Tag: Congressional Game of Chicken

Cross posted from The Stars Hollow Gazette

Sequestration wasn’t going to happen according to Pres. Barack Obama, but it did. Mostly, because he was naive enough to think that the Republicans would cave because he dangled cuts to Social Security under there noses. Well, that didn’t work out so well. The Tea Party hard liners were adamant about no new taxes and House Speaker John Boehner (R-OH), eager to hold onto his gavel, stood his ground.

We now move to the next manufactured budget crisis on the agenda: the continuing resolution (CR) to keep the government lights on after March 27. If you think that is going to be smooth sailing then you aren’t paying attention. The fight over sequestration could very well lead to a government shutdown:

An aide to Speaker John Boehner (R-OH) said GOP leaders haven’t yet settled on an approach to funding the government. And House Republicans are divided enough that it’s unclear whether they could pass a stripped-down appropriations measure to begin with. Many Republicans would like to use the appropriations process to mitigate sequestration’s defense cuts, or eliminate them by cutting more deeply into domestic spending – a non-starter for Democrats. [..]

“We have had a law that’s in effect; it’s called sequestration,” (Senate Majority Leader Harry Reid (D-NV) said. “Those cuts will go forward. They’re all cuts. I think we need some revenue to take the pressure off everybody. The American people agree with me. And until there’s some agreement on revenue, I believe we should just go ahead with the sequester.”

In other words, Democrats won’t allow Republicans to use a continuing resolution to enshrine sequestration’s lower overall spending requirement by apportioning the cuts in a less indiscriminate way.

Pres. Obama thinks a government shut down can be avoided believing that the Republicans will do the “right thing” and agree to a CR that “adhere to the spending levels they agreed to during the debt limit fight in 2011“:

If House Republicans can’t pass a government funding bill that sets overall spending at levels agreed to in the Budget Control Act – funding that would automatically be reduced because of sequestration – then the government will shutdown and the pressure Republicans feel to cut a deal that both averts sequestration and keeps the government running will intensify. [..]

Thus, if Republicans try to rejigger the sequestration cuts such that they make the lower overall spending levels permanent, but rescind its indiscriminate cutting mechanism and thus remove the pressure on Congress to pass a balanced alternative, they’ll set off a government shutdown fight.

But if Republicans can pass a government funding bill that adheres to spending levels agreed to and set in 2011, then the government will stay open and the fight over sequestration will continue indefinitely.

However the fight over ongoing funding of the government shakes out, Obama said he hopes public pressure convinces Republicans to relent on revenues so that he and Congress can replace sequestration with an alternative deficit reduction plan.

First, the Republicans don’t care about public pressure Second, if Pres. Obama isn’t aware of that then he hasn’t been paying attention and his prediction that the government won’t shut down is as premature as the one about sequestration not happening.

“We agreed to a certain amount of money that was going to be spent each year, and certain funding levels for our military, our education system, and so forth,” Obama said. “If we stick to that deal, then I will be supportive of us sticking to that deal.”

But the implementation of sequestration, particularly its indiscriminate cuts to defense programs, calls into question whether House Republicans will be able to honor the government funding deal without relying on a significant number of Democratic votes. Republicans want to restore some funding to defense programs to mitigate sequestration’s impact on GOP priorities. And that could leave Boehner to choose between keeping his conference united – and thus passing a continuing resolution that the Senate and White House reject – or ignoring internal GOP politics and teaming up with Democrats to keep the government open.

The Republicans in the House have other ideas and have already started planning their end run around the cuts in sequestration they didn’t like by eliminating them in the CR. According to The Hill, they’ve already introduced a funding bill that will “cushion the Pentagon and other agencies from the blow of $85 billion in sequester spending cuts”

It would shift about $10.4 billion into the Pentagon’s operations and maintenance account by cutting other defense accounts, including a $3.6 billion reduction in personnel funds, $2.5 billion less in research and development, and $4.2 billion less in equipment procurement. [..]

