My guess is that if the government shutdown and debt ceiling issues are not resolved by next week the markets will begin to decline significantly. Yesterday the Dow was down almost 140 points. It's one thing for the government to shut down and 800,000 workers to be sent home, but it's quite another for people to see the value of their 401(k) accounts plummet. Most people rely on the market for their retirement; that's where the nest egg is stored. The days when workers had a defined-benefit pension plan as well Social Security are over. Once the stock market begins a day-after-day tumble that will be when the Tea Party folds; it will be at this point that, as Obama likes to say, "the House Republican fever will break." Look for this to happen next week if a deal isn't struck over the weekend.
The deal being discussed once again centers around eliminating the medical device tax portion of the Affordable Care Act. There are also muffled noises from the odious Paul Ryan, chairman of the House Budget Committee, about a grand bargain (re-branded as a "down payment") on the budget which would include cuts to Medicare and Social Security. The medical device tax bargain was shot down by Senate leadership. And as for Paul Ryan, I wouldn't believe anything he says or any plan he even remotely comes in contact with.
The problem for Republicans is now that they have gone ahead and actually gone over the brink any deal that Democrats agree to will reinforce the effectiveness of the Tea Party strategy of "government by crisis," something that Democrats, who now occupy the high ground, are rightly unwilling to do. Republicans are mewling about the need for face-saving, that the Democrats need to toss them a bone -- repeal of the medical device tax -- so that they can ratchet back the shutdown. But, once again, why would Democrats do this? If they do they'll just be insuring that it will happen again.
No, the only way out of the impasse is for a full rout of the Tea Party caucus. And though there are plenty of complaints being voiced by Republican Party elders and governors -- Haley Barbour correctly points out that Obama's approval rating was in free fall prior to the shutdown standoff, but no more -- I think it is going to take consecutive days of the Dow falling by a couple hundred points before the pressure is great enough to force Boehner's hand. A significant development from yesterday is the story that Boehner will not allow a default on the debt, presumably by doing what he has so far be unwilling to do with the government shutdown -- allowing an up or down vote on the floor of the House. The Speaker of the House is getting pummeled in the press now, but I still think there is validity to the idea that he is playing the Tea Party against itself, backing the fire eaters on the government shutdown to expose them and burn them out prior to the larger catastrophe of a default on the debt.
Adam Liptak has a piece about Obama's options to raise money if the House Republicans refuse to raise the debt ceiling. Legal opinion centers on the Constitution's 14th Amendment:
Eric Posner, a law professor at the University of Chicago, said that the meaning if not the words of the Constitution left Mr. Obama with room to act.
“The president has inherent emergency powers,” he said. “It has long been understood that the president should act to protect the country.”
That is the broadest option for Mr. Obama. The second is based on the actual text of the Constitution, though there is a dispute about what the words in question mean. Section 4 of the 14th Amendment says: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
The provision, adopted in 1868, was meant to ensure the payment of Union debts after the Civil War. But it was written in more general terms, as the Supreme Court once noted in passing. “While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War,” Chief Justice Charles Evans Hughes wrote in 1935, “its language indicates a broader connotation.”
On Thursday, Mr. Carney dismissed the argument, popular in some legal circles, that the amendment authorized the president to raise the debt ceiling.
“We do not believe that the 14th Amendment provides that authority to the president,” he said. He added that the meaning of the provision had divided constitutional scholars. That alone, Mr. Carney said, “means that it would not be a credible alternative.”