Have you looked at the major Wall Street indexes this morning? As I type, the Dow Jones Industrial Average is up over 200 points, and as a matter of percentage, the S&P and Nasdaq indexes are doing even better. After weeks in which stocks were on a downward trend, what caused the sudden spike?
Wall Street is now under the impression that congressional Republicans are not going to use the debt ceiling to crash the economy on purpose. This leads to a variety of questions, not the least of which is whether Wall Street’s exuberance is rational.
It may not be. Jane Timm reports from Capitol Hill:
On Thursday, House Speaker John Boehner proposed a short-term debt ceiling increase – if President Obama will negotiate on opening the government.
That plan may be presented to Obama this afternoon, when a delegation of Republican negotiators will meet at the White House.
And this is where things start to get messy.
We talked earlier about the subtle shifts in the Republicans’ posture, as it slowly dawns on them that they’re losing the public; they won’t achieve their goals through extortion; and they need to find a way out of the trap they set and then promptly fell into.
So, Boehner and his team came up with a plan. They’ll let the government shutdown continue, but raise the debt ceiling for six weeks. In exchange for not crashing the economy on purpose, Democrats will have to agree to participate in budget negotiations.
Will Republicans agree to let the government reopen during the budget talks? No.
Will Republicans take the prospect of a debt-ceiling crisis off the table? No.
Is there any chance in the world Democrats will consider this a credible solution? No.
Indeed, it’s already been rejected.
The White House indicated that while the president might sign a short-term bill to avert default, it rejected the proposal as insufficient to begin negotiations over his health care law or further long-term deficit reductions because the plan does not address the measure passed by the Senate to finance and reopen the government.
“The president has made clear that he will not pay a ransom for Congress doing its job and paying our bills,” said a White House official, speaking on the condition of anonymity.
The Democratic appeal to Republicans can basically be summarized in a few words: Just do your job. The government needs to be funded, so fund it – without strings attached or a series of demands. The debt ceiling needs to be raised, so raise it – without demanding treats or taking hostages. At that point, the parties can enter negotiations on just about anything and everything.
But the GOP’s new “offer” is predicated on the same assumptions as the other “offers”: Republicans won’t talk unless the threat of deliberate harm hangs over the discussion. It’s effectively become the GOP’s prerequisite to every process: only plans involving hostages will be considered.
Indeed, why raise the debt ceiling for just six weeks? Either Republicans are prepared to hurt Americans on purpose or they’re not. This is either a threat or it isn’t. Boehner is willing to put the pin back in the grenade, but he wants Democrats to know he’s prepared to pull it again around Thanksgiving?
I suppose it’s evidence of some modicum of progress that GOP officials are looking for a new way out of this mess, but this new “plan” is hardly any more credible than the others.
I wish I could share in Wall Street’s excitement, but I don’t.