The U.S. Treasury Department says it will exhaust its emergency borrowing powers on Oct. 17. For the second time in two years, the government is nearing the point of default if Congress fails to raise the debt ceiling in time. The Fitch credit rating agency warned the U.S. could loose its AAA rating because of political brinkmanship. Yesterday, the House tried and failed to put forward a plan to temporarily fund the government and stave off default. Today, all eyes are on the Senate, where an aide to Senate Majority Leader Harry Reid said he was optimistic an agreement with Senate Republican Leader Mitch McConnell is within reach. Diane and her guests discuss the latest on the fiscal crisis and its consequences.

Guests

  • Sudeep Reddy economics reporter, The Wall Street Journal.
  • Byron York chief political correspondent, The Washington Examiner; author of "The Vast Left Wing Conspiracy: The Untold Story of the Democrats' Desperate Fight to Reclaim Power."
  • E.J. Dionne Jr. senior fellow, Brookings Institution and author, "Our Divided Political Heart: The Battle for the American Idea in an Age of Discontent."

Transcript

  • 10:06:53

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The Treasury Department says it will reach the government's debt ceiling at midnight tomorrow. The Fitch Ratings Agency warned political brinksmanship over raising the borrowing limit risks a cut in the credit rating of the U.S.

  • 10:07:13

    MS. DIANE REHMJoining me to talk about the latest maneuvering to reach a deal on Capitol Hill: Byron York of the Washington Examiner, Sudeep Reddy of the Wall Street Journal, and E.J. Dionne of the Washington Post and the Brookings Institution. Many of you, I know, have your own opinions. I hope you'll share at 800-433-8850. Give us your email to drshow@wamu.org. Follow us on Facebook or send us a tweet. Welcome to all of you.

  • 10:07:49

    MR. BYRON YORKMorning, Diane.

  • 10:07:50

    MR. SUDEEP REDDYGood to be here.

  • 10:07:50

    MR. E.J. DIONNE JR.Good to be here.

  • 10:07:51

    REHMByron York, where are we this morning?

  • 10:07:55

    YORKWell, the deal has gone to the Senate. There was a plan yesterday, after all of these -- we know what's been happening for all these weeks. There was a plan yesterday. The Senate had kind of come up with agreement. Nobody had really signed onto it, but the basics were it was going to extend the continuing resolution so the government would be funded, shutdown would end. It would extend the debt limit, so we wouldn't default. And it would have a few other things.

  • 10:08:20

    YORKIt would have a means to verify the eligibility for people who get subsidies under Obamacare. And it would also get rid of a tax that insurers pay on people under Obamacare that unions particularly did not like. Okay. Those were the parts of the deal. Republicans thought that was a really weak deal from their point of view, but, of course, they're in the minority in the Senate. The plan was send it over to the House. From a Republican point of view, the plan was send it to the House because they have the majority there.

  • 10:08:48

    YORKAnd they can add a few tougher things, pass it, send it back to the Senate, and maybe the Senate would have to pass it. Well, the plan fell apart in the House, where the House Republican caucus basically melted down because they wanted stronger Obamacare limits to be put into this bill. John Boehner worked all day with them. Would you take this? Would you take that? The bill changed and changed and changed until finally the House leadership said, sorry, we can't do it. There's no bill. So now it's all back in the Senate's hands.

  • 10:09:19

    REHMSudeep, why couldn't the House come up with its own plan?

  • 10:09:25

    REDDYThe House GOP is divided. The House GOP has been divided for years about how to deal with budget issues. And a lot of Republican lawmakers are having to come to grips with the fact that the original cause, the original driver of the government shutdown and this debt ceiling battle we're in was Obamacare. And that is not really going to be any significant part of this deal in the end. So to come to grips with creating this incredible, tense battle and having to capitulate in the end is something that, I think, will take a little bit of time for a number of lawmakers to get past.

