Why Did Obama Want A Long-Term Debt Deal That Is Tied To Raising The Debt limit?

[rhombus]

Can anyone explain this? The GOP would fold like a cheap suit to prevent a debt default under any scenario. So again, why did the President choose this route?

[AlinPA]

1. The GOP wants default. The teabaggers run the party now.

[DefenseLawyer]

2. Hogwash

The "tea party" is a manufactured political movement, bought and paid for by billionaires. They don't run shit because they have no money. The people that created the "tea party" don't want a default.

[JoePhilly]

6. Except Frankenstein's monster got out of hand .... see the idea ...

was to create this noisy astro-turf movement, rile up the crazies, and then get them to vote for run of the mill Republicans.

And it was working ... Scott Brown in MA, Christie in NJ, Bob McDonnell in Virginia ... all rode a Tea Party wave, yet each is fairly run of the mill Republican.

But at the level of the House, the more of the races are local, and harder to control. And as a result, you got a bunch of very far right wing nuts elected, along with some run of the mill Republicans who pretend to be just as nuts.

I think the GOP expected this, and figured they'd be able to maintain better control of their monster. They figured that they'd be able to buy off the new comers and get them to vote the way the leadership wants.

The problem is that their monster loves the nonsense they feed it to make it grow, and it grew bigger than they intended.

Which is why they've now cut its diet. No more national rallies. No more busing old people to events. Fewer references to it on Fox News.

They don't want to kill the monster, just keep it from growing, harness it. Toss it some red meat (social issue stuff) in exchange for loyalty on the money side.

They want a trained monster that they control.

[AlinPA]

19. The republicans want and need the default to hurt the President. With the media singing for them,

they will blame it all on Obama. The teabaggers put the people in who are running the House now, so they are not a manufactured movement.

[dkf]

3. S&P says they are looking at downgrading our credit rating

We need to trim around $4 trillion from the deficit to avoid it.

That would probably affect our interest rates and would be bad for our economy.

[rhombus]

4. Ok. This sounds more plausible

But still wouldn't it have been better for the president to decouple deficit reduction and debt limit increase? Raise the debt limit, and then pivot quickly to tackle long-term debt?

[dkf]

7. Will there be urgency or attention once the debt ceiling is done with?

Who knows.

[dkf]

9. Here:

By DAMIAN PALETTA

POLITICS JULY 22, 2011, 9:30 P.M. ET
Small-Scale Deficit Deal Increases Risk of U.S. Downgrade


WASHINGTON—The breakdown in deficit-reduction talks between the White House and Speaker of the House John Boehner (R., Ohio) could immediately increase the risk that Standard & Poor's takes the unprecedented step of lowering its top-notch rating of U.S. government debt.

The credit-rating firm has warned repeatedly that it could move to downgrade U.S. debt if it believes any deficit-reduction deal isn't robust enough to change the country's trajectory of future debt growth. A downgrade could come even if officials agree to raise the federal debt ceiling by Aug. 2. Treasury Department officials have set that as the deadline because after that date, without more borrowing authority, the government could run out of cash to pay all its bills.

Messrs. Obama and Boehner had been trying to package a deal that would reduce future federal deficits by $4 trillion over 10 years, a level S&P officials had suggested would be sufficient to avoid a downgrade. A lower credit rating would raise borrowing costs not just for the government, but also for consumers and businesses, which could slow U.S. economic growth. It also could lower the value of Treasury securities held as assets by banks, pension funds, mutual funds, hedge funds, and other investors around the world, potentially shaking financial markets.

Now that the large-scale talks have broken down, policy makers will likely pursue a smaller-scale deal that falls short of S&P's targets. Mr. Obama alluded to this possibility Friday evening.

"If we can't come up with a serious plan for actual deficit and debt reduction, and all we're doing is extending the debt ceiling for another six, seven, eight months, then the probabilities of downgrading U.S. credit are increased, and that will be an additional cloud over the economy and make it more difficult for us and more difficult for businesses to create jobs that the American people so desperately need," Mr. Obama said Friday evening.

http://online.wsj.com/article/SB10001424053111903461104576462810741841494.html

[DrToast]

8. This only happened because of all the crap that's been going on

They weren't going to downgrade us until this debt ceiling fight happened.

http://www.washingtonpost.com/blogs/ezra-klein/post/how-congress-put-our-credit-rating-at-risk/2011/07/11/gIQA3WxhTI_blog.html

[dkf]

11. Yes.

But tell me you haven't been watching this mess and coming to the same conclusion.

Congress is dysfunctional and will be unable to do what is needed to fix long term problems, especially politically difficult long term problems like entitlements.

[OHdem10]

5. Poor Advice from those around him??????

[Fearless]

10. So it didn't interfere with the election.

[polichick]

12. He wanted to look like the great, calm, adult dealmaker?

[woolldog]

13. Hush up,

and eat your peas.

[karynnj]

14. Because the economy is damaged by this high stakes chicken game

and it is very clear that if there is a short term deal, they will just do this again. The problem is that it is really not clear the Republicans would fold at the last minute and pass a clean lift of the debt ceiling.

What is too bad is that many House Democrats were scared into voting against a clean raising of the debt limit - so we have no united position around that as a fall back.

[MiniMe]

15. Because if they do it short term, for 6 months or so,

The next fight about it will be in the middle of the 2012 election.

[ProSense]

16. Here,

in his own words: A Unique Opportunity to Secure our Fiscal Future

<...>

The truth is, you can’t solve our deficit without cutting spending. But you also can’t solve it without asking the wealthiest Americans to pay their fair share – or without taking on loopholes that give special interests and big corporations tax breaks that middle-class Americans don’t get.

It’s pretty simple. I don’t think oil companies should keep getting special tax breaks when they’re making tens of billions in profits. I don’t think hedge fund managers should pay taxes at a lower rate than their secretaries. I don’t think it’s fair to ask nothing of someone like me when the average family has seen their income decline over the past decade – and when many of you are just trying to stretch every dollar as far it it’ll go.

We shouldn’t put the burden of deficit reduction on the backs of folks who’ve already borne the brunt of the recession. It’s not reasonable and it’s not right. If we’re going to ask seniors, or students, or middle-class Americans to sacrifice, then we have to ask corporations and the wealthiest Americans to share in that sacrifice. We have to ask everyone to play their part. Because we are all part of the same country. We are all in this together.

<...>

[Left of the Left]

17. Because ITS HISTORIC! What would be the impact?-who cares ITS HISTORIC!

For more information look at the healthcare debacle.

[CakeGrrl]

18. As he has explained several times, the GOP will drag this crap out again and again

if it's set up to renegotiate after such a short period.

They're also trying to manufacture an "issue" for 2012, market uncertainty be damned.

[elleng]

20. He was trying to do the right thing, for the future.

I'm not sure I agree that 'The GOP would fold like a cheap suit to prevent a debt default under any scenario.'

[sad sally]

21. Maybe it's like Republican turned Democrat Arlin Spector said,

"so I can be re-elected."

[quiller4]

22. He didn't. He doesn't. It is just a way to appear reasonable and

hoist Republicans on their own debt petard. What he wants is a straight up or down vote on the debt ceiling and that is most likely what he will get. At the same time he has showed enough flexibility to contrast with Republican intransigence to improve his standing with independents