The Note: Down The Rabbit Hole: Where Does Congress Go From Here?

Jul 29, 2011 9:05am

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

A vote on House Speaker John Boehner’s debt-limit plan hasn’t even happened yet but already the political recriminations are in full-swing.

ABC’s Jonathan Karl hears that GOP leaders are infuriated with Boehner's fellow Ohio Republican Jim Jordan — who led a charge against the Speaker’s plan — and they are maneuvering to oust him as the chairman of the Republican Study Committee, an influential group of House conservatives. Republican leaders are also pinning part of the blame on South Carolina Senators Jim DeMint and Lindsey Graham, both of whom have come out against the Boehner bill. Their public opposition is making it extremely difficult to convince House Republicans from South Carolina to vote for “yes,” Karl reports. http://abcn.ws/opKPep

Tune In: ABC's Christiane Amanpour interviews Sen. Graham on "This Week" on Sunday.

Meanwhile, we will hear from President Obama for the first time in three days on the status of the debt ceiling negotiations. He plans to make a statment from the White House at 10:20 a.m. this morning.

Last night's scene on Capitol Hill was reminiscent of many close votes in recent times: the last minute arm twisting, the late night pizza deliveries, the minute-by-minute fluctuations in whip counts. But, these are not “ordinary times.”

With the clock ticking, the Treasury Department literally plotting out contingency plans in the event the government runs out of money and the markets sitting on pins and needles waiting for resolution, getting a deal through Congress is more than just an intellectual exercise. Which is what made last night's vote debacle even more surreal and consequential.

"It's Mad Hatter time on the Hill," a senior White House official told ABC's Jake Tapper after Republican leaders decided to withdraw House Speaker John Boehner’s debt-limit plan from consideration rather than let it go down in failure. "None of this has anything to do with the economy, it's all power games inside the Beltway," the official added.

Even more troubling: if Boehner can't get his own team on board with a bill that is the best Republicans can get (a proposal that can't even pass the Senate) how can he get them on board with a compromise deal?

This puts the ball into Democrats' court. Can Senate Majority Leader Harry Reid and his GOP counterpart, Minority Leader Mitch McConnell, put something together that can get through the Senate and then pass the House with support from House Democrats?

So what happens next?

ON THE HILL. The House plans to vote on a tweaked Boehner bill this morning after the Speaker holds a private meeting with the GOP caucus. Sources tell ABC’s Jonathan Karl that Republicans believe they have the votes to get it through this time. The bill’s prospects in the Senate remain bleak. Senate Democrats convene a caucus meeting this morning and Majority Leader Reid is expected to speak at noon.

AT THE WHITE HOUSE. Our Jake Tapper hears from White House officials that President Obama believes that last night’s chaos on Capitol Hill underlines his belief that passing a small bill is not easier than passing a big one. The president also believes the time for a big deal has passed, officials said. The White House could still hold a Friday evening briefing (after the markets close) detailing which of the government’s bills will be paid and which will not after Aug. 2 if no deal is reached, but nothing has been scheduled yet.

IN THE MARKETS. ABC’s Dan Arnall notes that the financial markets are thus far taking the impasse in Washington in good stride — marking each day with tempered selling. More like an erosion than a landslide. What’s ahead?

The outcome of the planned vote on Speaker Boehner’s proposal and the late-day revelation of Treasury's just-in-case plan will likely paint a picture of where Washington is heading in the coming days. Wall Street will take its hints from them. If Senate Democrats and House Republicans seem calm and forthright, investors will likely continue the mantra, "They'll get it done." However, a quick breakdown or storm of negative post-meeting press scrums and you'll likely see investors heading for the doors before the end of the week — in droves. 

If Treasury reveals a well-thought, comprehensive plan to keep bondholders paid in full and minimize economic effects of no deal on the debt, then we might see relative calm as the next market week dawns. A hint that Treasury might drop a payment or two and dump into default, then grab your crash helmets. 

Analysts have told us they are betting we could easily see a quick 10 percent market drop on the worst case. In the best case we continue to shed 0.7-1 percent a day until the president signs something that gives us some debt ceiling breathing room and hopefully placates the global ratings agencies. 