In total, the bill includes $518 billion for defense, $2 billion more than President Obama requested this year but the same as in 2012. It assumes the 13 percent cut to non-exempt budget accounts called for by sequestration will occur.

The Republicans are trying to undo the cuts they don’t like while preserving the cuts that the Democrats don’t like and using the CR as an end run around the law.

The Democrats are still reviewing the proposal and have said that they would insist on the same “cushion” non-defense appropriations. There are two scenarios for how this “drama” will play out:

A fight ensues between the House and Senate over the cushions for the Republican’s pet cuts and the Democratic opposition without similar concessions leading to a government shutdown;

Harry Reid gets his orders from the White House, fearing the repercussions of a government shut down, and he puts the House bill up for a vote and it passes with minimum Democratic support.

I’m betting on the latter because Barack already said so.

Cross posted from The Stars Hollow Gazette

MSNBC’s “The Last Word” guest host Ezra Klein translates Federal Reserve Chairman Ben Bernanke’s testimony before the Senate Banking Committee lecturing Congress that the austerity of sequestration is a really bad idea for the economy:

“Given the still-moderate underlying pace of economic growth, this additional near-term burden on the recovery is significant,” Bernanke told his students, who included a number of right-wing Republican diehards, such as Senator Bob Corker, of Tennessee, and Patrick Toomey, of Pennsylvania. “Moreover, besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run.”

Translated from Fed-speak, that meant that congressional Republicans have got things upside down. Bernanke has warned before about the dangers of excessive short-term spending cuts. But this was his most blunt assertion yet that Mitch McConnell, John Boehner, et al. should change course. “To address both the near- and longer-term issues, the Congress and the Administration should consider replacing the sharp, frontloaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run,” Bernanke said. “Such an approach could lessen the near-term fiscal headwinds facing the recovery while more effectively addressing the longer-term imbalances in the federal budget.”

Here is Ezra’s translation of Chairman Bernanke’s “Yoda Speak”:

Cross posted from The Stars Hollow Gazette

“Just pass a one sentence bill that repeals sequestration” an idea that was posed by Up with Chris Hayes host Chris Hayes in the last segment of his Sunday show. So why isn’t that “on the table?”

Sequestration, when it was proposed, was supposed to be such a terrible economic idea that it would force Democrats and Republicans to come to “reasonable” agreement about the economy and implementing sound economic policies that would stimulate economic growth, create jobs and, in the long term reduce the deficit/debt that our elected officials and the traditional main stream media are agonizing over. The truth of the matter is, that regardless who is to blame (my opinion both parties are equally responsible), neither side wants to just end this insanity, not even Pres. Barack Obama, who “refuses to kill sequestration“, as William K. Black, former bank regulator and professor of law and economics, points out:

President Obama has revealed his real preferences in the current blame game by not calling for a clean bill eliminating the Sequester. It is striking that as far as I know (1) neither Obama nor any administration official has called for the elimination of the Sequester and (2) we have a fairly silly blame game about how the Sequester was created without discussing the implications of Obama’s continuing failure to call for the elimination of the Sequester despite his knowledge that it is highly self-destructive.

The only logical inference that can be drawn is that Obama remains committed to inflicting the “Grand Bargain” (really, the Grand Betrayal) on the Nation in his quest for a “legacy” and continues to believe that the Sequester provides him the essential leverage he feels he needs to coerce Senate progressives to adopt austerity, make deep cuts in vital social programs, and to begin to unravel the safety net. Obama’s newest budget offer includes cuts to the safety net and provides that 2/3 of the austerity inflicted would consist of spending cuts instead of tax increases. When that package is one’s starting position the end result of any deal will be far worse.

