Capitol Hill: Not Especially Promising

Published on October 19, 2015

With most Senate and House members flying in today for a return to session by tonight, we wanted to offer a quick update on three pressing issues, with none yet offering any especially promising signs of positive movement.

*** Contrary to various media reports, House Ways and Means Committee Chairman Paul Ryan has not tipped his hand yet as the GOP nominee to succeed John Boehner as Speaker. If he says no, there could be a political backlash against him within the GOP mainstream ranks. We still think Ryan will agree, no later than Wednesday morning this week, but if not, Budget Committee Chairman Tom Price could emerge as one of the few viable alternative candidates. ***

*** Ryan’s Hamlet-like stance is complicating Boehner’s “barn cleaning” efforts to wrap a clean debt ceiling bill into a broader two year budget agreement. There has been some early staff preparations to reopen the five-way negotiations between the Capitol Hill leadership and President Obama, but we suspect Senate Minority Leader Harry Reid is unlikely to agree to any concessions on entitlement reform to make the process any easier for Boehner. ***

*** There is no chance HR 692, the House debt ceiling bill that might go to a floor vote this week, will go anywhere. It only “prioritizes” debt payments rather than avoids a default, and would never be taken up in the Senate or escape a presidential veto. We still believe a bill to increase the debt ceiling bill will pass before the first few days of November, but the question remains of how badly it will further split the GOP. ***

Ryan has yet to Show his Hand

From what we understand, Ryan has spoken to Speaker John Boehner a few times during last week’s recess, but he has still not committed one way or another. There have been some talks on whether or how the Speaker’s job could be “redefined” — namely, less travel for party fund raising — and there are indications Ryan is not willing to cede to the demands from the House “Freedom Caucus” to open up the steering committees to their bills or to guarantee positions for its members. But it is not true he is demanding “unanimous” support from all 247 House Republicans as a condition to running, which is good, since he would be unlikely to get it.

The expectation, or hope, is that Ryan will announce his decision no later than the regular Wednesday morning meeting of the House Republican conference, if not before. It would be near impossible for him to stall a decision beyond that, if for any other reason, the anxiety within the GOP ranks would invariably turn into outright anger, especially if he said thanks, but no thanks.

There is a risk to Ryan that if he does not step up when the party is in (desperate) hour of need, there would be a backlash against him and his political career would fall into tatters as a result. If he does say no — and we still believe/hope he in fact says yes — he will need to give a very good reason and he will probably need to have worked something out with Boehner in advance.

That would entail either for Boehner to stay longer — which he does not want to do — or for a deal to be worked out in which what is left of the GOP House leadership throws its support behind a candidate, any candidate, other than the HFC favorite, Daniel Webster, who in any case is highly unlikely to surpass 40 votes, if that.

About the only benefit of Ryan’s week-long escape to Wisconsin to keep his party second guessing is that it has in effect neutralized any momentum for any of the other half dozen or more members angling to jump in if he indeed says no. Again, though, like Webster, none may even come close to the 218 GOP votes to ensure the Democrats can’t block a GOP nominee when the vote for the Speaker goes to the full House.

One name discreetly making the rounds as GOP House conference members fly back into Washington today is that of Tom Price, chairman of the Budget Committee. Price in fact wants the job, but has been careful not to make an open bid, in part to keep the attacks on him from building. Price is extremely conservative, but is not an HFC favorite, and he would be bad news for any loosening of fiscal spending, but on the other hand, he could probably get 218 GOP votes, especially if the GOP leadership gives him a Good Housekeeping seal of approval.

And it is interesting to note that Boehner can call for a Speaker nominee election within 72 hours, and the sooner he does it, the less time for credible opposition to build around an alternative to either Ryan, or someone like Price.

HR 692 Unlikely to go Anywhere

While the GOP House plays out its drama over finding a new leader, the more pressing issue is the need to pass a bill to increase the debt ceiling. There has been a bit of media attention on HR 692, the “Default Prevention Act”, which may go to the Rules Committee as early as tomorrow. HR 692, however, is an attempt to diminish the impact of an outright default by “prioritizing” who gets paid first  — in this case, treasury interest payments and social security payments — in the event there is no debt ceiling increase.

Aside from the fact it is essentially conceding a default with all the potentially enormous market fallout, it may not be put to the House floor for a vote, and it may not even pass if it is; and if it did go to the floor and pass, it would be entirely along a strictly partisan vote with all GOP votes. Even then, it would mostly be another “show” vote that something, anything, was being done, as the bill is highly unlikely to be taken up by the Senate, and would be vetoed by the President if it was and somehow passed.

What a vote on HR 692 may do, however, is to show how futile the demands are of the HRC and far right, potentially paving the way for cooler heads to prevail, with a clean debt ceiling bill then put to the House floor for a rapid passage with Democratic votes that then goes to the Senate.

The problem is, it would probably trigger the open rupture within the GOP that the leadership has been trying for years to avoid — think of the near 60 votes to “repeal” Obamacare that have been brought to the House floor without placating the far right — and it would likewise, it is feared by the leadership, fan the flames of the populist rhetoric of the GOP presidential candidates.

Remember, Senate Majority Leader Mitch McConnell, in particular, is worried about losing his Senate majority with so many GOP Senators from blue and purple states up for re-election if the party “establishment” loses control to the populist right wing, not to mention losing the White House.

Prospects Dim for the Boehner “Barn Cleaning”

The Ryan decision is invariably complicating, albeit more on the margin, the more pressing state of play in the five way negotiations to resuscitate some version of the failed “Grand Bargain” negotiations of 2012. The idea is to clinch a two year budget agreement or “son of the cromnibus” that would have everything and the kitchen sink thrown in — the debt ceiling, the highway spending bill, Export-Import Bank reauthorization, and the FY2016 and FY2017 top line budget totals — as Boehner’s “barn cleaning” gift to his successor as Speaker.

The talks are supposed to include Boehner, President Obama, House Minority Leader Nancy Pelosi, Senate Majority Leader McConnell, and Senate Minority Leader Harry Reid. But the real talks are essentially between but two with the others adding some color or ballast here and there: Boehner and Reid.

And the prognosis, after some initial high hopes, is turning sour, for pretty much the same reason the original Grand Bargain fell apart.

For Boehner to move forward with a deal that includes a clean debt ceiling increase, and for higher domestic spending that includes both the higher defense spending demanded by the GOP defense hawks and the non-defense discretionary spending demanded by the Democrats, it would need to include some sort of cuts in the trajectory of entitlement spending in the outer years of a new budget ten-year baseline that could be scored by the CBO.

To be fair, that will be very difficult to say the least to execute in the time that remains relative to a debt ceiling increase, but there could be an escape clause built into the agreement that commits to eventual entitlement reform with the creation of some sort of blue ribbon panel or “son of the Super Committee” to delve into where the cuts would fall — sometime in 2017, or after the elections.

But again, the problem is Reid is unlikely to go along with anything that lets the GOP escape from the political war they are now facing with their far right. Reid has already successfully filibustered all 12 of the FY2016 spending bills in the Senate over the GOP sleight of hand attempt to bypass the sequestered spending caps by shoveling all their desired defense spending increases into the off-budget Overseas Contingency Account, which in the process heightened the internal GOP tensions between the defense hawks and fiscal hawks.

Now Reid may find he holds in his hands the even larger prize of the near term fate of the GOP, whether they find an easier way out of their self-inflicted political wounds. Even if it is argued it would be better for the country to avoid another paralyzing political impasse on Capitol Hill, it seems unlikely the Senate Minority Leader, who is a former boxer, would necessarily see the benefits in helping the GOP get off the ropes where it finds itself.

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