The political unknowns of a debt default

at 07:42 AM ET, 07/13/2011

Twenty days remain before the federal government is set to default on its loans unless the debt limit is increased, and the two sides appear to be further apart than at any time in recent weeks.

That distance — on both the rhetorical and policy fronts — has led to a creeping pessimism among elected officials and party strategists that neither side will budge before it’s too late.

“Right now, I’m very worried,” South Carolina Republican Sen. Lindsey Graham told ABC’s Jon Karl about the prospects of a deal. “If I were a betting man, I’d bet no.”

If Graham is right, both parties are headed toward a massive political showdown with neither side certain what lies on the other side.

Polls taken in the runup to the default deadline suggest that the American public is deeply divided on who they might blame if a deal isn’t reached.

In a mid-June Washington Post/ABC News poll, 42 percent said they would blame congressional Republicans more for a default, while 33 percent said President Obama would bear more of the blame. Thirteen percent said both sides would be deserving of blame.

A Bloomberg poll in the field around the same time as the Post/ABC survey showed blame more evenly apportioned; 44 percent said Republicans would deserve more blame for “insisting that any debt ceiling vote be tied to comparable budget cuts” while 41 percent said President Obama would be blamed for “resisting Republican demands on spending cuts.”

Michael Feldman, a Democratic strategist, said that both parties would be in uncharted political waters if a default actually occurred.

“If we fail to reach a deal and that failure leads to more economic distress and anxiety, both parties could feel the pain,” said Feldman. “The political law of unintended consequences applies.”

It’s long been our belief that the very uncertainty that Feldman refers to is the main reason why neither Obama nor congressional Republicans will allow the debt deadline to pass without a deal.

Politicians, as a rule, don’t ever like to do things (or not do them) when the impact of their actions (or inaction) is unknown. That goes double — or more — for an issue that has drawn as much media attention as has this debate over the debt ceiling.

But over the last 48 hours it’s become clear that we may be looking at an immoveable force meeting an inanimate object. Congressional Republicans seem adamantly opposed to adding any additional revenue to the deal while Obama said as recently as Monday that a short-term deal is out of the question.

If neither side gives — and they, of course, could as the deadline approaches and the world economy begins to show increasing signs of anxiety — there will be no deal.

Should that scenario come to pass, the political possibilities — and pain — are nearly infinite.

Obama’s $86 million haul: Obama’s campaign announced early Wednesday that it has raised $86 million for it’s reelection campaign and the Democratic National Committee, setting a new record for off-year fundraising by a president.

In a video posted by Obama’s campaign, campaign manager Jim Messina says the Obama campaign raised more than $47 million, while the DNC raised $38 million to reelect Obama.

Combined, that’s more than the previous record, set by President George W. Bush and the Republican National Committee in 2003.

Obama’s campaign alone did come in short of the record set by Bush , which raised more than $50 million for its campaign committee in one quarter in 2003.

More Iowa polling: Adding New Jersey Gov. Chris Christie, Texas Gov. Rick Perry and former Alaska governor Sarah Palin to the field in Iowa hurts Rep. Michele Bachmann, according to additional results of a poll we detailed Tuesday.

When the Voter/Consumer Research survey adds those un-announced candidates to the mix, Bachmann’s four-point lead over Mitt Romney became a three-point deficit.

It seems pretty unlikely that all three would get in — especially Christie, who has disavowed any interest in running — but it’s pretty clear that each of them eat into the tea party crowd that may be looking for a different kind of candidate in the presidential race.

We wrote Tuesday that Bachmann appears to be benefitting from that the lack of enthusiasm for the other candidates, but Perry and Palin could eat into that.

Meanwhile, a new Quinnipiac poll confirms Bachmann’s momentum nationally, as she trails Romney 25 percent to 14 percent, with no other declared candidate in double digits (Palin is at 12 percent, while Perry is at 10 percent).

Mandel’s big day: It’s a new day for the GOP in the Ohio Senate race, with state Treasurer Josh Mandel (R) set to turn in a massive fundraising report.