In any event, there is a clear answer to how to help our Nation. Both Parties should agree tomorrow to do a clean deal eliminating the Sequester without any conditions. By doing so, Obama would demonstrate that he had no desire to inflict the Grand Betrayal.

digby noticed Hayes’ comment, too:

As I’ve said a thousand times, this was not written in stone, it did not come down from Mt Sinai, it was an agreement that was struck to save face in the moment and it can be unstruck at any time. There is nothing absolutely requiring the congress to go through with this. There is some discussion that the only way this can happen is if the people see that government services they need are being affected and then put pressure on the government to end this game of chicken. Maybe that’s true. But let’s not kid ourselves that it isn’t a purely political bind these people have gotten themselves into. This goes back to the ill-fated 2011 Grand Bargain negotiations in which both the White House and the Republicans in the House bungled things so badly that we are still dealing with the fallout.

H/T Atrios

Joining Chris and Prof. Black for a lively panel discussion of “the anatomy of the sequester” were Neera Tanden, president and CEO for Center for American Progress; Steve Ellis,  vice president of Taxpayers for Common Sense; and Phyllis Bennis, director of the New Internationalism Project at the Institute for Policy Studies.

Cross posted from The Stars Hollow Gazette

Senate Majority Leader Harry Reid has a headache, Filibuster Reform.

Filibuster reform has become a headache for Senate Majority Leader Harry Reid (D-Nev.).

Reid is stuck in the middle, between liberal senators pushing hard for drastic reform and senior Democrats balking at changing the culture of the upper chamber. [..]

Reid has begun to show signs of impatience with Senate Republican Leader Mitch McConnell (Ky.), with whom he has been negotiating for weeks. He said Tuesday that he and McConnell have made progress, but added, “[W]e’ve got a long way to go.”

The Nevada Democrat said he would give Republicans another 24 to 36 hours to agree to filibuster reform and then trigger the so-called nuclear option. This controversial tactic would allow him to change the Senate rules with a simple majority vote.

Sen.  Reid insists that reform is at the top of his agenda, even though it has been delayed almost three weeks to give time for negotiations with the recalcitrant Republican minority who have used the current rule to virtually halt government. While progressive Democrats back the reforms put forth by Senators Jeff Merkley (D-OR) and Tom Udall (D-NM), including “talking filibuster,” Sen. Reid has put forth his own proposal as a compromise in an attempt to placate six more senior Democrats who are reluctant to pass reform with a simple majority vote:

The proposals include eliminating filibusters on motions to proceed, and an idea proposed by Sen. Al Franken (D-Minn.) that would shift the burden onto the minority by requiring 41 members to vote in order to maintain a filibuster, rather than requiring the majority to find 60 votes to end a filibuster. [..]

Sen. Carl Levin (D-Mich.), a co-sponsor of the scaled-back, bipartisan filibuster reform package, also said he supports putting some onus on the minority to keep a filibuster going. [..] Levin said he continues to have problems with a nuclear option. [..] Levin said he supports getting rid of the filibuster on the motion to proceed, but again held out hope for an agreement. [..]

One of the proponents of stronger filibuster reform, Sen. Tom Udall (D-N.M.), took to the floor a little later to demand that the Senate not take half measures. [..] Udall suggested the constitutional option need not actually be invoked. [..] But he added that if Republicans don’t agree, Democrats have a responsibility to act.

If there is any hope of the Senate passing comprehensive immigration reform and gun violence prevention, along with education, infrastructure, the Violence Against Women Act, veterans aid, climate change, tax loopholes, voter suppression and the farm bill, ending filibuster gridlock is a must.

The question of whether Democrats can get this done was the topic of discussion this past weekend on Up with Chris Hayes. Host Chris Hayes was joined by Sen. Tom Udall (D-NM); Patrick Gaspard, executive director of the Democratic National Committee; Neera Tanden, president of the Center for American Progress; and Jen Psaki, former Obama White House deputy communications director.

