Back to Where We Started: Boehner Will Have to Go Against His Caucus

The confidence that caused an increase in the Dow on Friday quickly disappeared over the weekend when a Paul Ryan brokered deal to end the government shutdown/debt ceiling standoff fell through.

Republicans are loudly blaming Democrats. Strange stuff since Republicans are the ones that initiated the shutdown and are the ones threatening default.

Apparently the fault lies with the Democrats because they're unwilling to throw the Republicans a bone; in other words, the government shutdown is going to continue and the the world financial system is going to have to get work on building a new foundation because Democrats will not reward Republican blackmail.

As Krugman says in his column this morning, "The Dixiecrat Solution":

[O]ur current state of dysfunction looks like a chronic condition, not a one-time event. Even if the debt ceiling is raised enough to avoid immediate default, even if the government shutdown is somehow brought to an end, it will only be a temporary reprieve. Conservative activists are simply not willing to give up on the idea of ruling through extortion, and the Obama administration has decided, wisely, that it will not give in to extortion.

U.S. Treasury bills can longer be viewed as a completely safe. Republicans want a bone tossed to them so they can maintain extortion as a weapon to enhance their minority status. A potentially catastrophic default on U.S. sovereign debt, one would imagine, renders this weapon inoperable for future use. This is why Democrats are correctly refusing to offer any concessions. Concessions mean we go through this all over again the next time we butt up against the debt ceiling or the government needs to be funded.

The deal being worked on in the Senate is under the care of Susan Collins, Republican of Maine. Jonathan Weisman describes the Collins plan this morning in his story, "Spending Dispute Leaves a Senate Deal Elusive":

The Collins plan would maintain sequestration-level spending through Jan. 15, when formal budget negotiators would be required to complete a House-Senate agreement on spending and taxation over the next decade. That date was already a concession. Ms. Collins, along with Senators Kelly Ayotte of New Hampshire and Lisa Murkowski of Alaska, both Republicans, initially wanted to finance the government for six months at those levels. The initial proposal by Ms. Collins would also have extended the debt ceiling only to Nov. 15, but at the request of Senate Democratic leaders, she and Mr. McConnell pushed it back to Jan. 31.

Having embraced this proposal, Senate minority leader Mitch McConnell is presumably using it as the basis for talks with Senate majority Harry Reid. As of now Democrats want the reduced spending of the sequester to last only through mid-November, not into the new year as Collins proposes.

It's hard to see how the Tea Party controlled House passes the Collins plan. So we're back to where we were at the beginning. Speaker of the House Boehner is going to have to go against the majority of his caucus and release whatever emerges from the Senate for an up-or-down floor vote. This is Krugman's conclusion, and it basically repeats the dynamic from the fiscal cliff negotiations last New Year's Eve.

Senate Democrats need to stand firm. They are who will determine if the neo-Dixiecrat rump will continue to dominate the federal government.