  • 10:10:04

    REHME.J. Dionne?

  • 10:10:06

    DIONNE JR.The Tea Party lost. I think that is the biggest headline. The country lost because we were held hostage to all of this, but I think that the big issue after this is, will the Tea Party veto in the House end? Because I think it's very clear you can't govern with folks who say that not raising the debt limit would actually be good for the economy, for the budget.

  • 10:10:29

    DIONNE JR.You can't govern with people who would risk wrecking our economy over a demand that virtually all Republicans knew the Democrats would never meet, gutting or ending Obamacare. I think Speaker Boehner finally today is going to do what I see is the right thing, which is to bring this Senate agreement to the floor, end this shutdown, end the threat to our solvency. And then a lot hangs on what we do over the next few months.

  • 10:10:58

    DIONNE JR.Do we go back to having normal budget negotiations? The Senate has a slightly larger funding level than the House does. The Senate would like to undo more of the sequester. Do we have a back and forth, a normal governing process? Or do we go through this again? And I think a lot depends on what House Republicans decide to do with their Tea Party minority.

  • 10:11:20

    REHMBig question, Sudeep.

  • 10:11:23

    REDDYIt is the big question because the schedule right now, the bill that is going to likely come out of the Senate, will only buy us a few months' time. We are very likely to be dealing with this same set of issues in January and February. And you can already see market reaction moving into February. Investments in Treasury bills, the yields, the interest rates are spiking for January and February, just like they've been spiking in recent weeks for the current period.

  • 10:11:57

    REDDYThe concept that we would -- the entire idea that we would just push this battle down for three months is perplexing to most people in financial markets and around the world because it's just unfathomable that you could go through this incredible fight again in just a matter of months.

  • 10:12:14

    REHMSudeep, tell me about the influence here of the Heritage Action For America conservative group.

  • 10:12:23

    REDDYThis is a very powerful political group that has been able to guide many of the Tea Party Republicans, a certain contingent of the House GOP, and try to force a more conservative bill coming out of the House. They've been pushing this over and over and it's looking very likely now that they've managed to push their supporters, their members in House out of some of these discussions because whatever they were pushing could not really pass clear of the House GOP.

  • 10:12:54

    REHMBy warning Republicans that…

  • 10:12:59

    REDDYBy warning Republicans that the Heritage Group would remember when elections come around, when primaries come around where they voted and whether they were conservative enough in their votes.

  • 10:13:10

    REHMByron York, do you agree with E.J.'s assessment, the Tea Party lost?

  • 10:13:16

    YORKThey certainly did. And I think when you talk about Heritage Action you need to understand the dynamics in the House Republican caucus. There are 232 Republicans in the House. It takes 217 to pass a bill. If you're going to do it only with Republican votes, you can only lose 14. And if you lose 15 -- well, you can lose 15. You can't lose any more than that. And that makes small groups very powerful, if Democrats remain united on the other side. So what we've seen is Democrats have been united with a mostly solid front in defending Obamacare against any significant changes.

  • 10:13:54

    YORKAnd you had this group, could be 30, 40, 50 Republicans who really do agree with this Heritage Action plan. And they've said to John Boehner, we won't sign onto this or we won't sign onto that. And if you don't have us, you don't have a Republican majority. So that has given groups of 20, 30, 40 people extraordinary power inside the House. And the question is whether Boehner will continue being deferential to them or not.

  • 10:14:22

    REHMWhat do you think, Sudeep?

  • 10:14:24

    REDDYI think John Boehner is a pragmatist. He, just like Barack Obama, has wanted to guide his party and to defer to the will of his caucus in the House. And he is willing to push that to a limit. The House Republican leadership is very well aware of the consequences of this. They know you can push the politics to a point.

  • 10:14:49

    REDDYEventually you get down to the final deadline, and the risks are too great for financial markets and the economy. And that's when you see a move, just like the House GOP did around the fiscal cliff, just like they did in prior cases around the debt ceiling, and let something come to the floor at the very last moment to let Democrats vote with some Republicans and pass it eventually.