Filibuster

TheMomCat–

• Congressional Game of Chicken: Fixing Filibuster, Part II Tue Nov 27, 2012 at 06:06:34 AM EST
• Congressional Game of Chicken: Fixing Filibuster, Part III Tue Dec 04, 2012 at 20:13:20 PM EST
• Congressional Game of Chicken: Fixing Filibuster, Part IV Fri Jan 04, 2013 at 13:39:35 PM EST
• Congressional Game of Chicken: Fixing Filibuster, Part V Fri Jan 11, 2013 at 03:32:29 AM EST
• Congressional Game of Chicken: Fixing Filibuster Sign the Petition, Part VI Wed Jan 16, 2013 at 23:20:31 PM EST

Will Harry Reid kill real filibuster reform? Vote is tomorrow, January 22.

1/21/2013 10:00am by Gaius Publius

(W)e should be calling Harry Reid’s office today and tomorrow (early morning EST):

    Harry Reid:

    (202) 224-3542

Reid also has four Nevada offices, all with phones. If you call:

1. Tell him (politely) to act like a Democrat instead of a Beltway insider & Mitch McConnell’s virtual golfing buddy.
2. Tell him to support the Merkley-Udall proposal and nothing less.
3. Say if he doesn’t get real filibuster reform passed in the Senate, he owns the silent filibuster for the next two years. Every Republican obstruction will be his obstruction as well.

Let’s give him naming rights if he fails us like he did two years ago. The Senator Harry Reid Silent Filibuster™, brought to you by Senator Harry Reid, the Republicans’ new best friend in the Senate.

Other Dem senators who may be wavering:

Baucus	Max	MT	D	(202) 224-2651
Boxer	Barbara	CA	D	(202) 224-3553
Feinstein	Dianne	CA	D	(202) 224-3841
Heitkamp	Heidi	ND	D	(202) 224-2043
Hirono	Mazie	HI	D	(202) 224-6361
Leahy	Patrick	VT	D	(202) 224-4242
Reed	Jack	RI	D	(202) 224-4642

Make the call, please. Today… early (EST). Make several. I’d be shocked if the folks in the $800 suits hit the chambers anytime before 10 or 11am – gotta have time for those lobbyist breakfasts and all.

Harry Reid seeks middle path on filibuster

By MANU RAJU, Politico

1/17/13 6:41 PM EST

The contents of a filibuster reform package are not yet finalized, sources say, and Reid is still trying to cut a bipartisan deal with Senate Minority Leader Mitch McConnell (R-Ky.) to avert a partisan showdown on the floor next week. But Reid seems to have discarded one of the more far-reaching proposals sought by liberals – forcing senators to actually carry out a filibuster – because of fears that the plan would effectively kill the potent delaying tactic used frequently by the minority party.

…

Reid’s most pressing demand is to eliminate filibusters used to prevent debate on legislation from starting. He also wants to end filibusters used to prevent the Senate from convening conference committees with the House. And he’s eager to pare back the use of filibusters on certain presidential nominations.

Senators could still filibuster in any number of situations under this approach. But Reid is weighing whether to shift the burden of the filibuster from those who are seeking to defeat it onto those who are threatening to wage one. Rather than requiring 60 votes to break a filibuster, Reid is considering requiring at least 41 senators to sustain a filibuster. That would amount to a subtle shift to force opponents to ensure every senator is present in order to mount a filibuster.

…

Still, what Reid is considering would fall short of a plan pushed by Sens. Merkley, Tom Udall (D-N.M.) and Tom Harkin (D-Iowa), who want to require anyone who is threatening to filibuster to actually carry one out on the floor – much like in the infamous movie classic, “Mr. Smith Goes to Washington.”

Under their plan, if a filibuster is not defeated – but at least 51 senators want to overcome the delay tactic – senators who are obstructing would go to the floor and carry out the talk-a-thon. But once the senators stop talking, the Senate could overcome the filibuster with just 51 votes, rather than the 60 that is currently required.

Republicans and a handful of Democrats oppose this approach because they fear that it would effectively usurp the power of an individual senator to filibuster and effectively lower the threshold to overcome a filibuster from 60 votes to 51.

