Either the President accepts and Republicans pound on the “Democratic debt limit increase” message every three months, or he agrees to cut spending. Either way, default risk is eliminated. Republicans will look responsible because they will be acting responsibly, and the markets couldn’t care less about which Members take political heat for casting these unpopular votes.
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The venue shifts
Since the Speaker announced plan B at the beginning of the week, the venue for substantive negotiations has shifted from Obama/Boehner to a standard House/Senate dynamic.
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What kind of negotiator is President Obama?
Is President Obama a risk-taker? Is he bluffing? Or is he an ineffective negotiator?
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A third option changes the negotiation
Even if you are unwilling to challenge President Obama’s bluff, Republicans have a third option, a legislative alternative to an Obama-Boehner deal. And that gives them and their negotiator at least a little bit of leverage.
Read moreUnder Construction
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WSJ op-ed: Time to Call the President’s Budget Bluff
The Wall Street Journal has published an op-ed of mine, titled “Time to Call the President’s Budget Bluff.”
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More on the President’s veto bluff
At the moment I worry less about the President’s goals and priorities, and more about his negotiating skill and his capacity to reach agreement with those with whom he strongly disagrees.
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The President is bluffing
The President’s veto threat is about whether he wants to cause a recession in 2013 and hamstring his second term.
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Reactions to the President’s press conference
No matter who gets blamed for it, a legislative stalemate leads to a terrible short-term macroeconomic consequence: increased unemployment and a new recession.
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