Debt Drama Continues, But Don’t Expect A Hollywood Ending (The Note)

Jul 14, 2011 8:54am

NyZvZj*w Debt Drama Continues, But Don’t Expect A Hollywood Ending (The Note)


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

With each passing day, the debt ceiling negotiations at the White House sound more and more like they were ripped from an episode of “The West Wing.”

At a meeting between Democratic and Republican leaders yesterday — the most tense of the deficit reduction meetings yet, representatives from both sides say — the drama focused on an exchange between President Obama and House Majority Leader Eric Cantor, R-Va.

ABC’s Jake Tapper and Ann Compton report that Cantor suggested a short-term fix that would avoid default on U.S. debt obligations on Aug. 2 but would require another vote next year.

Enter a frustrated President Obama: “Don't call my bluff,” he said. “I am not afraid to veto and I will take it to the American people.”

He added, “This may bring my presidency down, but I will not yield on this.”

Then there were House Speaker John Boehner’s comments from a briefing with reporters yesterday at which he declared, “Dealing with them the last couple months has been like dealing with Jell-o. Some days it’s firmer than others. Sometimes it’s like they’ve left it out over night.”

But amid all the food metaphors (don’t forget Obama’s “peas” line from Monday) and the Hollywood dialogue (paging Aaron Sorkin), Moody's reminded us yesterday that consequences of not getting a debt ceiling deal are all too real. 

The agency announced that it was putting the country’s credit rating under review for a possible downgrade as both sides struggle to hammer out a compromise.

The Moody's warning may be what gets the two sides together, but even so, Speaker Boehner appeared to dig in his heels last night.

“This report underscores the warning I outlined months ago,” he said, “If the White House does not take action soon to address our nation’s debt crisis by reining in spending, the markets may do it for us.” 


WHITE HOUSE WATCH. ABC News' Mary Bruce reports: “After President Obama abruptly walked out of Wednesday’s deficit meeting, negotiators will come back to the table today. They are scheduled to meet at the White House at 4:15 p.m. ET … Obama will continue his deficit reduction push in three regional television interviews with Cox Television, WRC in Washington, D.C. and KYW in Philadelphia. With the August 2nd deadline looming, Obama and Vice President Biden will also meet privately with Treasury Secretary Tim Geithner before they meet with Congressional leaders.”

ABC’s John R. Parkinson has more backstory from yesterday’s meeting from Majority Leader Eric Cantor’s office:


BACHMANN DOUBLES DOWN ON DEBT… As ABC’s Jonathan Karl reported on “Good Morning America” today, presidential candidate Michele Bachmann has taken one of the hardest lines on the debt ceiling, vowing not to vote to raise it. In an appearance on Fox News last night she seemed unfazed by yesterday’s Moody’s announcement. "[Moody’s downgraded credit rating] is dependent on not paying interest on the debt. That’s a very small amount of money relatively speaking. We can easily do that. … We won’t get downgraded if we pay the interest on the debt. The president knows and Sec. Geithner know we have sufficient money to pay the interest on the debt. … No reason to do that we have plenty of money to pay the interest on the debt. That’s why I think the president is playing politics.”

…BUT STAYS UP IN IOWA. As Karl noted, a new national poll out yesterday puts Bachmann firmly in second place as the leading challenger to front-runner Mitt Romney, and three separate polls over the past week conducted in Iowa, place Bachmann in first place. The latest survey, conducted by Mason-Dixon, gave her a 3 point lead over Romney in the Hawkeye State among likely Republican Caucus-goers. Here’s how the contenders stack up:                       

Michele Bachmann: 32%                               

Mitt Romney: 29%                             

Tim Pawlenty: 7%                              

Rick Santorum: 6%                 

Ron Paul: 3%                          

Newt Gingrich: 2%                 

Jon Huntsman: 0%                  

Gary Johnson: 0%                               

(Undecided): 19%      

NOTABLE: The two biggest threats to Bachmann are from people who aren't even in the race — yet. Namely, Sarah Palin and Rick Perry. Perry and his aides have been laying the groundwork for a campaign and on Fox News last night Palin hinted she'd make a decision by August or September on whether to jump into the race (more on that below).


ON TODAY’S “TOP LINE”:  ABC’s Rick Klein and Jonathan Karl will hear from Congressman Chris Van Hollen, D-Md., the ranking member on the House Budget Committee. (When Van Hollen appeared on “Top Line” in June he said the committee’s goal was to hammer out an agreement on the debt ceiling by the start of July.) Also on the program, national security reporter Josh Rogin of Foreign Policy magazine. Watch “Top Line” LIVE at 12:00 p.m. Eastern.

“TOP LINE REPLAY”: ‘GET OVER IT, GET ON WITH IT’ Congressman Xavier Becerra broke from the mold yesterday when he said there definitively that members of the legislature would reach a deal on deficit negotiations, ABC’s Z. Byron Wolf reports. “‘It’s become clear as Governor Ann Richards former governor of Texas used to say, ‘get over it, get on with it.’ I think that's the message to House Republicans — even I think Senator McConnell Republican in the Senate is saying the same thing to House republicans you've taken us to the brink of the cliff this game of chicken is no longer against the president or against Democrats,’” Becerra said.



WHAT HAPPENS IF THERE’S NO DEAL?  “On Aug. 3, the nation would find out, with Obama forced to make a set of extraordinarily difficult choices about what to pay or not pay. By then, the government’s savings account would be nearly empty and the president would be relying on daily tax revenue to pay the nation’s bills,” the Washington Post’s Zach Goldfarb writes. “There wouldn’t be enough — in fact, there would be a $134 billion shortfall in August alone. As Obama decided what to pay, he would choose among Social Security checks, salaries for members of the military and veterans, unemployment benefits, student loans, and many other government programs, according to administration officials and an independent analysis by a former senior Treasury Department official in the George H.W. Bush administration. To protect the nation’s creditworthiness, Obama would have to balance those priorities with the imperative of making payments to investors in U.S. government bonds — ranging from domestic pension funds to the Chinese government.”

