Thursday, December 20, 2012

Broken House

"In a parliamentary system, he would resign and his party would elect a new leader. We don’t do it that way here … usually. But it’s hard to see how Speaker Boehner continues from here — or why he would want to."

-- John Marshal, TPM

Exactly. There is much less reason for Speaker Boehner getting re-elected. This is some phenomenal implosion on GOP side. I thought Boehner would be able to pull some how. But he could not. When Jonathan Chait claimed Boehner did not have votes, I felt he was more partisan there.

At this point few things are clear:

- It is pointless for Obama White House to engage with GOP House. That caucus cannot pass 'any' deal no matter how many concessions President Obama gives (which he has given too many at this point). If President Obama still continues to pursue a deal seriously with GOP (publicly the 'kabuki dance' can continue) American People would start doubting political skills of this newly elected President. Most likely Obama White House gets the message here and will not waste any more political capital in offering any more concessions.

- Unless GOP House simply passes the Senate bill of tax cuts for $250K only, there is no recourse left for House (apart from 'embarrassment forcing' GOP to come back to Boehner plan B again). This means we are going over 'fiscal cliff'. (Need to watch Market reaction.) At least that is what President Obama's real default position will be and should be.

- Speaker Boehner has an option of sacrificing his Speakership and bringing a bill to floor to be passed by Democratic Votes and few Republicans. But I doubt any such 'heroism' on part of Boehner or GOP will happen. 

- Come next year, as many Republicans have noted, President Obama will be in an incredible position to deal with GOP. First by an executive order he will order payroll deductions NOT to increase for income below $250K. He can do that and basically he would halt collection of additional taxes for few months  for non-rich even though Law says something else. That and Market pressure will be enormous for the new House to accept $250K Tax Cut threshold (or say $400K, the revised offer from President). 

- All this means we are going to see absolutely brutal political fight in coming months when Debt Ceiling issue comes to the floor. I believe it would look like how Clinton faced intransigence of Gingrich when USA Government was forcefully closed by House Republicans. 

We all know how all that ended and a sense is Obama has to deliver that kind of 'whacking' to GOP. Basically in last quarter of a century Republican Politicians simply have not behaved responsibly with a Democratic President unless 'the stick' comes on their rear parts. That time is approaching fast for Obama. Today's development was one major stop in that journey.

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