To repeat-

(W)e should be calling Harry Reid’s office today and tomorrow (early morning EST):

    Harry Reid:

    (202) 224-3542

Reid also has four Nevada offices, all with phones. If you call:

1. Tell him (politely) to act like a Democrat instead of a Beltway insider & Mitch McConnell’s virtual golfing buddy.
2. Tell him to support the Merkley-Udall proposal and nothing less.
3. Say if he doesn’t get real filibuster reform passed in the Senate, he owns the silent filibuster for the next two years. Every Republican obstruction will be his obstruction as well.

Let’s give him naming rights if he fails us like he did two years ago. The Senator Harry Reid Silent Filibuster™, brought to you by Senator Harry Reid, the Republicans’ new best friend in the Senate.

Other Dem senators who may be wavering:

Baucus	Max	MT	D	(202) 224-2651
Boxer	Barbara	CA	D	(202) 224-3553
Feinstein	Dianne	CA	D	(202) 224-3841
Heitkamp	Heidi	ND	D	(202) 224-2043
Hirono	Mazie	HI	D	(202) 224-6361
Leahy	Patrick	VT	D	(202) 224-4242
Reed	Jack	RI	D	(202) 224-4642

Make the call, please. Today… early (EST). Make several. I’d be shocked if the folks in the $800 suits hit the chambers anytime before 10 or 11am – gotta have time for those lobbyist breakfasts and all.

Cross posted from The Stars Hollow Gazette

Time is getting short to reform the filibuster rule of the Senate. The debate and vote to reform will take place January 22, the day after Pres. Obama’s inauguration for his second term and before hearing on the president’s nominees for important cabinet vacancies.

Sign the Petition

WASHINGTON — With just a week left to influence the looming debate over filibuster reform, Sens. Jeff Merkley (D-Ore.), Tom Udall (D-N.M.) and Elizabeth Warren (D-Mass.), along with the progressive Daily Kos community, launched a petition on Monday to drum up support for a proposal that would eliminate the silent filibuster.

The hope is to maintain pressure for reform that would include the talking filibuster. Merkley, Udall and Sen. Tom Harkin (D-Iowa) have been pushing one such approach, which would still allow the minority to filibuster legislation but would require members to do so by actually standing and speaking on the floor. The Merkley-Udall-Harkin plan also seeks to streamline conference committee assignments and nominations, and eliminate the motion to proceed — a motion typically offered by the majority leader to bring up a bill or other measure for consideration.

Their proposal is competing with a scaled-back bipartisan plan introduced by Sens. Carl Levin (D-Mich.) and John McCain (R-Ariz.) and backed by six other senators. In a statement accompanying the petition, Merkley argues that “other proposals out there don’t go far enough, and won’t change the culture of obstruction that paralyzes the Senate.”

“Without a talking filibuster, obstructionist Senators will still be able to silently stall any piece of legislation they want without any accountability,” he writes.>

Filibuster reform will be first thing on the docket when the U.S. Senate convenes on Jan. 22.

Under the U.S. Constitution, a majority of each house have the power to change its rules on the first day of the legislative session by a simple majority vote. The Senate convened the first session of the 113th Congress on Jan. 3 – and the three Democratic senators introduced SR 4. Here’s what it would do:

  Clear the path to debate – Those objecting to legislation would only have one opportunity to filibuster legislation. Specifically, the ability to bring up a bill for simple debate (the motion to proceed) would not be subjected to a filibuster.

   Restore the “talking filibuster” – Those wishing to filibuster legislation must actually hold the floor and be required to actually debate the legislation. It would end “silent” filibusters where one senator quietly objects and is not required to take the Senate floor.

   Put filibuster supporters on record – 41 senators would have to affirmatively vote to continue debate, rather than forcing 60 senators to vote to end debate.

   Expedite nominations – The process for approving nominations would be streamlined, shortening the amount of time required for debate once a nomination is brought to the Senate floor.

