Washington, DC, was chosen as the nation's capital as the result of a drunken compromise between Alexander Hamilton and James Madison at a dinner party hosted by Thomas Jefferson. So it's not inexplicable that politicians seem to be guided by mentally addled men acting like boisterous idiots. It's tradition.
For want of anyone on Wall St. able to make sense of the looming DC budget "crisis" beyond "it's a bunch of garbage being manufactured by self-motivated jackasses trying to boil down complicated issues to a stump-speech soundbite," Breakout invited the entirely rational editor-in-chief of Yahoo! Politics, Jane Sasseen, to add a bit of nuance to our view.
Specifically, what does it mean that Vice President Biden and representative Eric Cantor are being all weaselly with one another? Is the government really going to shut down on August 2 or is this, as most believe, a bunch of silly theatrics and bluffing? Isn't this a situation where some "leading" seems in order. And why is that not happening?
Jane says there are two distinct games being played. The first is the traditional fight between Democrats ("Tax the Rich!") and Republicans ("Cut spending!"). Into this standard and utterly insincere mix we now have a war amongst the centrist Republicans and the upstart Tea Party group. No Republicans are yet willing to risk alienating the Tea Party, and the Democrats lack the support or leadership to cut a deal.
The budget fight is ostensibly over cutting the U.S. budget by $2 trillion before we raise the ceiling on debt. If no deal is struck by August 2, it could lead to a frozen government and potential loss of the U.S. credit rating. The stakes are high, in other words.
Sasseen characterizes the walk-outs and posturing as "a game of chicken" but seems assured that a worst case scenario is not going to happen. The delay, she says, is due to the fact that "it's a lot easier to hold the process hostage by saying no than to actually get something affirmatively done by saying yes."
Ugh. My incredibly strong desire to go on an angry tirade aside, the question is how this plays out over the next month, once we spend every second between now and the August 2 deadline threatening to finish ruining the American economy.
"There's a lot of belief that [Republican Speaker of the House John Boehner] is much more likely to cut a deal," says Saseen. "He's a more traditional, more mainstream Republican; he understands what would happen to the markets [in the event of no deal being struck]".
The bottom line is that between $1.2 trillion and $2 trillion in cuts have already been identified, leaving a paltry (by U.S. GDP standards) $800 billion left to fight over. "Everyone believes right now, ultimately, that the adults will win and there will be a deal," Saseen reassures us.
Adults. Winning. A deal. Good stuff, all of it. To speed things along, might I gently suggest President Obama and Congressman Boehner skip their next round of golf and take the Jeffersonian approach of having cocktails until a deal gets struck. I'm pretty sure I could round up some traders more than happy to pick up the bar tab.
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