Tuesday, September 17, 2013

The Next 100 Days

Let's look at what's on the country's Fall agenda:

  • 2014 Budget resolution (October 1) and raising the debt ceiling (October 18)
  • Obamacare Exchange launch (October 1)
  • Syria Chemical Weapons (ongoing)
  • Iran Nuclear discussions (possibly beginning late September)
I feel the next 100 days, in other words between now and January 1, will prove to be the most consequential period in Obama's presidency. Let's look briefly at each bullet point:

Budget Resolution and Debt Ceiling

The President sternly lectured the GOP, with particular focus on the "Conservative faction", in his Economic Speech in the Rose Garden yesterday, on the fifth anniversary of the Great Financial Crisis. He said that the deficit is falling at the fastest rate since the end of World War II, and that it makes no sense to shutdown the Government over an attempt to defund Obamacare. He said he would absolutely not negotiate over the debt ceiling. This morning Senate Minority Leader McConnell said that the GOP fully intended to use the debt ceiling issue to get concessions from Dems, because it's the time we have the most leverage.

Apparently the two sides are not even talking. No negotiations are underway. Instead Republican leadership is trying to figure out how to craft a continuing resolution that conservatives will support. The plan to pass a CR at sequester levels, with an amendment defunding Obamacare that the Senate could peel off and reject, was rejected by 43 conservatives, which meant 218 votes in the House was not achievable, and the vote was cancelled. The group of 43 has grown to almost 60: this group of Republicans have vowed not to vote for any CR that funds Obamacare.

So what look like Boehner's options?
  • Write a sequester level CR (until December 15) with a non-severable defunding amendment. This would pass the House with GOP votes, but would die in the Senate.
  • Go ahead with the vote for a sequester level CR with the severable defunding amendment. Likely to fail, since not enough Dems would vote for a sequester level CR to offset the loss of conservative GOP members.
  • Craft a CR at non-sequester levels ($1058 billion, versus $988 billion) with a severable defunding amendment: Likely to pass with mostly Democratic votes, but Boehner would have given away the GOP's one perceived win, the sequester. The caucus revolt would be broad.
  • Convince conservatives to pass a sequester CR, with the severable defunding amendment, saying, like McConnell, that we should save our powder for our point of greatest leverage, the debt ceiling. This would probably work, but the debt ceiling deadline is just 30 days away. Is Boehner ready to go to the brink and over?
Believe Boehner will work hard on bullet 4, but will not be successful. Will he then defy his caucus and the Hastert rule and do a CR at non-sequester levels that passes with mostly Democratic votes? If he does, there will not be a shutdown. If he doesn't, there will be. I'm just not sure. Almost 50-50 in my book. If I had to choose, I would say he would act against his caucus to get a CR done and avoid a shutdown. If he does this, he will have revolt in his caucus; and he will have to get a short term debt ceiling extension with mostly Democratic votes. Here Democrats may use their leverage to make this a one year debt ceiling extension. If Boehner is still Speaker in December, he could do the same thing (one year extension) with the Budget.

If events go the other way, and there is a shutdown on October 1, what then? Again, it all depends on Boehner. If he caves, and quickly puts forward a CR that is passed with Democratic votes, we're back to the same place. Only if Boehner stands with the conservative bloc in an effort to defund Obamacare do we have a serious shutdown and the real possibility of default. As mentioned earlier, I think the President would then exercise his 14th Amendment powers to protect US debt, and order the Fed to keep putting money in Treasury's account, so the Government can pay its bills. This could lead to impeachment hearings.

My guess: There will be a shutdown, either now, or in December. There is also a significant risk (40 %) that we will go to the debt ceiling brink, and the President will have to exercise his 14th Amendment powers. And the result of the shutdown: Obamacare funded; sequester canceled; new budget near Dem levels of $1058 billion, including some new tax revenues from closing loopholes; in other words a rout for the GOP.


Predict a generally successful rollout: some Exchange glitches, mostly in non-participating Red states; but strong enrollment in Blue states, with states like California that have worked the hardest at setting up a good system doing the best. Signups will be good, and will accelerate over time. The young and healthy will enroll in acceptable, quite possibly good numbers. Premiums will mostly come in lower than expected by CBO, and dramatically under GOP forecasts. For a very large number of people, this will be affordable health care. HHS is out today with a dynamite study that documents in detail that 56% of the 41.3 million eligible uninsured will, beginning in 2014, be able to get insurance for less than $100 per month, combining prices and costs for individuals getting coverage through the Exchanges or Medicaid. When the 24 non-participating states finally accept the Medicaid expansion, bringing up to 9 million people newly onto Medicaid, thuis percentage rises to 78% - 78% of the eligible uninsured, or 32.1 million people, will eventually be able to get insurance for under $100 per month.

Given a generally strong rollout, the really tough comparisons will be between Blue and Red states; between those who set up their own state exchanges, and those who didn't; between the 26 states that accepted the Medicaid expansion, and the 24 who did not. These comparisons will make the GOP look not just wrong, but mean-spirited.

We will soon see that the GOP has been wrong on every single major prediction they made for Obamacare. I'm never sure whether voters punish politicians for being stupid; but they do exact vengeance for not getting local constituents as good a deal as other areas. The GOP will suffer big time from their obstinacy on the ACA.

Syria and Iran

I am predicting a generally successful partnership with Russia in identifying, controlling and ultimately destroying Syria's chemical weapons. Working together and with the UN we will begin a peace negotiation process that will probably move in fits and starts, but will be seen as moving in the right direction. Eventually people will give up arguing over whether this diplomatic initiative was planned, or not. What will matter is that it will be working more or less well. The emerging fact set that Washington and Moscow can actually work together to accomplish substantive shared objectives will astonish many and infuriate more than a few neocons.

What I predict will lend resonance and support to this diplomatic initiative will be the soon-to-be-emerging diplomatic conversations with Iran. They like what they see us trying to do in Syria, even though the process may weaken their Alawite ally, Hassad. They will, I think, conclude that America does not only make war; that we are potentially a reliable partner for peace. To move this process forward, Obama will need to make what neocons will consider dangerous concessions: agreeing to Iran's right to enrich, as long as they allow UN inspections to be sure there are no weapons; and agreeing to start the process of removing the sanctions. Obama will take this risk, and a process will begin of integrating Iran into the world community. More on this over time.


By January 1, 2014, the political world will have shifted dramatically on its axis. The world will be getting safer, thanks to our President. And without hardly raising his voice, he will have completed a long term strategy of taking the wind out of GOP budget sails, and proving them almost completely wrong on healthcare. In short, the GOP will have essentially self-destructed.

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