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Boehner Prepared to Cave-In to Obama; Reflections on the Waiting Game in the Government Shutdown

October 3, 2013

Those who thought House leader John Boehner would do something different this  time (not cave-in to Obama) thought wrongly.
The New York Times has the  details in  Boehner  Tells Republicans He Won’t Let the Nation Default

With a budget deal still elusive and a deadline approaching on raising  the debt ceiling, Speaker John A. Boehner has told colleagues that he is  determined to prevent a federal default and is willing to pass a measure through  a combination of Republican and Democratic votes, according to one House  Republican.
The lawmaker, who spoke on the condition of anonymity,  said Mr. Boehner had indicated he would be willing to violate the so-called  Hastert Rule if necessary to pass a debt-limit increase. The informal rule  refers to a policy of not bringing to the floor any measure that does not have a  majority of Republican votes.
Representative Michael G.  Fitzpatrick, Republican of Pennsylvania, who was one of just 22 House  Republicans this year who helped Mr. Boehner pass three crucial bills — to avert  a fiscal showdown, to provide relief for the victims of Hurricane Sandy, and to  pass the Violence Against Women Act — with a majority of Democratic support,  said he expected that he may be asked to do so again.
“Hurricane  Sandy, the fiscal cliff, all of the big votes require reasonable Republicans and  Democrats to come together in order to pass it and get it to the president’s  desk,” he said. “This will be no different.”
And, Mr.  Fitzpatrick added, “I’ve been there in the past, and I’m prepared to be there  again.”
Representative Leonard Lance of New Jersey, one of the moderate  Republicans who met privately with Mr. Boehner on Wednesday, would not provide  details of the meeting, but said, “The speaker of the House does not want to  default on the debt on the United States, and I believe he believes in Congress  as an institution, and I certainly believe he is working for the best interests  of the American people.”

boehner-and-obamaWaiting  Game
All that’s left now is a waiting game. Given that Boehner  is going to cave-in and pass some sort of measure Obama and the Democrats can  sign off on, the pseudo-drama is gone.
Perhaps the House puts together  another measure that a few Democrats will go along with, but if the Senate and  president Obama do not like the measure, it will go nowhere.
The Senate  would amend any bill the president does not like, pass it back, and Boehner  would put it up for a vote. Then, a handful of Republicans will sign it, and  that will be that.
The best Republicans can hope for is some minor  changes to Obamacare (that Democrats are in favor of as well).  I suspect  some talk between Boehner and Obama along these lines are in progress right  now.
Both parties will declare victory but Republicans will have  lost.
Meanwhile, the Hype Continues
From  the Times ….

A Treasury Department report released on Thursday said the debt-limit  impasse could cause credit markets to freeze, the dollar to plummet and interest  rates to rise precipitously. A default might prove catastrophic, the report  said, and could potentially result “in a financial crisis and recession that  could echo the events of 2008 or worse.”
The administration has made  increasingly strong public warnings about the potential economic consequences of  not increasing the debt limit.
“As reckless as a government shutdown is,  as many people as are being hurt by a government shutdown, an economic shutdown  that results from default would be dramatically worse,” Mr. Obama said on  Thursday, speaking to construction workers at M. Luis Construction in Rockville,  Md., a suburb north of Washington.
He said that a default would be “the  height of irresponsibility,” adding that “there will be no negotiations over  this.”
“The United States is the center of the world economy,” Mr. Obama  said, “so if we screw up, everybody gets screwed up — the whole world will have  problems.”
Many market participants interpret the White House’s public  statements as an effort to get Wall Street to pay attention, even to provoke a  market reaction that might spur Congress to act.

Reflections on the Waiting Game 
Why should the  market react to any of this, since everyone knows Boehner will cave-in,  including Boehner himself?
Moreover, one has to wonder about the nature  of hyped-up statements from the White House in the first place, if the only  intent is to create a wanted  reaction in the stock market.
Such is  the preposterous positioning on both sides of the aisle.

Credit To:  Mike “Mish” Shedlock / Freedom Outpost


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