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The Center Folds

The most viable solution to the shutdown crisis—a ‘clean’ budget in the House—is losing what little Republican support it had. David Freedlander on why everyone’s jumping ship.

And on the eighth day, things got even worse.

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US Capitol is seen at sunrise in Washington on October 8, 2013. (Saul Loeb/AFP/Getty)

In a fast-moving series of events in Washington that saw, albeit briefly, the floating of an idea to revive “a super-committee” to deal with the budget crisis, moderate House Republicans who have been working to find a way out of the shutdown actually lost support for a measure to re-open the government using a combination of Democratic and Republican votes.

That plan, a so-called “clean” continuing resolution, or CR, would fund the government at existing levels—ignoring both Democratic efforts to erase the effects of sequestration and Republican efforts to defund the Affordable Care Act or institute a one-year delay in the controversial law.

Shutdown Impact

It’s Worse This Time

If 1995 is any guide, the government shutdown won’t be too bad, right? Wrong, says Daniel Gross. Ours is a very different economy.

I’m generally an optimist about the resilience of the U.S. economy, its ability to bounce back from shocks and power through disasters, whether they’re imposed by nature, markets, or politics. But today, four years into an expansion that few people saw coming, I’m more pessimistic than many about the impact of the shutdown.

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President Barack Obama answers a question during a press conference in the Brady Press Briefing Room at the White House. (Jewel Samad/AFP/Getty)

The predictions have come fast and furious. The shutdown costs $300 million in lost gross domestic product per day, according to IHS Global Insight. Economists surveyed by Bloomberg last week said a one-week shutdown would reduce fourth quarter GDP growth by .1 percent. Macroeconomic Advisers, one of the most sober and best forecasters, said a two-week shutdown could shave .3 percent off the fourth quarter. Neil Irwin at the Washington Post has helpfully aggregated a bunch of Wall Street forecasts that project that a one-month shutdown could reduce fourth-quarter growth by anywhere from .5 percent to 2.0 percent.

That’s a pretty big dispersion.

It’s a Deal

Dirty Debt, Done Dirt Cheap

They screwed up the shutdown, but Republicans are right to insist that any increased borrowing today should require spending less in the future, says Nick Gillespie.

Can anyone other than doctrinaire Democrats and members of his immediate family keep a straight face when President Barack Obama insists that he is “prepared to negotiate on anything” while simultaneously saying that “until we make sure that Congress allows Treasury to pay for things that Congress itself already authorized, we are not going to engage in a series of negotiations”?

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Ulrich Baumgarten/Getty

Or when Treasury Secretary Jack Lew announces that the government “cannot be put in a position of having to choose which commitments it should meet,” as if picking between, say, paying interest payments to avoid default and buying half a billion dollars worth of useless cargo planes is a contemporary version of Sophie’s Choice.

However much House Republicans may have Mr. Belvedered themselves when it comes to the government shutdown, they are absolutely right to insist that any increase in the amount of money the government can borrow today should be tied to firm commitments to spend less in the future. Think sequester, which promises to cut just somewhere between 1 percent and 2 percent of overall annual spending, on steroids. And the future should be defined as “the day after the debt-limit increase goes into effect.”

Obama Presser

‘Lord Knows I’m Tired of It’

The president rebutted the GOP claim that a default is no big deal on Tuesday but left a little wiggle room for Boehner, insisting he’s ‘compromised my whole political career.’ Eleanor Clift reports.

With the shutdown in its second week, President Obama chose the White House briefing room to lay out, once again, his strategy of no negotiations until the government is opened and the threat of defaulting on the debt removed. But he did leave a little wiggle room for a possible way out of the stalemate. He urged House Speaker John Boehner to put a resolution on the floor that would fund the government if only for a short time, a measure the president believes could pass with the necessary 218 votes. “And they can attach some process to that that gives them some certainty, if my word isn’t good enough,” that he would then “sit down with them for as long as it takes” to go through the health-care law “line by line.” But Obama said he’s not going to “gut” his signature achievement, and he’s not going to talk about it with government agencies shuttered.

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Chip Somodevilla/Getty

“I may have—I have flaws, Michelle will tell you,” he said toward the end of an extraordinary hour-plus press conference. “One of them is not that I’m unwilling to compromise. I’ve compromised my whole political career.” Once the Republicans lift their “threats of economic chaos,” he said, he is happy to talk with Boehner and other “reasonable Republicans” about anything. “I’ll even spring for dinner,” he said.