Mandel’s campaign committee will announce today that it raised more than $2.3 million in the second quarter — a total that will recast the race from one that was slightly below the radar to a top opportunity for the GOP in 2012.

The 33-year-old Iraq veteran easily outraised Sen. Sherrod Brown (D-Ohio), who brought in $1.5 million for the quarter.

It’s a welcomed change of events for Mandel, whose campaign in recent days has dealt with a video that surfaced of him clapping at an Al Gore rally at Ohio State University during the 2000 campaign. (The candidate insists that he had to be there, becauese he was Ohio State’s student body president.)

Romney criticizes marriage pledge: Romney says he won’t sign the Family Leader’s controversial marraige pledge, with a spokeswoman calling parts of it “undignified and inappropriate.”

The pledge has gained some bad press in recent days for a reference to the family structure of African-American families under slavery, suggesting more black children had two parents then than they do now.

Romney’s decision to not only not sign the pledge, but to repudiate it, makes him the first candidate to stake out that ground. (Previously, Newt Gingrich said he would sign the pledge if significant changes were made.)

It’s also an interesting tack from Team Romney, given the candidate’s more liberal past positions on social issues, including gay rights. In denouncing the pledge, his campaign did assert, though, that he supports traditional marraige.

The only two presidential candidates to sign the pledge before the controversy were Bachmann and former senator Rick Santorum.

NRCC adds five Young Guns: The National Republican Congressional Committee is launching its Young Guns program for the 2012 campaign by putting five GOP candidates at the first level of the program — “on the radar.”

The additions include three repeat candidates and two newcomers. The repeats are businessman Randy Altschuler, who is challenging Rep. Tim Bishop (D-N.Y.), attorney Andy Barr, who is challenging Rep. Ben Chandler (D-Ky.), and former state representative Jackie Walorski, who is running for Rep. Joe Donnelly’s (D-Ind.) open seat as Donnelly runs for Senate.

The other two candidates are businessman Steve Daines, who is running for Senate candidate Rep. Denny Rehberg’s (R-Mont.) seat, and former Rhode Island police superintendent Brendan Doherty, who is running against embattled freshman Rep. David Cicilline (D-R.I.).

Young Guns is a program built to help non-incumbents meet goals set by the NRCC for their campaigns. As they achieve those goals, they advance through the three stages of the program, with the final stage being “Young Gun.”

Fundraising update: Mandel’s big day aside, Democratic Senate candidates turned in a strong performance Tuesday, with several announcing more than $1 million raised in the second quarter.

A quick recap:

* Sen. Jon Tester (D-Mont.) raised $1.2 million.

* Sen. Debbie Stabenow (D-Mich.) raised $1.5 million.

* Rep. Shelley Berkley (D-Nev.) raised $1.2 million and edged Sen. Dean Heller’s (R-Nev.) $1.05 million. (Caveat: Wealthy Democratic primary opponent Byron Georgiou self-funded another $500,000 and has $1.5 million on hand now.)

* Sen. Bill Nelson (D-Fla.) outraised every Republican who is challenging him more than two-to-one, bringing in $1.85 million.

* Sen. Bob Menendez (D-N.J.) raised $2 million.

We are now just two days from the deadline to report second quarter numbers. Keep an eye on The Fix for all the latest.

Fixbits:

Former congressman Alan Grayson (D-Fla.) will face a primary in his return bid for Congress, from former Orlando Police Chief Val Demings.

Herman Cain has the highest “postitive intensity” score in the GOP presidential field.

A GOP state senator is now running for Rep. Thaddeus McCotter’s (R-Mich.) seat, which is interesting since most people think McCotter will revert to running for reelection once his presidential campaign is finished.

Must-reads:

Dewhurst casts a long shadow over Texas Senate race” — Ross Ramsey, Texas Tribune

What Reagan Can Teach Bachmann Supporters” — Conor Fridersdorg, The Atlantic

Pawlenty’s pastor problem” — McKay Coppins, The Daily Beast

Rick Perry has ‘huge’ opening” — Philip Rucker and Perry Bacon Jr., Washington Post

 
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