  • 10:15:11

    DIONNE JR.There are a couple of things here. One is Byron is right about the power of that conservative minority, probably 40 hardcore, 40 more who are petrified of Tea Party primaries. So Jim DeMint at one vote in the Senate. He's got 40 to 80 votes in the House now. So he made a pretty good trade moving over to Heritage Action. But what you haven't seen are the 20 to 30 moderate conservatives in the House exercise anything like this power.

  • 10:15:41

    DIONNE JR.And I think one of the questions coming out of this -- you had a few outspoken people on that side, Peter King of New York, Charlie Dent of Pennsylvania, Scott Rigell of Virginia, but that was about it. And the question is, do these guys, on the other end -- and they're all conservatives. We're not talking about liberals here.

  • 10:15:58

    DIONNE JR.But do they say we can't go on like this? I think the other thing is, why were Democrats so united? And they were united because they were tired of extortion -- the word they kept using, which is, look, we can have a normal argument over what we do about Obamacare. I know a lot of Democrats who'd like -- including the president -- who'd like to fix some things in the health bill.

  • 10:16:21

    DIONNE JR.But what they could not do is have one more round where the Republicans would use either a shutdown or a threat to the nation's credit to achieve an end that they couldn't achieve through the normal legislative process. And so that's why you had Democratic unity, to a degree you've almost never seen. I mean, now you have Republicans behaving like Democrats used to and Democrats behaving like Republicans used to.

  • 10:16:44

    REHMAll right. So now we shift to the Senate Majority Leader Reid, Republican leader McConnell are said to be close to agreement, Sudeep.

  • 10:16:56

    REDDYThey've been saying that for days.

  • 10:16:57

    REHMI know.

  • 10:16:58

    REDDYThey are still trying to…

  • 10:16:59

    REHMI know.

  • 10:17:01

    REDDYThey need to finalize the details. And once we have all the details, we can actually see whether it will have the full support or at least enough support in the Senate to prevent a handful of lawmakers, such as Ted Cruz, from stepping in and delaying this potentially for days before the House even sees something. There is some wiggle room here. The Oct. 17 deadline that a lot of people talk about is not the date…

  • 10:17:27

    REHMDrop dead date.

  • 10:17:28

    REDDY…the drop dead default date for the nation. That is when the Treasury Department runs out of -- its bag of tricks is empty.

  • 10:17:33

    REHMBut it sends bad signals.

  • 10:17:35

    REDDYIt certainly does send bad signals. I think markets have been watching this long enough…

  • 10:17:40

    REHMYou bet.

  • 10:17:40

    REDDY…that they know what is realistic, if it is just a delaying tactic and it looks likely, with signals from the House as well, that they can pass something through votes from Republicans and Democrats, markets might give it a little bit more time. We have at least until around Oct. 22 before you're going to actually see the U.S. government defaulting on anything.

  • 10:18:02

    REHMDo you think Republicans are going to push that way?

  • 10:18:05

    YORKThe dynamic in the Senate is different today than it was yesterday because Senate Republicans were hoping that a tougher bill passed in the House would give them more leverage in the Senate. Last night, they saw that leverage go away. It just disappeared. So now they realize we have no leverage, we have no support from the House, we have to pass a bill, and they will.

  • 10:18:29

    REHMByron York, of the Washington Examiner. Short break here. When we come back, we'll talk further and take your calls. I look forward to speaking with you.

  • 10:20:01

    REHMAnd welcome back as we reach that November -- sorry, Oct. 17 deadline. Here with me, E.J. Dionne. He's at the Washington Post and Brookings Institution. He is the author of "Our Divided Political Heart: The Battle for the American Idea in an Age of Discontent." And, boy, are we discontent these days. Sudeep Reddy of the Wall Street Journal, Byron York, chief political correspondent for the Washington Examiner. He's a FOX News contributor, author of "The Vast Left Wing Conspiracy."

