Slow Walk

Obama Slow Walks Us Over the Cliff

President Obama has stated many times that he will never again negotiate with Republicans to raise the country’s debt limit.

“Let’s not do this again. We’re not going to negotiate on the debt limit ever again.” -President Obama speaking to staffers on July 31, 2011. From “The Price of Politics” by Bob Woodward, p 355

“If Congress in any way suggests that they’re going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation — which, by the way, we had never done in our history until we did it last year — I will not play that game.” – President Obama’s comments during a meeting with the Business Roundtable on 12/5/12

“So I’ve put forward a very clear principle:  I will not negotiate around the debt ceiling.  We’re not going to play the same game that we saw happen in 2011.” – President Obama’s comments during a White House Press Conference on 12/19/12

Yet, it is widely understood that the country would hit the debt limit once again sometime early in 2013, and then we hear from Treasury Secretary Geithner on the day after Christmas that we will breach the debt limit on December 31 (today). So, why would President Obama ever think he could avoid another debt limit negotiation?

The only answer is that the President never intended to reach a deal with Republicans to avoid the Fiscal Cliff deadline that is set to expire at 11:59pm today. Instead, the President has once again schooled the Republican Party, and the Republican Party has allowed the President to do it.

The President would have everyone believe that he has made good faith efforts to reach agreement with Republicans to avoid across-the-board tax increases that go into effect on January 1, 2013. He also wants us to believe that dysfunctional and unreasonable Republicans are all to blame for our government’s failure to avoid sequestration.

However, it is now clear that the President’s strategy has been to go straight off the Cliff all along just so he can blame the Republican Party in order to improve his negotiating position on the Debt Limit increase.

At the conclusion of David Gregory’s interview with President Obama that aired this morning on NBC’s Meet the Press, Obama said this about what his next steps are:

“And if all else fails, if Republicans do in fact decide to block it, so that taxes on middle class families do in fact go up on January 1st, then we’ll come back with a new Congress on January 4th and the first bill that will be introduced on the floor will be to cut taxes on middle class families. And, you know, I– I don’t think the average person’s going to say, “Gosh, you know, that’s a– that’s a really partisan agenda on the part of either the president or Democrats in Congress.” I think people will say, “That makes sense, because that’s what the economy needs right now.”

What the President did not say, but many viewers probably realize, is that the first bill introduced on January 4 will also include a request to raise the debt limit. In fact, it appears that we must now have an immediate vote to raise the debt limit, because the Treasury will only have a couple of weeks in which they can move some things around to avoid default.

The difference in negotiating the debt ceiling increase this time is that the President is going to have several advantages working for him as he faces a disorganized, dejected and demoralized Republican Party.

First, the stock market is going to tank when it opens later this morning. Second, many Americans are soon going to realize that their take home pay is less because tax rates have increased, and they are going to become very angry. The combination of a tanking stock market and an angry citizenry will cut across party lines, giving Obama infinitely more leverage than he had prior to the country falling off the Cliff.

The final outcome will be that Obama gets the tax increases he is dying for (probably above $400,000), a few spending reductions so that his 10 year budget projections can show that annual deficits will steadily decline, and his debt limit increase.

What will be overlooked entirely is that Obama’s projections beyond the 10 year period will continue to show that deficits sky-rocket after 2022 due to continuing demographic changes. The can will most certainly be kicked down the road once again, albeit so far that some people might forget about the can for awhile.

In short, the grand master politician will have worked his will in a way that helps his legacy, by showing that deficits steadily decreased during his second term, at the expense of our children and grand children, who will have to pay for the gargantuan debt that is projected to so rapidly accumulate in the years following Obama’s presidency.

What the President has not calculated nor considered is that his grand plan for growing our economy from the Middle Class outward is a policy and world view that is doomed for failure. While he may think that workers and government help build business, it is the entrepreneurs and business owners who build businesses. Obama will soon see how wrong he is.

If you don’t buy my logic and the inferences I have made about Obama slow-walking all of us right over the Fiscal Cliff, tomorrow I will post a timeline of the negotiations since the election which shows how little time was spent on direct negotiations between the White House and Congress.

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One Response to Slow Walk

  1. h3hancock says:

    Last year’s debt ceiling fiasco shaved 2,000 points off the Dow. On July 21, 2011 the Dow stood at 12,724, but by Aug 10, 2011 the Dow had dropped to 10,719. The market reacted today based on the short term news that a deal was imminent; however, does anyone really think the market is going to hold up well when Washington turns its attention to the debt ceiling fight in the next 2 months?

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