ABC NEWS’ COUNTDOWN CLOCK: 4 DAYS TO DEFAULT: http://abcnews.go.com/politics

 

SUBWAY SERIES: SEN. THUNE’S PREDICTION: ‘IT’S GONNA HAPPEN’ Sen. John Thune, R-SD, said the two sides will still come together and reach agreement. “It’s gotta happen,” Thune told ABC News’ Jonathan Karl in the latest installment of the Subway Series. Thune said that if the structure of the Democratic proposal written by Senate Majority Leader Harry Reid is paired with some of the spending cuts in the proposal written by House Speaker John Boehner, Congress can make a debt ceiling increase happen either before Aug. 2 or sometime next week.  “I still believe that between now and Tuesday I mean I don't think they are that far apart there are some questions about the proposed spending reductions in Reid's plan and whether or not they're phony or real and we believe they're phony. But if you can get to, uh, you know, some significant immediate caps on spending for 2012, 2013 put some kind of process in place where you deal with entitlement issues and don't raise taxes I think we get there I still believe it,” Thune said. http://abcn.ws/qQQawX –ABC’s Z. Byron Wolf

 

ON TODAY’S “TOP LINE”:  ABC’s Rick Klein and Amy Walter hear from Rep. Adam Kinzinger, R-Ill., about the latest in the debt-limit debacle on Capitol Hill. Then D.C. comedian and rapper Remy Munasifi is in the “Top Line” house! You might recognize Remy from such local hits as “Metro Song” and “Arlington: The Rap.” His most recent piece is a “Raise the Debt Ceiling” rap. Also, a clip of Jon Karl’s “Subway Series” interview with Sen. John Thune, R-S.D. (preview above.) Watch “Top Line” LIVE at 12:00 p.m. Eastern. http://abcn.ws/toplineliveabc

“TOP LINE” REPLAY: MIKE LEE. The Utah Republican Senator defended his plan for a balanced budget amendment after Senator John McCain, R-Ariz., called it, “bizarro.” “I wouldn't call any plan 'bizarro' that 75 percent of the American people support. That's how Americans feel about the need for a balanced budget amendment,” Lee said on “Top Line,” pointing to the passage of the “Cut, Cap and Balance Act” in the House and its support among Republicans in the Senate before Democrats voted to table it. “I think it's unfortunate that they killed it that way. I think it's even more unfortunate that some people have chosen to criticize this process, rather than seeing it for what it is, which is a sincere desire to address a long-term problem with a permanent solution." http://abcn.ws/ptOgBh  

 

KAL PENN BIDS THE WHITE HOUSE GOODBYE (FOR NOW).It was Kalpen Modi's last day of work at the White House, but it's his first time talking about it,” ABC’s Jake Tapper reports from his exclusive interview with Penn. “Many probably recognize him more by his stage name — Kal Penn, known for playing the lovable stoner Kumar from the ‘Harold and Kumar’ film franchise, or the suicidal Dr. Kutner from the TV series ‘House, M.D.,’ or a terrorist from TV's ‘24.’ Working as the associate director for the White House's Office of Public Engagement, the 34-year-old actor has declined multiple requests for interviews until now. …The Office of Public Engagement focuses on creating a dialogue with students around the country about policy. One of Penn's jobs is to engage the elusive young voters who turned out in droves for President Obama in 2008, but now seem to have become more complacent almost three years later. ‘I think what I've seen is that there is a realization that change is not a light switch,’ he said. ‘That if it was easy to flip on a light switch and change everything, someone would have done it before — and it's actually a very laborious process, it's very slow. I wouldn't say it's disillusionment, I would say it's understanding the process.’” More from Tapper's exclusive interview with Kal Penn and watch the full story on “Nightline” tonight: http://abcn.ws/qwdz3c

 

RICK PERRY WATCH. ABC’s Arlette Saenz and Michael Falcone report: Rick Perry held a private meeting last night with potential donors and supporters in Austin and it appeared to leave at least some participants fired up about the prospect of a Perry candidacy. “Impressive. He's authentic, fighter & has a successful record as gov. #hopePerryruns,” tweeted Mississippi Republican Henry Barbour, the nephew of Gov. Haley Barbour. The Daily Beast’s Jill Lawrence spoke with another possible Perry backer who attended a similar meeting with the governor last week. “I would say he’s a game-changer,” said, Barry Wynn, a prominent GOP fundraiser and former chairman of the South Carolina Republican Party. Wynn told Lawrence that Perry has “a remarkable record of creating jobs.” http://bit.ly/mZGQvp

Today, Perry heads to Colorado today to address the Western Conservative Summit. He’ll sign copies of his book, “Fed Up!” prior to the speech. Though he’s not a declared candidate, Perry will be one of fourteen names included on the summit's straw poll ballot, and his attendance there is piquing interest among some Colorado Republicans. 

