Debt Deal? ‘Three’ Is The Magic Number (The Note)

Jul 15, 2011 8:54am

By MICHAEL FALCONE (@michaelpfalcone) and AMY WALTER (@amyewalter)

Four Capitol Hill press conferences, three local television interviews at the White House, one fund-raising email and a single hour-long negotiating session later and lawmakers still hadn’t reached a final agreement on the debt ceiling yesterday.

But, today there are indications of a light at the end of the tunnel.

President Obama takes to the podium again at 11 a.m. for his second news conference of the week. There’s no word on whether he’ll ask congressional leaders to eat another vegetable (brussel sprouts?), but it seems clear that he'll push for a deal by the end of the weekend.

ABC’s Jake Tapper reports that the president ended yesterday's meeting with congressional leaders by telling them, “It’s decision time. We need concrete plans to move this forward." Lawmakers from both parties were essentially given three options to bring back to their caucuses.  

Here they are, courtesy of Tapper:

First, The Big Deal: Four trillion in deficit reduction with cuts to entitlement programs and tax increases. But, this option seems less likely as the August 2 deadline approaches. “I want to do the largest deal possible,” the president said, according to one Democratic official. “A short-term solution is not something I will sign.”

Second, The Medium Plan: Somewhere between $1.5 and $1.7 trillion in cuts to spending, but no entitlement cuts or tax elements. One roadblock here is that Republicans demand that spending cuts at least match the amount of the increase of the debt ceiling, which the president says needs to be $2.4 trillion or so to get to 2013.

Third,  The McConnell Plan: Senate Minority Leader Mitch McConnell, R-Ky., would allow the debt ceiling to be raised by the president, with Congress voting disapprovingly three times before the 2012 election. Senate Majority Leader Harry Reid and McConnell are talking about creating a deficit commission that, like the base closing commission, would issue legislation that would be voted on up or down. They're also discussing attaching spending cuts to the plan.

This proposal has not yet been the subject of a lot of interest by House Republicans, but there are signs it may be gaining “traction,” according to a report today in the Wall Street Journal. “What is emerging as the most likely outcome is a plan based on Messrs. McConnell and Reid's work, a Democratic official familiar with negotiations said,” the Journal’s Carol E. Lee and Janet Hook report. “It would include roughly $1 trillion in deficit reduction, but would not come with tax increases or Medicare savings, the official said. It could include an extension of unemployment insurance, the official said, which costs $40 billion and would be offset by spending cuts.”

Such a deal may help assure Wall Street and Moody's for now, but the lack of real substantial effort at long term deficit reduction won't make our creditors feel much better. 

BOTTOM LINE: No matter what deal ultimately gets cut, the damage to Washington's credibility — what little was left — has already been done.  For the last three elections Americans have sent a clear message to politicians: stop the silliness and posturing and get something done.

Any deal lawmakers reach that skirts the big issues will serve as another reminder to voters that Washington is truly broken. And, despite Obama's attempts to rise above the fray, it's going to be hard to truly distance himself from it all.  In fact, if anything the only people who “benefit” from this entire affair are those who aren't involved in it at all — namely Republican ex-governors and current presidential candidates like Tim Pawlenty, Mitt Romney and Jon Huntsman.

 ABC's Z. Byron Wolf contributed reporting.

THE CHINA FACTOR. A sobering excerpt from today’s Wall Street Journal report on the debt ceiling negotiations: “For China, which has the world's largest pile of foreign exchange at $3 trillion — an estimated two-thirds of it in dollars—the inability to resolve the debt-ceiling dispute, and the longer-term deficit problem, is especially worrisome. China has long talked of diversifying, and officials have said in the past year that Beijing has bought more European debt. ‘We hope the U.S. government adopts responsible policies to protect the interests of investors,’ said Chinese Foreign Ministry spokesman Hong Lei, whose government held at least $1.152 trillion in Treasury securities as of April, and is the U.S. government's largest creditor.”