  • 10:20:48

    REHMHere's an email from Mike in Keller, Texas. He says, "Soundbites to the effect of, we've never defaulted before, and especially, a default won't matter, are both incorrect and dangerous. The first time was 1812, second in 1979. The recent one was another debt limit standoff, which, though resolved in the nick of time, resulted in delays in 120 million of Treasury Bill payments for up to two weeks. The limit then was 830 billion." For you, Byron York, is Ted Cruz going to try to scuttle anything that happens in the Senate today?

  • 10:21:45

    YORKWell, we all know an individual senator can slow things down a lot if he or she chooses. But the indications I have are that Cruz will not do that. As late as Monday night, you know, Cruz met with a group of House Republicans at a Capitol Hill restaurant, Tortilla Coast. And they went down in the basement, and Cruz encouraged them to keep fighting and to keep -- stay strong on this.

  • 10:22:10

    YORKAnd that what resulted was this meltdown in the house on Tuesday. The indications that I have are that Cruz will not stand in the way. Now, the Senate Republicans had a big policy lunch on Tuesday. Ted Cruz and Mike Lee did not show up. And from what I hear, he's saying that further -- he's going to say, we fought the good fight, further delay will not accomplish anything, and then step out of the way.

  • 10:22:34

    REHME.J.

  • 10:22:35

    DIONNE JR.That's what it sounds like. Ted Cruz has increased his popularity among only two groups, the far right of the Republican Party and the owners of the Tortilla Coast restaurant, which has gotten more play in the last several days. And the notion that they thought they could have a secret meeting at one of the most popular eateries on the Hill, one of the only restaurants near the Hill...

  • 10:22:54

    REDDYThere are members of Congress crawling all over the place.

  • 10:22:56

    DIONNE JR.Yeah, so that was very odd.

  • 10:22:57

    REDDYKevin McCarthy was upstairs trying to figure out what was going on downstairs.

  • 10:23:00

    DIONNE JR.Precisely. The indications you have is that Cruz has really been lying low. And I think he's going to have a lot of explaining to do after this. I think it was Sen. Corker who said right at the start that this strategy was leading Republicans into a boxed canyon. That's exactly where they have been led. And for Cruz to have gone out there cheering on these Tea Party folks in the House said, we can repeal Obamacare, and then to go out with a whimper here, which I don't want to discourage him.

  • 10:23:30

    DIONNE JR.I hope he doesn't show up today. You know, maybe he can go to one of the baseball playoff games. I mean, it would be a shame if he slowed this down. But if he doesn't, why did he start this whole thing?

  • 10:23:42

    REHMAnd here's a question from Alexandra of Dallas, Texas. You're on the air.

  • 10:23:50

    ALEXANDRAGood morning. It's wonderful to hear this intelligent and rational discourse. Thank you so much. My question actually is in regards to Ted Cruz. I'm really baffled by the fact that the discussion has not ever reached the point where charges of sedition should be brought up against him for conspiring and bullying others to work with him to undermine the American economy -- the United States economy full faith in credit.

  • 10:24:15

    ALEXANDRAHe's done so much damage to the standing of the United States in the World. And if you read the Sedition Act, it seems like it really applies. I'd like the panel's comments on that. And will there be a possibility of that? Thank you so much.

  • 10:24:26

    REHMAll right. All right. Thanks for calling. And I'm going to turn that over to you, Sudeep.

  • 10:24:35

    REDDYThere is no possibility of that and we have to remember that Ted Cruz and Tea Party Republicans represent a small but still significant part of the country. There are millions of people out in the country who believe that our nation has gone astray, that we need some radical changes in the nature of our government right now. That is the driving force coming out of the 2008 economic crisis. People who believe that we need much more significant change from the right than the mainstream Republican Party is willing to lead.