"I think there’s a restlessness among Republicans in Colorado and across the country that people are not super excited about people in the announced field," John Andrews, the organizer of the summit and director of the Centennial Institute, a public policy think tank, told ABC News. "Consequently, the newness and some of the mystery surrounding a successful and long serving governor like Rick Perry is drawing a lot of attention."

Presidential candidates Herman Cain and Rick Santorum will also speak at the summit. Santorum, who speaks immediately before Perry, recently criticized the Texas governor’s support of New York's gay marriage law, but yesterday Perry attempted to clarify his stance on gay marriage, saying on a radio show, "Gay marriage is not fine with me." http://abcn.ws/nUoNg2  

 

THE BUZZ

TEA PARTY LINE ON DEBT SHOWDOWN. Jenny Beth Martin, co-founder and national coordinator of the Tea Party Patriots, is none too pleased with House Speaker John Boehner or the Republican lawmakers who are going to vote for his debt-limit plan today. In a statement to ABC News, Martin warns that “Tea Party-allied lawmakers” who have said they will vote for Boehner’s bill have been “co-opted by the Republican Leadership.” Here’s her full statement: “The Boehner plan does not go far enough in taking the steps needed now to return fiscal responsibility to our country. The phantom cuts promised in his plan are likely to never materialize. It’s becoming clear Speaker Boehner cannot keep his own ‘pledge’ to cut $100 Billion this year, so how can we expect future Congress’ to keep his promises made today? Many Tea Party-allied lawmakers have been co-opted by the Republican Leadership as we predicted would happen in November. As citizens it is our job to hold our elected officials accountable for their actions. This is what Tea Party Patriots has done and will continue to do with all elected officials.”

LABOR COALITION PLANS AD BLITZ. “It's fair to say that if they're not paying attention already, the debt ceiling crisis will likely be on the minds of Americans this weekend as the August 2nd deadline for default draws nigh. And as they tune in, a coalition of labor groups hope to use a new TV ad campaign to remind Americans of their side of the story,” notes Talking Points Memo’s Evan McMorris-Santoro. “The coalition — made up of AFSCME, SEIU, the NEA and Americans United For Change — has dropped ads on eight states targeting Republican politicians over the debt ceiling crisis, which seems destined to drag on until the bitter end — or maybe after, taking the nation into default. The message from labor: ‘If the Social Security checks, veterans' benefits, military pay Americans are counting on don't arrive after August 2, thank Republicans in Congress.’ Democrats, led by President Obama, have been warning that entitlement payments may be delayed should Congress fail to raise the national borrowing limit. That's a result that even Senate Minority Leader Mitch McConnell has said will be bad news for the GOP. The union spots lay the groundwork for what will likely be a common refrain among Democrats should it actually come to default. The new spots will run in media markets targeting Sen. Dean Heller (R-NV), Rep. Bobby Schilling (R-IL), Rep. Steve King (R-IA), Rep. Chip Cravaack (R-MN), Rep. Denny Rehberg (R-MT), Rep. Ann Marie Buerkle (R-NY), Rep. Lou Barletta (R-PA) and House Majority Leader Eric Cantor (VA).” http://bit.ly/qKkpOx

LIBERALS SEEK BOOST FROM DEBT TALKS. Just as the Tea Party used President Obama’s bailouts to inspire supporters in the 2010 elections, liberal groups now say frustration over the debt ceiling debate is fueling left-wing fire, Roll Call’s Ambreen Ali reports. “…disenchanted liberals are trying to regain control of the debate to focus on increasing taxes on corporations and the wealthy and on preventing cuts in entitlement programs.” “‘The tea party has effectively shifted the frame of debate on the economy. From our perspective, we’re fighting in their frame and losing that battle,’” Justin Ruben, executive director of MoveOn.org, told Roll Call. “‘That sort of frustration is what we’re counting on that will give some lift to this [movement].’” http://bit.ly/qeVnZz