BOEHNER: TOO MANY COOKS IN THE KITCHEN. “Speaker John Boehner (R-Ohio) on Thursday said ‘there are too many people’ in the White House negotiations over raising the debt limit,” The Hill’s Russell Berman reports. “‘The room’s too big,’ Boehner said in an interview with Fox News host Greta Van Susteren. ‘There are too many people in there trying to negotiate what is a very difficult, could be and will be a very difficult agreement. There are just too many people in there pouring cold water on virtually every idea that gets thrown on the table.’ President Obama has convened five straight days of meetings with eight congressional leaders from the House and Senate, along with Vice President Biden, Treasury Secretary Tim Geithner, and several White House aides. Boehner did not say who he thought did not belong in the room, and a spokesman for the Speaker would not elaborate. … Boehner told Van Susteren that despite the ongoing impasse between Republicans and Democrats, he was still hopeful Congress could strike “the big deal.” He said a plan floated by Senate GOP Leader Mitch McConnell (R-Ky.) to give the president more authority to increase the debt ceiling was a “last-ditch” plan but not his ‘preferred option.’ ‘I think we need to continue to solve our short-term and long-term debt issue. That means the big deal,’ the Speaker said. “This is the moment of opportunity here.’”


MARCUS BACHMANN RESPONDS TO ABC NEWS INVESTIGATION. In an interview with the Minneapolis Star-Tribune, Marcus Bachmann, husband of presidential candidate Michele Bachmann, made his first public statements surrounding the controversy over his clinics as well as statements he has been said to have made calling gay people “barbarians.” Earlier this week, ABC’s Brian Ross, Rhonda Schwartz, Matthew Mosk and Megan Chuchmach reported that a former patient who sought help from the Christian counseling clinic owned by the Bachmanns was advised that prayer could rid him of his homosexual urges and he could eventually be "re-oriented.” ABC’S original investigative report:

From today’s Star-Tribune: “Marcus Bachmann said counselors at his clinics follow the wishes of patients and don't force any treatment. ‘This individual came to us under a false pretense,'' Bachmann said.’ The truth of the matter is he specifically asked for help.’ … Meanwhile, an audiotape circulating on the Internet depicts Bachmann as calling gays barbarians in a 2010 interview he gave to the ‘Point of View’ Christian radio talk show. ‘We have to understand: Barbarians need to be educated,'' Bachmann's voice is heard saying on the tape.’ They need to be disciplined. Just because someone feels it or thinks it doesn't mean that we are supposed to go down that road.’ Bachmann said that someone must have doctored the recording of the interview, in which he addressed child discipline as well as homosexuality and sex education. ‘I think the strongest myth. … is the myth that I have ever called a homosexual a barbarian,’ Bachmann said. He didn't deny that he or other counselors at Bachmann & Associates have attempted to convert gay patients, but he said it is not a special interest of the business and would only be attempted at the client's request. ‘Will I address it? Certainly we'll talk about it,’ Bachmann said. ‘Is it a remedy form that I typically would use? … It is at the client's discretion.’”


ON TODAY’S “TOP LINE”: ABC’s Rick Klein and Amy Walter sit down with Paul Burka, a correspondent for the Texas Monthly to weigh in on Gov. Rick Perry’s potential presidential campaign. Watch “Top Line” LIVE at 12:00 p.m. Eastern.

“TOP LINE REPLAY”: DEM CONGRESSMAN CAUTIONS AGAINST ‘SLASHING’ MEDICARE. ABC’s Rick Klein reports: “Rep. Chris Van Hollen, the ranking Democrat on the House Budget Committee, said that while Democrats support cost savings inside of Medicare, he and other leaders in his party staunchly oppose benefit cuts, higher premiums, or increased use of ‘means-testing’ to scale down benefits based on recipients’ wealth. ‘There are lots of ways you can modernize Medicare without slashing and hurting benefits, and we put those ideas on the table,’ Van Hollen, D-Md.,” told Top Line.  


RICK PERRY WATCH: WADING INTO DEBT FIGHT. In an op-ed Thursday, Texas Gov. Rick Perry joined forces with popular South Carolina Gov. Nikki Haley to call on the Washington establishment to follow their example and adhere to the "Cut, Cap, and Balance" pledge in their debt-ceiling negotiations, ABC’s Arlette Saenz reports. “At heart, the pledge represents the reality that yet another temporary fix to our nation's budgetary woes is no fix at all. The time has come for all us to begin holding the federal government to the same common-sense standards in place in most states, including South Carolina and Texas,” the Republican governors wrote in the Post. The Op-Ed marked Perry's first comments on the debt ceiling fight in Congress and reinforced his strong economic record in Texas — a platform he would likely tout heavily should he decide to run for president.