Historically, the filibuster was intended to protect the minority party’s interests on extraordinary issues, and it was rarely invoked. But in today’s contentious political climate the filibuster has been used in record numbers (nearly 400 times in the 112th Congress) to block votes and debate, and the requirement for 60 votes to end a filibuster has proved virtually insurmountable. For example, much of the legislation organized labor has fought for to restore collective bargaining rights and to create jobs  – from the Employee Free Choice Act, to the Bring Jobs Home Act, the American Jobs Act, and many more – never received a Senate floor vote because of the filibuster threat, even though the legislation had majority support from senators.

For these reasons, SR 4 is endorsed by the AFL-CIO and some 50 progressive groups – in a coalition called Fix the Senate Now.

As our friend, Gaius Publius at AMERICAblog says:

This is my reminder – you can help hold that group together. We need strong filibuster reform, not a weaker version. Call your senator if you believe in this (click to find the phone number).

In addition, call these senators – they are the Democrats flirting with “well, I don’t really know” when the last public list of supporters was announced:

• Baucus Max MT D (202) 224-2651
• Boxer Barbara CA D (202) 224-3553
• Feinstein Dianne CA D (202) 224-3841
• Heitkamp Heidi ND D (202) 224-2043
• Hirono Mazie HI D (202) 224-6361
• Leahy Patrick VT D (202) 224-4242
• Reed Jack RI D (202) 224-4642

As of last report, these are the Democratic waverers (and shame on them). Please make the calls, now and daily (if you can) until January 22.

Sign the Petition

Cross posted from The Stars Hollow Gazette

Last night (Jan. 1) the House of Representatives voted to make permanent the Bush/Obama tax cuts on all but the top 1% of tax payers and increasing taxes on on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut. With the bill set to be signed by Pres. Barack Obama, Congress and the White House move to the next manufactured crisis that this bill set up, the draconian sequester cuts to defense and non-defense spending and the debt ceiling, also a manufactured “crisis.” The bill did hold off those draconian cuts for two months, just in time for spending to hit the debt ceiling.

Pres. Obama made it clear in his address after the passage of the “Fiscal Cliff” bill, that he would not allow the debt ceiling to be used as a bargaining chip in negotiations over spending.

“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. We can’t not pay bills that we’ve already incurred.”

“If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic – far worse than the impact of a fiscal cliff.”

This bill was not the best deal as this article on the behind the scenes Senate dealings by Ryan Grym at Huffington Post tells it:

The White House sent Reid a list of suggested concessions as his staff debated what to send back to McConnell. Reid looked over the concessions the administration wanted to offer, crumpled up the paper and tossed it into his fireplace. The gesture was first reported by Politico and confirmed to HuffPost by sources with knowledge of it, who noted that Reid frequently keeps his fire going and is fond of feeding a variety of proposals to it.

Reid’s staff then called McConnell’s office with a simple message: Our last offer stands. There will be no further concessions. McConnell took to the Senate floor, complaining that he had no “dance partner” in Reid, and called Vice President Joe Biden, a man he assumed would be more willing to give. McConnell was right.

Perhaps the most important concession he wrangled from the administration, which Reid had been unwilling to make, was a two-month extension of the sequester, automatic cuts to defense spending and domestic programs that were supposed to be triggered Jan. 1. Reid wanted much more, worried that the two-month period will simply set up another colossal showdown that will also rope in the debt ceiling and funding for the government. “The deal itself is OK, but sets up Democrats for [a] worse fight and strengthens Republicans’ hand for what they really want: cuts,” said a Democratic source close to Reid. “Biden gave away the store on timeline. Two months and we’re back at this and in worse shape.”

President Barack Obama has vowed not to negotiate over the debt ceiling, but Democrats in the Senate are worried that they’ve now lost their leverage. “Everyone knew taxes would be raised on high earners,” said the Democratic source. “So with that out of the way, what do we bargain with?”

All they had to do was let the tax cuts end and pass new tax bill that included extension of unemployment benefits, ended unconstitutional the debt ceiling nonsense and added some stimulus to really create jobs, since we all know that tax cuts don’t. But no, Pres. Obama had to have this done and kept backing away from his so-called “line in the sand.”