  • 10:25:08

    REHMBut considering the fact that he may go down with a whimper, are even his own constituents going to turn against him?

  • 10:25:20

    REDDYI do not think his constituents will turn against him. Many of them will feel emboldened by what he's doing because he is one of the few voices out there speaking from that position. There's a reason very few people in the Senate support that position because it's not going to lead anywhere that's productive, at least in the near term. But it is a position that's representative of some part of the country.

  • 10:25:45

    YORKAlso you should remember, if you listened to Cruz all through August and all through September, they point to polls. And we have tons and tons of polls that show a plurality of Americans don't like Obamacare. They don't think they want to see it, and they're divided over it. What I think the mistake that they made was, I think, also a large number of Americans think that defunding was not a fair and square way to go about it.

  • 10:26:11

    YORKAnd a lot of people believe -- and they may be right -- that the whole thing might collapse of its own weight. But that's still to come. But Cruz and company had a certain amount of support in people who didn't like Obamacare. They just went from there to a tactical choice that failed miserably.

  • 10:26:30

    REHME.J.

  • 10:26:31

    DIONNE JR.First, for the record, I'm a liberal, so I don't like prosecuting people for sedition for their ideas. But the caller raises a couple of interesting points. First on the Tea Party, I think one of the most important things that's happened through all of this is a real collapse of sympathy for the Tea Party in the country.

  • 10:26:50

    DIONNE JR.That Wall Street Journal NBC News poll that's gotten a lot of attention which showed the Republicans losing a lot of ground, at its height in mid-2010, 34 percent of Americans had a positive view of the Tea Party. That's down to 21 percent. That means they've lost almost 40 percent of their friends. That is a very important change in American politics.

  • 10:27:12

    DIONNE JR.Number two, there is something in the rhetoric of this far right that seems not to like the America that exists today. And that's where some of the publicity they got with the confederate flags at the White House with those comments about Obama, put down your Quran from Larry Klayman. God help us. That is the kind of rhetoric -- again, it's not seditious. I'm a pretty broad free speech guy -- but it really tells you about an attitude toward the country that I don't think that most of the country shares, whatever they think of the Affordable Care Act.

  • 10:27:47

    REHMSudeep.

  • 10:27:48

    REDDYMost of the country does not share that attitude and that is why you could see coming into this battle why it would be a political loser for Republicans. It was -- just about everything that's happened over the last two weeks was -- could've been predicted and was predicted. And we're ending up basically where we thought we would just with some added economic and financial damage to it, so none of this should be surprising. But politically I think it actually leads people to dig in a little more, even if their numbers dwindle, and try to fight another day.

  • 10:28:21

    REHMAll right. To Mark in Pensacola, Fla. You're on the air.

  • 10:28:27

    MARKHey, good morning, Diane. I have one question.

  • 10:28:30

    REHMSure.

  • 10:28:32

    MARKThe question I have, in the past the government has used sequester to continue to operate while the Congress cannot reach an agreement. Do you think it would be possible -- or would the Congress go along with an idea to continue to operate under the terms of the sequester for as long as it takes? To me that seems like a reasonable solution. Obviously it would be better for both sides of the aisle but that seems to be what it would take at this point to get the government back open.

  • 10:29:07

    REHMAll right. Let's see what Byron York thinks.

  • 10:29:10

    YORKWell, what happened in the Senate, when it finally got to the Senate, was the battle became less about Obamacare and about actual spending levels for the next period of time, however long that is. And that was a battle about the sequester. There's no doubt that for however long the spending is extended in this deal, it will be at these lower sequester levels that Republicans want. But Democrats want to re-litigate that as soon as possible and lift some of those sequester stuff.

