to sequestration the total debt ceiling increase would be $2.1 trillion in two doses.


GOP leaders are convinced that the triggers are so scary that it will in fact force the commission to reach agreement. The president at that point will be rooting for a deal as well, since the alternative across-the-board cuts would yield only $1.2 trillion in a debt ceiling hike and would set up another round of this insanity depending on economic growth.

The threat of drastically slashing Defense will cause Republicans to vote for tax increases. Democrats will not identify additional money to be cut, because they don't want to, and they don't need to -- Republicans will cave, as they have caved since the 2011 budget fight, and will agree to tax increases to avert devastating cuts in Defense.

So they're just pushing this off to closer to the election.

If they're going to capitulate, why not do it now?

Without the willingness to shut the government down, they have no leverage. Most of them don't even pretend at the fiction that they're willing to do that.

So Democrats continue dictating the terms of "negotiation." Furthermore, Republicans are simply trading an early capitulation for one closer to the elections, which doesn't even make sense to me.

And: I am still hearing nothing at all about a bill to dictate the procedure and priority of bill-paying in the event of a shutdown -- something that could greatly increase the Republicans' leverage in such an event.

But they don't even want to seem to want the leverage, because they don't even want to contemplate that option.

Another Possibility: Republicans let the automatic cuts happen, but then immediately propose reinstating most of the money to Defense.

This winds up causing automatic cuts to domestic discretionary, but no big cuts to Defense; most Democrats would probably have to vote for this.

But it has a bad effect: We'd have approved $2.1 trillion in debt ceiling increase while only (guestimating) cutting, say, $1.6 - $1.7 trillion in cuts.

Who knows, maybe that's a decent deal. Doesn't seem that decent, though.

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posted by Ace at 01:12 PM

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