August 12, 2013

Democrats on the Hill closely read the Wall Street Journal’s Stephen Moore, because they believe his columns are a decent guide to the thinking among GOP-aligned business establishment types and even in some cases among GOP leaders who want to float trial balloon ideas they are unwilling to venture publicly.

And so Dems think today’s column by Moore contains some interesting clues as to how Republicans and business leaders are thinking about this fall’s looming battles over the debt limit and funding the government. Short version: they are hoping to avoid it.

Moore’s column is mostly devoted to declaring the sequester cuts a huge success. He notes that the big untold story in Washington is that the budget is shrinking and that the deficit is falling (try telling that to Republican officials who remain committed to the falsehood that the deficit continues to grow). But buried at the end of the column is the really important point:

But the fiscal story isn’t all rosy. The major entitlements remain on autopilot and are roaring toward insolvency…So the fiscal progress reported here is no excuse for complacency. But it does call into question the wisdom of a government-shutdown confrontation over the budget this fall or a debt-default showdown that runs the risk of suspending the spending caps and sequester and revitalizing an increasingly irrelevant president.

Liberals had hoped that re-electing Mr. Obama, the most pro-spending president since LBJ, would unleash another four years of Great Society government expansion. Instead, spending caps and the sequester are squashing these progressive dreams. Welcome to the new fiscal reality in Washington. All Republicans need to do is enforce the budget laws Mr. Obama has already agreed to. Entitlement reforms will come when liberals realize that the unhappy alternative is to allow every program they cherish to keep shrinking.

Buried in this column is a warning to Republicans: don’t get drawn into a confrontation over the debt limit or a potential government shutdown, because it will be destructive to the GOP and play into the hands of Obama and Democrats. What Moore is really saying here is that Republicans have a way to avoid such an outcome: they should point to the sequester cuts to declare victory, and leave it at that.

But it’s hard to see House conservatives accepting this logic. Indeed, there are already signs that, thanks to the push from the right for epic confrontations over the debt limit and Obamacare, House Republicans may not be able to pass even something that continues to fund the government temporarily at sequester levels. We already saw hints of that in the House GOP leadership’s need to yank the transportation bill off the floor. And one well known Republican is warning that this could happen again this fall:

Congress could simply keep the government on autopilot at current funding levels, continuing the automatic spending cuts that kicked in last March. One veteran Congress-watcher says passing it in the 435-member House might again require violating Hastert’s practice.

“What Boehner has done successfully in the past, is you have to write it to levels that actually get support in the Senate and get some Democrats in the House,” said former Rep. Steve LaTourette, R-Ohio.

Some conservatives among the House’s 233 Republicans may “then squeal…,” LaTourette said, “but if they’re not going to supply the votes to get to 218 in a way that makes everybody in the (GOP) conference comfortable, then that’s the strategy that’s left to them. And I think that’s probably where we’re headed.”

And so, in this scenario, if there aren’t enough House Republicans to pass something funding the government at current levels, the GOP leadership would have to break the Hastert Rule (which, by the way, is fictional) and pass funding with mostly Dems.

As Moore notes, however, Republicans could declare the sequester a victory and avoid the self inflicted wounds a debt limit or government shutdown debacle would inflict. And in truth, the sequester is in some ways a victory for Republicans.

The problem is that it’s the only meaningful win they have enjoyed in the big battles over the size and scope of government that have defined the Obama era. So for conservatives it’s far from enough. And at any rate, Republican officials remain committed to the view, based largely on distortion and misdirection, that the deficit must be dealt with urgently in the short term. Indeed, if Republican leaders find themselves met with a continuing conservative revolt over spending this fall, they are partly to blame for it, having fed the base delusions on multiple levels about spending for literally years now. Which is to say, again, that Republican leaders have made this mess for themselves, and they well may need Nancy Pelosi to help get them out of it.

**************************************************************

UPDATE: Politico notes that Wall Street should be very worried about a crisis this fall:

Wrap all this potential dysfunction together and there is a real chance that the fall of 2013 will be more like the summer of 2011, when a near-miss on the debt ceiling led to a ratings agency downgrade, a huge sell-off in the stock market and yet another hit to an economy that might otherwise be heating up nicely.

Greg Sargent writes The Plum Line blog, a reported opinion blog with a liberal slant -- what you might call “opinionated reporting” from the left.
Continue reading