Obama must be feeling the heat from the Republican mantra that he won’t negotiate. Americans like their political leaders to negotiate, and while polls show Obama and the Democrats have the edge on public opinion so far, that could erode if the president looks too implacable. Asked if he is tempted to sign some of the piecemeal measures passed by Republicans to provide funding for popular programs, Obama replied, “Of course I’m tempted,” but he stuck to his position that it’s no way to run a government.

Delusional

Do the Right Thing, Boehner

A growing number of Republicans believe that we can survive a debt limit breach with little trouble. Yeah, that’s incredibly troubling.

During the first debt limit stand-off, Senate Minority Leader Mitch McConnell designed a scheme that would end the then-crisis and preclude another one. Instead of waiting on congressional authorization to lift the debt ceiling, McConnell’s proposal would allow the president to do it himself. Congress could block the extension, but only with a two-thirds vote.

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U.S. Speaker of the House Rep. John Boehner leaves after a meeting with President Barack Obama October 2, 2013 at the White House in Washington, DC. (Alex Wong/Getty)

It’s a good idea. As former Treasury Secretary Hank Paulson told CNBC, the whole idea of a “debt limit” is redundant. “Congress has already approved the spending,” he explained, “And then say ‘you have to then come back and agree to allow us to meet our obligations,’ that’s ridiculous.” When Congress authorizes spending, it gives an implicit OK to the president—“If you need to borrow to fulfill your obligations to the laws we passed, then do so.” McConnell’s idea would make that explicit.

Indeed, it’s such a good idea that Senate Majority Leader Harry Reid has brought it back, to pressure John Boehner and House Republicans into ending the stand-off. As Brian Beutler writes for Salon, “Moving quickly, while Boehner and his lieutenants dither, is a can’t-lose move for Reid. If the plan fails—that is, if Republicans successfully filibuster the bill with a week before the Treasury Department’s deadline—markets will turn, and the pressure on the GOP to cave will increase. If it passes, Boehner will be isolated.”

Diagnosis

Out of Touch Whiners

Has the shutdown made the Tea Party go bipolar? Some of them want our pity; others are too busy celebrating to care about real people. Kirsten Powers calls for an end to the madness.

As the U.S. government enters week two of Shutdown 2013, the Tea Party members who created this mess have gone bipolar. In the Senate, it’s a pity party. Over in the House, manic glee.

Senators Marco Rubio, R-FL., Mike Lee, R-UT., and Ted Cruz, R-TX., talk on the East Front Plaza of the U.S. Capitol on August 1, 2013

Douglas Graham/Getty

Sen. Ted Cruz took to the Senate floor on Friday to whine that Democrats were invoking his name as the “root of all evil in the world.” This grandiose self-pity exaggerates the plaint. He is the root of only one evil, at least so far: the government shutdown. His Tea Party sidekick, Sen. Mike Lee, cried to radio host Hugh Hewitt after a meeting with displeased GOP colleagues, “It was an all-out attack against Ted Cruz and me. It was unflattering. It was unfair. It was demeaning.”

Two grown men were giving us this crybaby routine as it was reported that actual babies were to go without formula, thanks to them. Almost nine million mothers and their children are at risk of having their benefits under the Women, Infant, and Children (WIC) program slashed or frozen.  The U.S. Department of Agriculture has found stopgap funding, but warns that if the shutdown goes beyond October they will run out of money.

Unscathed

And the State Goes On

From the CIA to Treasury, the shutdown has crippled key national-security functions. But John Kerry’s State Department barely has a scratch. Josh Rogin and Eli Lake report.

Until yesterday, 400,000 Defense Department employees were furloughed without pay due to the government shutdown. At the Treasury Department, the offices that enforce and monitor sanctions on North Korea, Syria, and Iran have been reduced to a skeleton crew. And large numbers of CIA analysts and logistics officers—including, until last week, 72 percent of the civilian workforce—have been told to stay home until the government has a 2014 budget.

John Kerry

Dita Alangkara/AFP/Getty

Yet while these and other federal agencies struggle to keep the lights on, John Kerry’s State Department appears to have largely avoided the pain.

At Foggy Bottom—admittedly a much smaller agency than Defense—only 340 employees have been sent home. The department recently informed Congress of several plans to spend money on non-critical items, such as $8 million for a new consulate building in Hyderabad, a city in southern India, according to a document obtained by The Daily Beast. In addition, its Iran negotiating team is fully funded and moving forward with plans to meet Iranian government officials in Geneva next week.

DIALOGUE?!?

Obama Calls Boehner

Obama Calls Boehner Pete Souza/The White House via Getty

President insisted no negotiations.