If anyone believes at this point that Obama stand up to the threats of a government shut down by Republicans refusing to raise the debt ceiling without serious concessions on Medicare and Social Security, consider these three reasons to doubt from Jon Walker at FDL Action

1) Failure to stick to previous lines in the sand – In past negotiations Obama has failed to stick to his previous lines in the sand. Obama did not stick to his demand that the Bush tax cuts end for income over $250,000. Similarly despite saying he would not play games with the debt ceiling, Obama seemed to treat it as just another bargain chip when trying to get a deal with John Boehner.

2) Dismissing unilateral action – The Obama administration has dismissed unilateral action to address the debt ceiling. Doing something like invoking the 14th amendment would probably be the easiest way to defuse the fight, but the administration has declared that “not an option.” Even if the Obama team didn’t think it was a legally viable solution by completely removing the threat it has weakened its bargaining position.

3) Allowing the creation of a new super cliff in two months – When WP Joe Biden took over the negotiations from Sen. Harry Reid the major concession he made was to have only a two month delay of the sequestration cuts instead of a one year delay.

Meanwhile the “irrational exuberance” of Wall St’s feral children over the tax deal abounds with the markets closing on a high. Let’s see what happens in two months when we sit on the edge of another cliff.

Cross posted from The Stars Hollow Gazette

Last night the House of Representatives voted to make permanent the Bush/Obama tax cuts on all but the top 1% of tax payers and increasing taxes on on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut. With the bill set to be signed by Pres. Barack Obama, Congress and the White House move to the next manufactured crisis that this bill set up, the draconian sequester cuts to defense and non-defense spending and the debt ceiling, also a manufactured “crisis.” The bill did hold off those draconian cuts for two months, just in time for spending to hit the debt ceiling.

Pres. Obama made it clear in his address after the passage of the “Fiscal Cliff” bill, that he would not allow the debt ceiling to be used as a bargaining chip in negotiations over spending.

“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. We can’t not pay bills that we’ve already incurred.”

“If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic – far worse than the impact of a fiscal cliff.”

This bill was not the best deal as this article on the behind the scenes Senate dealings by Ryan Grym at Huffington Post tells it:

The White House sent Reid a list of suggested concessions as his staff debated what to send back to McConnell. Reid looked over the concessions the administration wanted to offer, crumpled up the paper and tossed it into his fireplace. The gesture was first reported by Politico and confirmed to HuffPost by sources with knowledge of it, who noted that Reid frequently keeps his fire going and is fond of feeding a variety of proposals to it.

Reid’s staff then called McConnell’s office with a simple message: Our last offer stands. There will be no further concessions. McConnell took to the Senate floor, complaining that he had no “dance partner” in Reid, and called Vice President Joe Biden, a man he assumed would be more willing to give. McConnell was right.

Perhaps the most important concession he wrangled from the administration, which Reid had been unwilling to make, was a two-month extension of the sequester, automatic cuts to defense spending and domestic programs that were supposed to be triggered Jan. 1. Reid wanted much more, worried that the two-month period will simply set up another colossal showdown that will also rope in the debt ceiling and funding for the government. “The deal itself is OK, but sets up Democrats for [a] worse fight and strengthens Republicans’ hand for what they really want: cuts,” said a Democratic source close to Reid. “Biden gave away the store on timeline. Two months and we’re back at this and in worse shape.”

President Barack Obama has vowed not to negotiate over the debt ceiling, but Democrats in the Senate are worried that they’ve now lost their leverage. “Everyone knew taxes would be raised on high earners,” said the Democratic source. “So with that out of the way, what do we bargain with?”

All they had to do was let the tax cuts end and pass new tax bill that included extension of unemployment benefits, ended unconstitutional the debt ceiling nonsense and added some stimulus to really create jobs, since we all know that tax cuts don’t. But no, Pres. Obama had to have this done and kept backing away from his so-called “line in the sand.”

