This month’s budget breakfast group meeting was even more extraordinary than usual for one reason: The same people who typically analyze what’s ahead on the budget with remarkable precision months before it happens all basically admitted that the current situation is as complex, hard to read, and even harder to predict than any they’ve ever seen.
Here are the moving pieces.
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It now looks like the Senate on Wednesday will pass the "no budget no pay" version of the debt ceiling increase that has already been adopted by the House.
This will be the third GOP budget miscalculation, misstep and mistake in a row.
The problem with the no budget no pay plan is that, while the Senate will likely pass its own version of a congressional budget resolution because of the law, will not spur any real action on budget issues. The ultimate result, therefore, will be that the GOP talking point will be gone -- after all, the Senate will have adopted a budget -- but Republicans will have gotten nothing real for allowing the debt ceiling to rise.
Here's why.
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Given what happened in July 2011 when they decided to do the opposite (you remember the anything-but-super committee, right?), we should all be happy House Republicans have agreed that this time they won’t hold hostage the increase in the federal debt ceiling the Treasury says will be needed by the end of February. We should [...]
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Over at The Plum Line, Greg Sargent has an important post about the way the debt ceiling fight could end without triggering a cash-crunch crisis for the federal government. Greg thinks is could be one of two possibilities. First, the House GOP could agree to a version of the plan first proposed by Senate Minority Leader Mitch McConnell (R-KY) that helped solve the last debt ceiling fight in August 2011.
Second, Greg says that the same combination of Democrats and some Republicans in the House that voted for the fiscal cliff deal would likely approve the McConnell plan or a clean debt ceiling increase if the GOP leadership allowed the vote to take place.
Both options are plausible for a basic reason Greg does not mention: The GOP seems to be coming to the conclusion that fighting over the debt ceiling is not its best option.
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Politico had an outstanding but truly bone-chilling story yesterday about how appealing the prospects of a default and a government shutdown may be to House Republicans.
According to the piece by Jim VandeHei, Mike Allen and Jake Sherman, forcing a default by not raising the debt ceiling and shutting down the government by not passing a continuing resolution may be the preferred ways to go by a majority of the House GOP caucus no matter what that would mean to the U.S. economy, the Republican Party's overall approval rating, the GOP's prospects for a Senate majority in 2014 or a Republican winning the White House in 2016.
To those of us who have watched Washington operate for a while, this obviously sounds like totally insane, crazy self-destructive behavior by the House GOP.
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The U.S. Treasury yesterday dashed the hopes and dreams of many in the blogosphere when it announced that neither it nor the Federal Reserve saw the idea of a $1 trillion platinum coin as a realistic alternative to raising the debt ceiling. But the White House's statements about the 14th amendment and the platinum coin keep the focus laser beam-like on Congress. The only question now is whether the House GOP will play legislative chicken with the increase in the debt ceiling that will be needed some time in late February or will cave when the time comes.
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Given my stellar record for 2012, I should probably retire now while I’m at the top of my game. Not taking my own advice, here are my fearless budget forecasts for 2013.
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With 17 days as the crow flies before it happens, it's time for me to do something I've been resisting for a week or so: formally increase my odds that we'll go over rather than avoid the fiscal cliff.
Back in September I said it was better than 50-50 that no deal would be in place by January 1. I raised that to 60 percent immediately after the election. Today, I'm raising my predicted likelihood of no deal before January 1 to 75 percent, and I may still be overstating the possibility that an agreement will be reached and put in place before the tax cuts and spending increases go into effect.
I really hope I'm wrong, and will gladly and publicly say that if a last-minute deal materializes. But here's why I don't think I am:
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Whatever Congress and the White House do in the next couple of weeks will reinforce the case for tax reform. The seeming sanctification of low tax rates that occurred with the Tax Reform Act of 1986 has not meant keeping top tax rates low; it has meant only the death of honesty in talking about rates. The result is a patch work of hidden rates and additional wage taxes that is likely to continue.
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There's really not much new to say about the fiscal cliff except that, as of today, we're now three weeks away from it happening. There's especially not much new to say when the only news is that a meeting took place at the White House over the weekend between the president and speaker and the big statement was that the lines of communication remain open.
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