Hostage Part 1

Where We Are And Where We’re Going

We are now just FOUR days away from an unprecedented GOP-induced default on our nation’s obligations. Here’s a snapshot of where we are now and where the situation is headed over the next few days.

WHAT HAPPENED LAST NIGHT: Speaker Boehner (R-OH) was dealt a highly embarrassing setbackwhen he was forced to pull his plan from the floor and cancel a planned vote on it because of he could not secure enough votes in his own Republican caucus to pass it — despite having a massive 48-seat majority. The U.S. House instead turned to naming post offices last evening.

WHAT’S STILL IN THE GOP DEFAULT PLAN:  The basic framework has not changed much since we described the plan earlier this week, including:

• Another automatic default crisis in 6-months (just in time for Christmas)
• A commission to gut $1.8 TRILLION from Social Security, Medicare, and Medicaid (in addition to nearly $1 TRILLION in other spending cuts)
• No new revenues — or even the possibility of deficit reduction through revenue
• A downgrade of our credit rating

WHAT’S NEW IN THE GOP DEFAULT PLAN: In order to entice recalcitrant Tea Party extremists to support the plan, Speaker Boehner made some changes to his default plan, including:

• Adding a requirement that both the House and the Senate pass (not just vote on) a constitutional balanced budget amendment (BBA).  If both houses fail to pass the BBA(more here on why the plan offered by the House is an insane idea) then the president will not be allowed to increase the debt ceiling when we next hit it in about six months.

CRAZIEST TEA PARTY REJECTION: Several billion dollars in additional funding for Pell grants that would have ensured that the full amount of grants is available for students this year and next. Conservatives had protested the inclusion of such funding, .

WHAT’S NEXT:

• The House will vote tonight around 7 p.m. on the Boehner default plan.  The cuts to Pell grants and inclusion of the BBA provision are expected to ensure it finally has the votes to pass.  Zero Democrats are expected to vote in favor.
• As quickly as possible after the House vote, the Senate will vote tonight to kill the Boehner default plan.  There are currently 58 Senators (51 Democrats, 2 Independents, and 4 Republicans) who have publicly expressed their opposition to the plan.
• Senate Majority Leader Harry Reid (D-NV) will begin the long Senate process to bring up his compromise plan to avoid imminent default, preserve the nation’s AAA credit rating, raise the debt ceiling through 2013, cut $2.4 TRILLION in spending (with no benefit cuts to entitlements), and create a new committee to identify additional deficit reduction — including through new revenues.  As of this writing, a final vote on the Reid plan is expected around 1:00 on Sunday.

WHAT WE KNOW: There will be an unprecedented default on our obligations after Tuesday (more here on how that you would directly effect you) unless Republicans agree to a bipartisan plan to avoid it.

WHAT WE DON’T KNOW: What the final plan to avoid a default will look like.

IN ONE SENTENCE: Our economy is on a knife’s edge and it’s time for Republican leaders to abandon the extremists in their party and agree to a bipartisan plan that can pass both the House and the Senate, will be signed by the president, and will both avoid a default after Tuesday and extend the debt ceiling through 2013.