Is there a special phone for this, like FDR’s red phone? President Obama called House Speaker John Boehner on Tuesday, but don’t get too excited about a deal being worked out: the president told Boehner that he will not negotiate. Obama “repeated what he told [Boehner] when they met at the White House last week,” said a White House statement of the 10:45 a.m. call. Which is, the White House will not speak to Republicans until they end the shutdown and agree to raise the debt limit. House Republicans, meanwhile, have called for a “supercommittee” to negotiate, which New York Democratic Sen. Chuck Schumer immediately dismissed as a “gimmick” similar to the 2011 debt-ceiling compromise. Obama plans to speak at 2 p.m. Tuesday.

Read it at USA Today

There’s certainly racism left in America, but liberal pundits claiming it’s driving the government shutdown make a mockery of the real thing, says Stuart Stevens.

Maybe it was inevitable.

In a confusing mess of a crisis like the government shutdown, everybody is rushing to insist that each new development proves their favorite point. If you think the Tea Party is taking over Congress, here’s proof. If in your worldview, Barack Obama would rather negotiate with Iran than Republicans, here’s proof. Convinced that Washington is totally broken? Miss the days when leaders like Reagan and Tip O’Neil found common ground? Look no further then these last few days for ample evidence.

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President Barack Obama and Vice President Joe Biden talk to the media after walking from the White House for lunch on October 4, 2013 in Washington, D.C. (Pool photo by Pete Marovich)

You name it, these joyless days of our political life spill over with enough hyperbole, careless statements and blame to fuel any argument and buttress every assumption.

‘There Is No Default’

Meet the Debt Truthers

Worried about a default if the U.S. hits its debt ceiling? We can just ‘prioritize’ our payments, say some Republicans. Jamelle Bouie on why they’re wrong—but they’re not even the biggest GOP fantasists.

No one knows exactly what would happen if the United States breached its debt ceiling—an artificial limit on what the Treasury can borrow to pay its bills—but almost everyone agrees it would be disaster. I say “almost” because a growing chorus of Republicans insist the opposite, that hitting the debt limit wouldn’t cause a default, and even if it did, it’s no big deal for the nation or the world.

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Their main argument is that the Treasury can continue to pay interest and fund critical problems through “prioritization” of key payments. “We’re not going to default; there is no default,” said Rep. Mick Mulvaney (R-SC) over the weekend. “We should pass a bill out of the House,” he continued, “saying there will be certain priorities attached to certain things, namely payment of debt services and payment of our military.”

That isn’t a fringe view. At the beginning of the 112th Congress, in January 2011, Sen. Pat Toomey (R-PA) took to The Wall Street Journal to declare his support for legislation that would “require the Treasury to make interest payments on our debt its first priority in the event that the debt ceiling is not raised.” He followed his declaration up with legislation to that effect, which was seconded with similar legislation from Sen. David Vitter (R-LA). In May 2011, 17 GOP senators wrote to then–Treasury secretary Timothy Geithner “asking him to explain his recent claims that America will default on our debt payments” after the the country reached the limit, since—as far as they understood it—the executive could prioritize spending. And this year, House Republicans passed a bill that allows the government to borrow money above the debt ceiling to pay bondholders and Social Security recipients.

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The Debt Ceiling Denialists

A clique of GOP lawmakers say the debt ceiling crisis is a hoax. They could tank the economy and make a deal impossible, writes Patricia Murphy.

Worried about the looming debt ceiling crisis and possible default of the nation’s debt? Don’t be! According to more than a few GOP lawmakers, conservative donors, and Tea Party activists, the nation’s debt ceiling doesn’t really exist and the chances of a default on the United States’ sovereign debt lie somewhere between unlikely and impossible.

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Getty (2); AP

The default-is-a-hoax sentiment inside conservative circles is real and could have serious ramifications for the economy as a whole. While House Speaker John Boehner continues his hunt for enough votes just to re-open the federal government, the growing chorus of default deniers in the House and Senate could make striking a deal to increase the debt ceiling this month next to impossible.

Below are 10 of the latest naysayers:

Window of Opportunity

Dems, It’s Time to Negotiate

With declining popularity and growing party unrest, Republicans have backed themselves into a corner. Peter Beinart urges Democrats to seize the moment to negotiate a better budget deal now.

If there’s one thing most liberals agree on, it’s that until Republicans reopen the government and raise the debt ceiling, Democrats shouldn’t talk to them about anything else. “Until we make sure Congress allows Treasury to pay for things that Congress itself already authorized,” President Obama told CNBC last week, “we are not going to engage in a series of negotiations.”

