Friday, July 8, 2011

Department of inept messaging

The Huffington Post reports that, in a private meeting, Tim Geithner told congressional Dems that the Fourteenth Amendment "constitutional option" is off the table in debt ceiling talks.

This is a horrible tactical blunder by Geithner and the administration.

Now, of course, the administration would rather negotiate some sort of bargain than invoke the Fourteenth Amendment -- the constitutional option has never been without significant attendant risks. I have little doubt that this is the reason for Geithner's statement -- to communicate to Congress more fully the urgency of finding a deal.

But the Fourteenth Amendment, even if left untouched for now, serves two important purposes. For starters, it's the administration's only significant leverage over Republican negotiators. As long as it remains on the table, Republicans have to worry about pushing their demands too far and forcing the president to ignore the debt ceiling altogether.

Maybe more importantly, the Fourteenth Amendment gives the administration a legally cognizable escape hatch if negotiations fail. There is, as Felix Salmon points out, little chance that Treasury is even capable of halting all payments in time to meet the August 2 deadline -- too many computers to reprogram, too little time. Even if it could, the administration would then be forced to begin withholding Social Security checks and military wages in order to keep up interest payments. You might call that default or you might not, but it's kind of the same thing either way: the US government failing to meet its fiscal obligations. Markets would react accordingly. If this option is preferable to default that's only a commentary on how very bad a default would be.

This nightmare scenario is now less than one month away. No one seems to know how Congress could reach an acceptable, plausible budget deal. The administration needs a plan for the worst-case scenario, and it apparently just took its best option -- the option that goes the furthest towards preserving the status quo, ending the standoff, and preventing anyone from getting stiffed -- out of the game. In the meantime, Obama, rather than searching for an exit, is significantly raising the stakes of the deficit deal.

One final thing: it is worth noting that Geithner's comments came in private, and was intended to prod Congress into action. It probably wasn't meant for public consumption and it's probably not an official statement of administration policy. Now that his statement has escaped into the wild, it does significant damage to the administration's negotiating position going forward, but it hardly precludes Obama from reversing course and declaring the debt ceiling unconstitutional. I wouldn't completely write off the Fourteenth Amendment just yet, if for no other reason than because, come August 2, the administration might have precious few options left.

11 comments:

  1. What an unexpected political blun- http://www.huffingtonpost.com/miles-mogulescu/ny-times-reporter-confirm_b_500999.html

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  2. did you read the article

    if you look at the part of it that wasn't written by "miles mogulescu entertainment attorney" you might find it doesn't say what you think it says

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  3. That's a pretty condescending comment, man.
    Besides (this from the story that's not from Miles Mogulescu, writer and political activist):

    "That's a lobbyist for the hospital industry and he's talking about the hospital industry's specific deal with the White House and the Senate Finance Committee and, yeah, I think the hospital industry's got a deal here. There really were only two deals, meaning quid pro quo handshake deals on both sides, one with the hospitals and the other with the drug industry. And I think what you're interested in is that in the background of these deals was the presumption, shared on behalf of the lobbyists on the one side and the White House on the other, that the public option was not going to be in the final product."

    So, with the public option as with this debt-ceiling deal, they took something off the table, chose not to pursue something, in hopes of moving towards a compromise - instead of holding a hard line and forcing the other side to move.

    This is pretty common for the obama administration, and it fits in to the blog post you wrote the other day. Not sure what your issue is, here.

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  4. "the background of these deals was the presumption, shared on behalf of the lobbyists on the one side and the White House on the other, that the public option was not going to be in the final product."

    i.e. everyone knew there wasn't going to be a public option because it was politically infeasible because Ben Nelson exists

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  5. I mean I've said time and again that I don't think there was any political blunder involved at all insofar as the public option goes. The article you posted is misleading -- it points at a bunch of stuff that everyone already knew about in order to insinuate something that just isn't accurate at all.

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  6. That is in fact the party line about why it was dropped. However:

    "DASCHLE: I don’t think it was taken off the table completely. It was taken off the table as a result of the understanding that people had with the hospital association, with the insurance (AHIP), and others. I mean I think that part of the whole effort was based on a premise. That premise was, you had to have the stakeholders in the room and at the table. Lessons learned in past efforts is that without the stakeholders' active support rather than active opposition, it’s almost impossible to get this job done. They wanted to keep those stakeholders in the room and this was the price some thought they had to pay."

    http://news.firedoglake.com/2010/10/05/the-deal-with-the-hospital-industry-to-kill-the-public-option/

    and THEN, after these comments come to light, he walks back to the old "nah, it was dropped because there wasn't support in the senate." And, as we know, lying/re-phrasing/hastily-issued-apologies-to-cover-actual-revelation never happen in government.

    Suffice it to say, there's enough doubt as to why it was dropped, instead of pushed, to raise the question. Dropping ahead of time in a sort of conciliatory compromise effort, again, certainly fits into the obama admin's MO - see also guantanamo, early DADT, tax cuts for the rich as part of stimulus, etc. etc. etc.

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  7. I mean, Tom Daschle wasn't party to the administration's negotiations and actually admits in the very quote you posted that he's just speculating. That seems relevant.

    FDL has this hilariously stupid habit of posting articles that restate things we already know and that no one contests -- "Obama negotiated with the health care industry!" -- and acting like it's some sort of smoking gun that proves what FDL believes. No, it's really not.

    In fact, if anything, it goes the other way. We actually know a lot about Obama's deal with the health care industry; for instance, there are specific details in the article you posted! So why haven't specific details of the secret pact to murder the public option come to light as well? Well, one possibility is that Obama is employing some sort of complex double-reverse-blind gambit, hiding the Super Secret Deal by leaking details of the Secret deal. The other possibility is that it never existed.

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  8. In his book, Daschle reveals that after the Senate Finance Committee and the White House convinced hospitals to accept $155 billion in payment reductions over ten years on July 8, the hospitals and Democrats operated under two “working assumptions.” “One was that the Senate would aim for health coverage of at least 94 percent of Americans,” Daschle writes. “The other was that it would contain no public health plan,” which would have reimbursed hospitals at a lower rate than private insurers.

    Seems like some pretty specific details, dude.

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  9. "the White House convinced hospitals to accept $155 billion in payment reductions over ten years on July 8"

    Bargain.

    "the Senate would aim for health coverage of at least 94 percent of Americans” "it would contain no public health plan”

    Working assumptions -- not any different than what the article up above termed a "presumption." He separates them chronologically for a reason. Again, this doesn't conflict with anything we know. The White House negotiated a certain level of payment reductions over a political backdrop which made the public option impossible. The reason the public option thing remains an "assumption" and not a "bargaining chip" is that everyone already knew it couldn't happen anyway. Which is why these articles always say "Oh it was just understood" rather than "It was explicitly negotiated away," the latter being what you'd expect if it had been, well, bargained away.

    Also, note what you're saying here: that Daschle wrote a book saying the administration sold out the public option, then gave an interview saying the same thing, and then retracted the interview. Huh? What would be the point, if he just published a book about it?

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  10. At what point did it become clear that the public option was in no way politically viable?

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