If anyone believes at this point that Obama stand up to the threats of a government shut down by Republicans refusing to raise the debt ceiling without serious concessions on Medicare and Social Security, consider these three reasons to doubt from Jon Walker at FDL Action

1) Failure to stick to previous lines in the sand – In past negotiations Obama has failed to stick to his previous lines in the sand. Obama did not stick to his demand that the Bush tax cuts end for income over $250,000. Similarly despite saying he would not play games with the debt ceiling, Obama seemed to treat it as just another bargain chip when trying to get a deal with John Boehner.

2) Dismissing unilateral action – The Obama administration has dismissed unilateral action to address the debt ceiling. Doing something like invoking the 14th amendment would probably be the easiest way to defuse the fight, but the administration has declared that “not an option.” Even if the Obama team didn’t think it was a legally viable solution by completely removing the threat it has weakened its bargaining position.

3) Allowing the creation of a new super cliff in two months – When WP Joe Biden took over the negotiations from Sen. Harry Reid the major concession he made was to have only a two month delay of the sequestration cuts instead of a one year delay.

Meanwhile the “irrational exuberance” of Wall St’s feral children over the tax deal abounds with the markets closing on a high. Let’s see what happens in two months when we sit on the edge of another cliff.

Up Date 16:33 EDT: Republican Senators have taken Social Security off the table as part of the negotiations for the “fiscal cliff.”

Cross posted from The Stars Hollow Gazette

With the deadline for the expiration of Bush Tax cuts and austere spending cuts, the Senate negotiations have reached a stalemate. At the last minute, the Republicans demanded significant cuts to Social Security benefits. House Majority Leader Harry Reid (D-NV), who was described as  “shocked and disappointed” and this may well be the “poison pill” that ends the charade of “fiscal cliff” talks.

The development came after a long weekend of negotiations during which the two sides had been making progress.

The aide said Democrats had shown flexibility on the major sticking points involving taxes. They had not ruled out maintaining the tax on inherited estates at the current low rate, as Republicans prefer. And they had been open to a deal that would allow taxes to rise on many fewer wealthy households than President Obama had proposed. Republicans were seeking tax increases only on income higher than $400,000 or $500,000 a year, while Obama wanted to set the threshold at $250,000 a year.

But Obama was pressing for $30 billion in new spending to keep unemployment benefits flowing to the long-term unemployed, and he wanted to postpone roughly $100 billion in automatic spending cuts set to hit agency budgets next months. In exchange for those items, Senate Minority Leader Mitch McConnell (R-Ky.) insisted Sunday that Democrats put cuts to Social Security benefits on the table, noting that Obama had offered to do so as part of the big deficit-reduction package he had been negotiating with House Speaker John A. Boehner (R-Ohio.)

Republicans declined to comment on the new offer, but noted that Obama endorsed the adjustment, known as chained CPI, again Sunday, in an interview on NBC’s Meet the Press.

President Obama suggested that he was open to the highly unpopular proposal to cut increases to Social Security by linking it to the “chained CPI” in the context of a larger deal.

The other “monkey wrench” that McConnell threw into the mix was estate taxes which are scheduled to increase to the Clinton level of 55% on estates over one million dollars. The estate tax currently exempts the first $5 million of inheritance and taxes the remainder at 35 percent, which the Republicans want to keep. Pres. Obama wants to make it less generous, reducing the exemption to $3.5 million and taxing the remainder at a 45 percent rate. This tax only affects an extremely small number of people.

Under the Republican proposal, 3,800 people would pay the estate tax year, also near an average of $3.3 million. The GOP proposal would raise $182 billion for federal tax coffers over the next 10 years.

Under Obama’s proposal, 6,500 people would pay the estate tax next year, with an average payment estimated at about $3 million. The president’s proposal would raise $284 billion in tax revenue over the next 10 years.

No action by Congress would send the estate tax back to what it was in the 1990s – with a $1 million exemption and 55 rate percent for the remaining share. That would affect more than 40 million Americans.

Senate Minority Leader Mitch McConnell (R-SC) has reached out to Vice President Joe Biden to break the impasse.