RON PAUL RELEASES FIRST CAMPAIGN AD. “Congressman Ron Paul has released his first television campaign ad of the 2012 campaign season,” ABC’s Jason Volack reports. “Modeled after a cinematic movie trailer, the one-minute ad dramatically reviews past debt ceiling compromises in the 1980’s and 1990’s and starkly warns that although tax cuts were promised as part of those deals to increase the debt ceiling — those cuts never materialized.  As a result — the ad says — we are left with $14 trillion in debt, millions unemployed, and the dollar in decline. Congressman Paul has repeatedly said that he opposes any increase of the debt ceiling and the ad puts pressure on Republican congressional leaders to do the same. The congressman has found a voice as of late on the matter. Starting last weekend and continuing into this week — the congressman has been calling on his supporters to contact their congressperson and tell them to vote no on any deal. The current TV ad is an intensification of that effort. Congressman Paul has also been a media binge this past week. On Wednesday he launched a $75,000 radio ad buy across Iowa. The TV ad will start running this Friday in New Hampshire and Iowa.”

PALIN SUGGESTS AUGUST OR SEPTEMBER DECISION ON PRESIDENTIAL RUN.Sarah Palin blasted President Obama's handling of the debt crisis on Sean Hannity's Fox News show Wednesday night, saying the ‘plans under Obama are making absolutely no sense,’” ABC’s Sheila Marikar reports. “What if she were in Congress? Palin told Hannity she ‘would not vote to incur more debt. Not under this president, I do not trust him.’ Nevertheless, Palin said she believes the debt ceiling will be raised. As far as her 2012 prospects, the former Alaska governor maintained that she still hasn't decided what she'll do. But she acknowledged that the deadline to get into the presidential race is fast approaching, saying that by ‘August, of course, you have to be laying out a plan if you're going to be one to throw your hat in the ring.’ She also reiterated that she's not satisfied with the current crop of Republican contenders. ‘I'm not wholly confident that we have that field set yet,’ she said.”

RUDY’S TIMELINE: ‘END OF SUMMER’Rudy Giuliani says he will join the race for the White House if he feels no other Republican candidate can beat President Barack Obama in 2012,” the Daily Caller’s Alex Pappas reports. “In an interview with The Daily Caller, the former New York City mayor said he’s still very open to running and said a decision will be made within the next several months. ‘I think there’s an obvious timeline, which would be the end of the summer,’ said Giuliani, who ran for president in 2008, during the phone interview. ‘I got to get this decided by September.’ Asked how likely it is that he’ll ultimately join the already crowded race, Giuliani refused to say. ‘That’s too much teasing,’ the Republican said, ‘and I’m too far away from making a decision.’ Giuliani is traveling to New Hampshire this week for several events, but admitted he’s also going to “see how people are feeling, how good of chance we have of beating Obama, how the candidates are doing, so that I can also make a decision about whether I run or not.’”

ABOUT THAT PLEDGE… Presidential candidate Herman Cain on Wednesday became the fifth GOP presidential contender to decline to sign a conservative Iowa group's traditional marriage pledge. Although Cain is making a strong play in Iowa where the group, The Family Leader, is based, he said in a statement that while he supports the organization's "commitment to supporting traditional values" his own position "encompasses their values without the need to sign the pledge. In taking this position, the former Godfather’s Pizza CEO joins four other presidential candidates — Mitt Romney, Tim Pawlenty, Jon Huntsman and Gary Johnson — who have all declined to sign on to the pledge that includes a vow to support a constitutional amendment that defines marriage as between a man and a woman, equates same-sex marriage with bigamy and polygamy and calls on candidates to promise to be faithful to their spouses, among other requirements. Rep. Michele Bachmann, R-Minn., was the first presidential candidate to sign her name to the pledge, followed by former Pennsylvania Sen. Rick Santorum. Candidates Ron Paul and Newt Gingrich have not yet made a decision about whether to sign it. Gingrich said he won't do so with its current language. His campaign is working on an amended version of the vow that they will present to the Family Leader.



@thehill: McCaskill on debt talks: 'McConnell has lost his mind'; GOP a 'hot, sloppy mess'…

@ByronYork: Some in GOP are saying: With Obama in charge, debt talks are going nowhere, so let's try something else…

@PhilipRucker: New @MittRomney video featuring NH realtor. Firm went from 35 employees to just him & wife. He just filed bankruptcy.

@GOP12: Last year, Pawlenty praised Bachmann's "leadership" and ability to "change this country"

@politicoroger: Bozo Congress. What's really ruining America. My latest column:



(all times local)

* Mitt Romney addresses the Portsmouth Rotary at the Redhook Ale Brewery in Portsmouth, N.H. at 11:45 a.m. Just before 2 p.m., he tours RSA Realty in Rochester. Then Romney attends a Republican Town Committee Town Hall in Derry at 5:15 p.m.

* Herman Cain spends the day in Murfreesboro, Tenn. First, he attends a Friends of Herman Cain meet-and-greet at 1:30 p.m. Cain then goes to the Rutherford County Businessmen and Women meet-and-greet at 3:30 p.m. He delivers the keynote address at the We Are America Rally at 5:30 p.m.

* Rudy Giuliani meets with doctors and hospital administrators at Exeter Hospital in New Hampshire. He then speaks at the Seacoast Republican Women's luncheon in Hampton, N.H., at 11:30 a.m. He will also meet with local members of the National Rifle Association and Manchester motorcyclists at Harley Davidson before a private dinner in the evening.


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