PERRY MUST-READ. “Gov. Rick Perry, a no-apologies conservative known for slashing government spending and opposing all tax increases, is about as Republican as you can get. But that wasn’t always the case,” The Texas Tribune’s Jay Root notes. “Perry spent his first six years in politics as a Democrat, in a somewhat forgotten history that is sure to be revived and scrutinized by Republican opponents if he decides to run for president. A raging liberal he was not. Elected to represent a slice of rural West Texas in the state House of Representatives in 1984, Perry, a young rancher and cotton farmer, gained an early reputation as a fiscal conservative. He was one of a handful of freshman “pit bulls,” so named because they sat in the lower pit of the House Appropriations Committee, where they fought to keep spending low.”



BIDEN STAYS IN THE GAME.On the campaign trail, Republicans are reviving attacks on the Obama administration’s $830 billion stimulus package. It’s a debate Vice President Joe Biden, who oversaw the program, won’t shy away from. Republicans say the stimulus failed; the White House says it worked to curb job losses at the height of the recession,” Bloomberg’s  Kate Andersen Brower notes. “The issue has become such a complicated sale to voters that President Barack Obama doesn’t regularly bring it up. In contrast, Biden routinely highlights the signature assignment that helped transform his image from a gaffe-prone presidential partner to an influential voice inside the administration. ‘He deserves a great deal of credit for overseeing a very, very difficult expedited program,’ said David Axelrod, Obama’s campaign strategist and former White House aide. … While he was still managing the stimulus, Obama asked the 68-year-old vice president to help push an overhaul of the health-care system through the Senate. Biden also attends foreign policy discussions, including Oval Office debates over the Afghanistan war in which Biden pressed unsuccessfully against the 2009 troop surge. Since then, Obama has moved closer to Biden’s position, said Steve Clemons, an analyst at the New America Foundation, a policy research organization, who has counseled the White House on policy issues.”

SARAH PALIN SPENDS NEARLY $14,000 TO ‘WRAP’ HER BUS. Sarah Palin's political action committee, SarahPAC, raised more than $1.6 million during the first six months of the year, according to a mid-year campaign finance report filed with the Federal Election Commission on Thursday. Palin's committee raised $1,658,897 and spent $1,591,520. SarahPAC ends the first half of the year with $1,402,368 cash on hand. … Palin spent almost $14,000 to adorn her “One Nation” tour bus with larger-than-life renditions of the Constitution, Liberty Bell, and her signature. The former Alaska governor’s political action committee paid $13,708.44 to the Tennessee company Fast Signs for “Bus Wrap” on May 26, three days before her tour of the northeast kicked off. … Among SarahPAC’s other noteworthy disbursements: $26,295.47 to a Visa/BankCard payment center in Dallas, Tex. for “Air Fare, Lodging, Car Rental, Wireless.” The date of disbursement is June 2, the day she visited Massachusetts and New Hampshire. Presumably, the sum accounts for some of the cost of her “One Nation” tour. $5,794 to Israel’s Sar-El Tours and Travel for a“Tour of Holy Land.” Palin visited Israel in March and met with Prime Minister Benjamin Netanyahu. $18,700 to Young America’s Foundation, a conservative outreach organization aimed at students. $10,000 to Peter Schweizer for “Research Consulting.” Schweizer is a conservative author based in Florida who Palin hired as her foreign policy adviser in May.

WALTER SHAPIRO’S REQUIEM FOR TIM PAWLENTY.This storyline has clearly been over-hyped: With a weak GOP field, it is a mistake to write off Pawlenty more than six months before the Iowa caucuses. Yet it is also undeniable that the former Minnesota governor is in serious trouble,” Walter Shapiro writes in a 3,600-word New Republic profile of the former Minnesota governor and presidential candidate. “After a month on the Pawlenty beat — during which I spent time on the road with him in New Hampshire, toured his blue-collar hometown of South St. Paul, and delved into his Minnesota record — I came to appreciate the tragedy of his situation. ‘He’s always had it figured out,’ says former senior gubernatorial aide Tom Hanson. But suddenly nothing makes sense for Pawlenty. He is a guy who lifted himself out of his working-class roots, partly putting himself through college by bagging groceries. Along the way, he never left anything to chance, micromanaging every aspect of his career, sometimes exasperating those close to him with his obsession for detail. But now, rather than solidifying his position as the credible right-wing alternative to Mitt Romney, he finds himself distracted by thunder on his own right in the form of Bachmann. Why is it that Tim Pawlenty — for whom everything appeared perfect in theory — cannot seem to break through?” More from Shapiro:

REDISTRICTING GIVES WAY TO NEW BATTLES.  “The swelling ranks of Latinos here are a big reason Nevada will win a new seat in Washington. And so, as part of the once-a-decade redistricting process, leaders here are sketching out a new Congressional district that would give Latino neighborhoods more sway over their representation in Washington,” The New York Times’ Monica Davey reports from Las Vegas. “But that simple goal is turning out to be anything but. The efforts are complicated by the many ways people interpret laws governing redistricting. Politicians are also using the redistricting battles to advance their own agendas — ones that often have nothing to do with the Latino population. … The remarkable growth of Latinos nationwide — they accounted for more than half the nation’s population jump in the past 10 years and now make up more than 16 percent of the population — means that similar political calculations, debates and legal considerations are playing out across the country, much as they did in decades past with the shifting population of African-Americans. Political parties are keenly aware of the stakes. In the last presidential election, surveys showed that Latino voters leaned toward the Democratic Party, which hopes to hold on to this increasingly powerful bloc, even as Republicans in some places are working hard to woo Latinos to their side.”

JOE KLEIN HITS THE ROAD. Time Magazine’s Joe Klein is hitting the road again for “Joe’s Road Trip 2011,” which will take him “from Laredo, Texas to North Dakota, with a final stop in Minneapolis.” Klein writes, “As I was saying…Washington is just too ugly for words. The rest of the world isn’t much of a bargain, either. I’m feeling the need to get outta here, hit the road, talk to actual people. And so — you knew it was coming — another road trip!” He asked his readers, “ If you’re living somewhere along my general route, and you know someone really admirable or interesting I should meet — or maybe you want to introduce me to your co-workers or extended family — get in touch.”

DEMOCRATS DOMINATE GOP — ON THE FIELD.Republicans may rule in House of Representatives, but Democrats reigned supreme on the baseball field Thursday night,” ABC’s Amy Bingham reports. “The liberals brought home the trophy in an 8-2 win over conservatives at the annual congressional baseball game which raised money for The Washington Literacy Council and The Boys and Girls Club of Greater Washington. Democrats dominated from the start bringing in seven runs in the first three innings and stifling any Republican attempts to get on base. … While the leadership may not have been making deficit-reduction deals, the crowd was certainly buzzing with debt limit chatter. In between chants of “MVP” and “USA” ballgame-watchers could be heard muttering about budget cuts and credit ratings.”



@Reuters: FLASH: U.S. recognizes Libya rebel council as country's legitimate government, says Secretary of state Clinton

@ChadPergram: Jay Powell, who managed the debt ceiling for Bush 43, talking to GOP conference about consequences of not raising the debt ceiling in Aug.

@EWErickson: Just got told this post of mine is being passed around in a closed door meeting of House Republicans.…

@MattMackowiak: TX R's universally hate him RT @politicoalex: Doggett is one of the last Anglo Dems in Texas…facing his toughest

@JoshG54: Everyone knows the metro escalators are always broken, but its particularly special when one comes to a screeching halt while on it



(all times local)

* Jon Huntsman speaks about jobs at StruckAxiom, a brand marketing company, in Salt Lake City, Utah at 11:30 a.m.

* Newt Gingrich campaigns in Iowa, speaking to the Conservative Breakfast Club in Des Moines, attending a meet & greet with Iowa State Representative Scott Raecker, and he will throw out the first pitch at an Iowa Cubs vs. Oklahoma Red Hawks baseball game tonight.

* Herman Cain gives the keynote address at Freedom Fest in Las Vegas at 4 p.m.

* Rudy Giuliani speaks at Dartmouth College in Hanover, N.H.

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