  • 10:29:39

    YORKNow you're going to have a battle that sort of mirrors the Obamacare battle in the sense that Democrats said Obamacare is the law, sorry. And Republicans will say, sequester is the law. Now there may be some negotiations about how to change some levels of spending but come January, if we end up in January, the fight will not be about Obamacare implementation. That's underway. It will be about whether to extend those sequester levels of spending.

  • 10:30:07

    DIONNE JR.And the irony here is Republicans, if they had wanted to, could have declared great victory because Democrats agreed to these very low levels of sequester spending that they didn't like in order to keep the government opened. But you can't stick with these levels from the point of view of both Democrats and Republicans who really care a lot about national defense.

  • 10:30:31

    DIONNE JR.And what's interesting about where the sequester goes from here is the cuts that are coming next are really very deep in the Pentagon. And so I think you're going to have an interest on both the Republican and the Democratic side in shifting around sequester spending levels, which were supposed to be so extreme that no one would accept them in the first place.

  • 10:30:51

    REHMI want to ask you all about timing. Assuming that the Senate leaders reach a deal, Senate votes on it, is there time to send it back to the House? Will there be a deal by tomorrow, Sudeep?

  • 10:31:10

    REDDYAssuming there are no objections -- strong objections that delay this in the Senate and...

  • 10:31:14

    REHMAnd do you expect those?

  • 10:31:17

    REDDYI would be surprised to see that at this stage, but I don't think it's completely out of the question. Some financial markets, the stock market in particular, has been very calm about this expecting a deal in the end. Parts of the credit markets are going into convulsions as you get closer to the final stage. And so it's possible that if you were to see some delays, you'd see a little bit more turbulence in the stock market, the one that everyone watches.

  • 10:31:48

    REDDYAnd that might actually accelerate this both in the Senate and the House. But a number of lawmakers realize that there is time before you actually get to a devastating default, even if we're in some damaging moment now. And so they're going to try to push it as long as they can, even if they're not successful in the end.

  • 10:32:06

    REHMSudeep Reddy of the Wall Street Journal, and you're listening to "The Diane Rehm Show." Byron York, what's your take?

  • 10:32:16

    YORKWell, you need to remember that the House and the Senate can move incredibly quickly if they want to. When the House and the Senate were playing ping pong over these Obamacare bills, the House sent a bill to the Senate which received it, considered it and voted on it in about 45 minutes. They can do that again, the Senate can, if they have unanimous consent. And the House can do it because the Speaker of the House can really move things along. So if they agree, there's absolutely no reason they can't pass something very, very quickly.

  • 10:32:45

    REHMAll right.

  • 10:32:46

    DIONNE JR.No prediction is safe anymore but I agreed with my colleagues. All the indications are they want to move this fast and get out of this problem.

  • 10:32:53

    REHMAll right. Let's go to Tony in St. Petersburg, Fla. You're on the air.

  • 10:33:00

    TONYOh, thank you, Diane, for taking my call.

  • 10:33:02

    REHMSure.

  • 10:33:02

    TONYAnd thank you for your show. I wanted to ask the panel a question. I see this as a form of domestic terrorism. Maybe they don't, I do. To actually hold a country in this type of situation we're probably an international laughing stock. And my question is, should not the debt limit be put, for example, to Treasury where Treasury automatically just resumes the debt limit when it needs it in order to pay our bills? I mean, you know, how do you not pay on your bills that you've racked up already? In other words, you know, how can we default? It doesn't make any sense.

  • 10:33:38

    REHMAll right. Thanks...

  • 10:33:38

    TONYSo I don't think any one party, either Republican or Democratic should have a say in whether we pay our bills or not. That should just be moot. And that's the question I have with that.

  • 10:33:47

    REHMInteresting question, E.J.

  • 10:33:50

    DIONNE JR.Just on the terrorism word, I've used all kinds of words to describe the Republican right, in the last few weeks, foolish, stupid, dangerous, all kinds of things. Terrorism is a word we should reserve for actual violence. But I think the caller's right. The debt ceiling is really foolish. We shouldn't have a debt ceiling.