BRUTAL BATTLE SHAPING UP IN UTAH. “Republican Sen. Orrin Hatch of Utah has done everything he can to escape the fate of Republicans who lost primaries to the tea party in 2010. Despite working on improving his relationship with Tea Party and fiscal conservative groups over the last year, the alarm has been sounded and Rep. Jason Chaffetz, R-Utah, appears to be making steps towards an announcement sometime after Labor Day,” ABC’s Shushannah Walshe reports. “‘If it was just about taking the path of least resistance, I would just stay in the House,’ Chaffetz told ABC News. ‘But that’s not necessarily where I am headed. I don’t know. I haven’t made a final decision, but I’m trying to be as candid as I can saying I moved from being a definite maybe to probably.’ For an unannounced candidate, he has absolutely no hesitation taking on his potential intra-party rival. If or when Chaffetz gets in, it’s sure to be one of the most contentious primary fights in Congress. ‘I don’t know that 42 contiguous years in the bubble in the U.S. Senate is healthy for anyone,’ Chaffetz said. ‘I think people are ready for a change. And second to that is I just disagree with him on a lot of very important issues.’” More on the race, including the response from Hatch’s camp: http://abcn.ws/nlni9o

BACHMANN: ‘EVERY JOT AND TITTLE OF MY LIFE WILL BE FULLY’ INSPECTED. Presidential candidate Michele Bachmann declined to directly address reports that the Christian counseling clinic she owns with her husband, Marcus, has tried to help gay people become straight through prayer. “I’m extremely proud of my husband. I have tremendous respect and admiration for him,” she told an audience in Washington, D.C., Thursday. “I am running for the presidency of the United States. My husband is not running for the presidency, neither are my children, neither is our business, neither is our foster children. And I am more than happy to stand for questions on running for presidency of the United States.” Bachmann’s remarks came during a question-and-answer session after a speech at the National Press Club. Bachmann’s husband and two of the couple’s children, Sophie and Elisa, were in the audience  Thursday. Though she declined to respond to the question about her husband's counseling centers, Bachmann acknowledged that running for president often brings intense, and sometimes unwanted, scrutiny. “I have no doubt that every jot and tittle of my life will be fully looked at and inspected,” she said. Bachmann’s Thursday appearance in Washington was wedged in between visits to Iowa, where she has been campaigning in advance of the Ames Straw Poll next month. She campaigned there earlier in the week and will return for more events over the weekend. http://abcn.ws/qFUM5D

 

WHO’S TWEETING?

@RepDennisRoss: Is everybody ready to do this debate again in six months??#anyoneseenthePresident

@AlHuntDC: can u imagine sam rayburn or lyndon johnson or everett dirksen getting to this point ?

@stephenfhayes: Q2 GDP number makes clear that economy was slowing dramatically well before debt ceiling debate. Important to remember over next 17 months.

@AlexConant: Great early morning event in Council Bluffs, IA. Last event of our "Road to Results" tour this week. t.co/mzDIieK

@DKThomp: RT @tedfrank: Happy birthday to @thegarance !

 

POLITICAL RADAR: 

(all times local)

* Presidential candidates Huntsman, Johnson, McCotter, and Cain will participate in the the College Republican National Committee's 2011 convention at Renaissance Marriott in Washington, D.C. Johnson speaks at 10 a.m. McCotter addresses the crowd at 11 a.m. Huntsman will deliver the keynote speech at 7:30 p.m.

* Rick Perry, Rick Santorum and Herman Cain speak at the Western Conservative Summit Dinner in Denver, Colo. today and over the weekend.

* Ron Paul kicks off with the Iowa Tea Party Tour at 8 a.m. in Altoona. He also visits Des Moines, Sioux City, Spencer and Mason before he heads back to Des Moines at 7 p.m.

* Tim Pawlenty hosts a meet-and-greet in Council Bluffs at 7 a.m.

* Rick Santorum's wife, Karen and the Santorum children will manage a refreshment stand along the RAGBRAI race route in Ladora, Iowa at 11 a.m.

The Note Futures Calendar: http://abcn.ws/ZI9gV

 

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