Budget Battle

Democrats Nancy Pelosi and Harry Reid leave the White House following a meeting with the president and Republican leaders on October 2, 2013. (Pablo Martinez Monsivais/AP)

“What matters now above everything else,” adds Andrew Sullivan, “is that the president wavers not a jot or tittle in demanding a clean CR.”

I disagree. The argument against negotiating on broader issues until Republicans reopen the government is that doing so would reward legislative “hostage taking.” By giving the GOP a budgetary “ransom” in return for doing what the GOP should be doing anyway, the logic goes, Democrats give Republicans an incentive to threaten a government shutdown and a debt default in the future.

Military Pain

The Shutdown’s Hidden Cost

Politicians may be trumpeting that service members are being paid during the shutdown, but training, veterans’ benefits, and incentive pay are in the crosshairs, reports Jacob Siegel.

With the news that Pentagon employees are being paid again, the military seems to have been saved from the troubles caused by the government shutdown. But there’s just one problem: it’s not true.

The truth is that the military is not working like it’s supposed to, and things will only get worse if the shutdown isn’t resolved soon.

The Daily Beast spoke confidentially with several members of the military who were largely in agreement about the effects of the shutdown and how it is being perceived in the ranks.

Just a week into the government stoppage, there has already been mass cancellation of training across the Reserve forces; confusion over military pay, including the possible loss of incentive pay awarded to troops in Afghanistan; VA announcements about the impending cutoff of some veterans’ benefits and services; and the cancellation of military training schools.

Stuck

Shutdown Aversion

Boehner’s scrambling and the electorate says Republicans just aren’t acting rationally. Next year’s midterm elections may be a referendum on House management—and give Obama the Congress he wants.

Reports that House Speaker John Boehner is searching for a face-saving exit from the stalemate on Capitol Hill suggests a Democratic dream come true, that the shutdown is cratering the Republican Party. A sampling of five major polls last week surveying public attitudes toward the shutdown find “a Republican Party deeply at odds with the electorate,” says Democratic pollster Geoffrey Garin. “Only 20 percent of the electorate thinks this is a rational or reasonable approach.”

Protesters display placards during a demonstration in front of the US Capitol in Washington on October 1, 2013

Jewel Samad/AFP/Getty

Four in 10 Republicans say it’s more important to fund the government than defund Obamacare. By making the standoff a debate about them and their approach rather than the health-care law, “Republicans completely squandered whatever political advantage they may have had on this,” says Garin, “and they are really at the tipping point of making 2014 a referendum on their extreme and irresponsible tactics.”

The fight is far from over, and Republicans may have found a sweet spot in proposing a series of bills to restore parts of the government, putting the Democratic Senate on the defensive. But absent any clear strategy by the GOP, Garin believes the impasse has the potential to turn next year’s midterm elections into a referendum on Republican management of the House, as opposed to the failure of Obamacare, as the GOP had hoped.

Default Is Fine!

Three Coming GOP Lies

So, a default really wouldn’t be that bad? That’s what Republicans are going to start saying this week as the debt-ceiling debate ramps up. Michael Tomasky debunks the talking points in advance.

Attention will turn more sharply this week in the direction of the debt ceiling and the question of a possible default. We’re just 10 days away from D-Day, and since default is a much bigger deal than a shutdown, we’re going to have a week of cable debates about who’ll be to blame if the country defaults. It is with that in mind that offer you three arguments you’re sure to hear Republicans make. They’re all foolish or false or both, so clip this list and tape it to your refrigerator. The roof is finally starting to fall in on these serial liars, and I want you to be part of the growing army of Americans that knows a lie when it hears one.

Ted Cruz

Sen. Ted Cruz, R-Texas, left, and Mike Lee, R-Utah, speak to the media after the Senate voted to pass the continuing resolution on September 27, 2013. (Tom Williams/CQ Roll Call, via Getty)

1. A default wouldn’t really be that bad.

We haven’t heard this very much yet, but I expect it will start getting a stern workout this week. It was a heavy talking point back in 2011.

The Shutdown According to Everyone Else

The U.S. Government shutdown has ended and the debt ceiling crisis has been averted for now. Americans feel relieved, but how does the rest of the world feel about it?

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Washington Bureau

Keeping Secrets From Kiev

Daily Beast senior national security correspondent Eli Lake stops by CNN to explain why the U.S. is wary of sharing intelligence, and weaponry, with Ukraine.

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