Washington Leadership Vacuum Raises Risks of Shutdown, Default

Friday, 13 Sep 2013 01:14 PM

 

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President Barack Obama couldn’t get Democrats to go along on Syria. House Speaker John Boehner couldn’t get fellow Republicans to go along on a budget bill.

The one man who has proven he can cut deals with the White House, Senate Republican leader Mitch McConnell of Kentucky, is consumed with a tough re-election bid.

It’s enough to have Americans asking: Who’s running Washington?

With the chances growing of a U.S. government shutdown on Oct. 1 and the danger of debt default after that, the leadership vacuum is raising the risk that no one has the clout to head off those calamities.

“It is a scary place to be,” said House Minority Whip Steny Hoyer, a Maryland Democrat. “And it’s bad for the country.”

Time is short. The House has just five work days scheduled before a Sept. 30 deadline to pass a government funding bill. No legislation is ready, since some Republicans rejected the first try offered by their leaders. Those leaders may cancel a planned week-long break starting Sept. 23 to make time for talks.

“I don’t exactly have control of the steering wheel and I’m not sure any one individual does, even Speaker Boehner,” said Representative Scott Rigell, a Virginia Republican among those opposing the leadership budget proposal.

Disrupted Services

Without such legislation, the government loses authority to spend after this month. Payments to contractors would stop, federal workers would be furloughed and programs not deemed essential would be disrupted.

Then, unless Congress raises the $16.7 trillion debt limit, expected to be reached as early as mid-October, the Treasury would be unable to pay creditors. The nation’s credit rating could decline and the U.S. ultimately would default.

The market for U.S. government debt has yet to react to any potential impasse over raising the borrowing ceiling, as investors weigh prospects for Federal Reserve stimulus. The yield on the benchmark 10-year Treasury note yesterday was little changed at 2.91 percent. The Standard & Poor’s 500 Index of U.S. stocks reached a four-week high on Sept. 11, and slipped 0.3 percent yesterday to 1,683.42 in New York, snapping the longest streak of gains since July.

The four top leaders of the House and Senate held a rare joint meeting yesterday to discuss their plans to address those issues. They exited the meeting with no sign of progress.

“A small but vocal minority of Republicans here in the Senate, less than half of the Republicans in the Senate, seem to live in an alternative universe to keep demanding the impossible,” Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters after the meeting.

Unclear Path

With that kind of stalemate, the way ahead is unclear. In past years, the leaders have found ways to reach an agreement, and drag their reluctant caucuses along, even if it comes down to a last-minute deal.

There is room for compromise: Most Republicans say they hope to avoid a government shutdown, as do Obama and the Democrats, and few in Congress say letting the country default on its borrowing is a good idea.

It’s just not clear it’ll work out that way this time.

“They don’t have an answer right now,” said Tom Davis, a Republican strategist and former Virginia congressman. “The determination of a majority of members is to get there. Once you look under the hood it’s not very pretty watching this thing unravel.”

Each of the top leaders faces obstacles to cutting a deal. They also share negative poll numbers.

Public Disapproval

A Sept. 6-8 poll for CNN showed 78 percent of Americans disapprove of the job Congress is doing, with just 20 percent approving. Obama’s job performance was rated negatively by 52 percent, with 45 percent giving him positive marks. The poll of 1,022 adults had an error margin of 3 percentage points.

Speaking at the White House yesterday, Obama tried to refocus on domestic issues after pulling back on his effort to win support on Capitol Hill for a military strike against Syria.

“Even as we have been spending a lot of time on the Syria issue and making sure that international attention is focused on the horrible tragedy that occurred there, it is still important to recognize that we’ve got a lot more stuff to do in this country,” he told reporters.

Obama’s relations have never been warm with Congress, an institution he described in a July 24 speech in Galesburg, Ill., as focused on an “endless parade of distractions, political posturing and phony scandals.”

Gun Issue

In his first term, Obama was immersed in legislative wrangling as he pushed through an economic stimulus package, the Patient Protection and Affordable Care Act, and the Dodd-Frank financial regulation bill. He lost on his first big initiative of his second term, tougher background checks for gun buyers.

According to a Bloomberg News count, only 17 House Democrats and 16 Senate Democrats had said they were prepared to back Obama on attacking Syria, numbers far short of the support needed to win in Congress even after a major effort by the administration to woo lawmakers with briefings, phone calls, and presidential meetings.

On the budget, months of intermittent meetings and dinners among Obama, White House officials and a group of Republican senators have trailed off after failing to produce concrete results. The negotiations remained stalemated over long-standing issues: Republican demands for deeper cuts in entitlement programs and the president’s insistence that those reductions be coupled with higher taxes on the wealthy and businesses.

The gatherings “produced some fundamental agreement on defining the problem but not a fundamental agreement on how to solve the problem,” Senator Johnny Isakson, a Georgia Republican who was involved with the effort, said yesterday at a Bloomberg Government breakfast in Washington.

Fed Pick

Though Democrats are likely to stick with the president on budget issues in the coming months, he could face fresh opposition from his party when it comes to his pick to head the Federal Reserve. At least two Senate Democrats are publicly opposing Lawrence Summers, a former Treasury Secretary who Obama has said is a potential candidate for the post. About a third of the 54-member Senate Democratic caucus signed a letter praising Fed Vice Chairman Janet Yellen and encouraging her nomination.

“It’s another ‘ask’ on behalf of the White House and it’s another heavy lift,” said Davis, the former member of Congress.

Republicans have failed to capitalize on Obama’s struggles, as they navigate their own deep internal divisions.

McConnell’s Role

McConnell, the top Senate Republican, has often ridden to the rescue at times like this, using a direct line of communication with Vice President Joe Biden, a former senator. McConnell helped negotiate deals with the White House to stave off tax increases for most American at the start of this year and to keep the U.S. from defaulting in 2011.

He’s showing signs of abandoning the deal-maker role, as he faces a 2014 primary challenger backed by the anti-tax Tea Party movement and a Democratic general-election opponent with national support. He can’t afford to look too cozy with Obama.

Boehner, of Ohio, has battled a 41-member “Caucus of No,” House members who have repeatedly voted against their leadership since 2011 and oppose compromise with Democrats. Boehner can’t lose more than 16 of their votes to pass a funding measure or raise the debt limit, or he’ll need help from Democrats.

Hoyer said he was urging Democrats to vote against a budget bill that would defund or delay implementation of the healthcare measure, as Republicans have been seeking to do.

Stalled Bills

Meanwhile, action is stalled on other fronts. Boehner has supported in principle the Obama-led push to revamp immigration policy, yet the House hasn’t taken up the bill the Senate passed in June. A vote in the chamber on a transportation funding bill was called off amid signs it lacked enough support to pass, and the House and Senate have been unable to reach agreement on a farm bill.

Boehner’s support for Obama’s request for a military strike in Syria wasn’t embraced by many of his caucus members.

“My Republican friends like to talk about certainty, but you can’t get more uncertain than this,” said Representative Elijah Cummings, a Maryland Democrat. “Congress is a mess.”

If Boehner can’t command enough Republican votes to keep the government open and avoid default, he could face a tough re- election for speaker in 2015, if Republicans retain the House majority in the 2014 elections, as expected.

Boehner acknowledged he is frustrated with efforts to resolve the government funding fight in a way that would satisfy the Tea Party wing of his caucus.

“Do you have an idea?” he joked with reporters this week, according to the Politico website. “They’ll just shoot it down anyway.”

© Copyright 2014 Bloomberg News. All rights reserved.

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