  • 10:34:07

    DIONNE JR.Congress incurs this debt when they pass a budget. That's -- they've already done it. This is an artifact of something we did to make it more convenience to finance World War I. I wish we could get rid of the debt limit and not have this fight year after year.

  • 10:34:23

    DIONNE JR.And just one quick point that I wanted to make earlier, one of the most chilling things I've heard in the last week was a Chinese official who said, this chaos in America shows that we have to de-Americanize the world. The last thing we want to be doing as a country -- and I don't care what your ideology is -- is to create excuses for someone abroad, somebody in the Chinese government to use this kind of propaganda against us. We don't want to do that.

  • 10:34:49

    REHMSudeep.

  • 10:34:49

    REDDYThat was a brilliant play by the Chinese leadership to get that comment out there because it fit into a broader set of thinking around the world where not only in government offices at the highest levels, but also in investment firms. People are starting to wonder, are we going to go through this every couple of years? And at some point...

  • 10:35:08

    REHMExactly. Every few months if it gets postponed.

  • 10:35:11

    REDDYEvery few months, indeed. And at some point is there going to be a mistake? Will we push it too far to the point where you actually break the financial system? And we forget how much the entire global economy is built on top of Treasury debt. The United States' economy is the largest economy in the world, the strongest economy in the world in the long run. People recognize that. And there's a reason that the financial system is built on United States' debt.

  • 10:35:43

    REDDYAnd this is not going to be a sudden shift. This is not going to be something that -- where we wake up and realize that there are other currencies, there are other forms of debt that become alternatives. But it's a slow process where you wear away at U.S. credibility and lay the groundwork for alternatives.

  • 10:36:02

    REHMWhat about our caller's suggestion of leaving this to the U.S. Department of Treasury and taking it out of political debate, Byron?

  • 10:36:14

    YORKWell, I don't think there's anything sacred about having a debt limit. I don't think we actually have to do it. On the other hand, I do think it is good that we have regular reminders of the issue of debt. And the question of whether we're racking up so much of it that we will harm economic growth and basically contract our economic future. So I don't see any reason why the debt limit has to be that vehicle. But I do think it's actually good that we've had these fights.

  • 10:36:46

    YORKWe're going to -- we had one in 2011, we've had it now. I think we'll likely have them again, although there is something in Capitol Hill known as the hot stove theory. A lot of people felt that the Republicans who were pushing this in the House, they felt that the shutdown would be the hot stove. They would touch the hot stove, it would hurt, they'd have to run away. That didn't happen. Maybe this will.

  • 10:37:07

    REHMByron York of the Washington Examiner. Short break here. More of your calls, your email when we come back. Stay with us.

  • 10:40:01

    REHMAnd welcome back as we talk about last minute maneuvering on Capitol Hill, what's going on between the Senate and the House. We talked earlier about the fact that the Senate was going to come into session shortly after 10:00. Now we hear from Politico, which reported earlier today, that the House is going to vote first on an emergency proposal to open government, lift the debt ceiling, a move that would expedite bipartisan legislation developed by Senate Majority Leader Harry Reid, Minority Leader Mitch McConnell. Why would this expedite matters, Sudeep?

  • 10:40:52

    REDDYDiane, when bills start in the Senate they can be delayed even longer due to Senate procedures. If the Senate is receiving something from the House, it can expedite that process, act on it, move it through its own procedures quickly. There has been an expectation with John Boehner involved with Mitch McConnell, the Senate Majority Leader, in these discussions about how to finally get legislation out of Congress. That John Boehner would play along by what's called sending a message or sending some piece of legislation that the Senate can then act on more quickly to get it out and deal with this.

  • 10:41:25

    REHMAnd the National Review's Robert Costa has reported that John Boehner has agreed to allow the Senate plan, once it's finalized, to pass the lower chamber with the help of Democratic votes. Where does that leave John Boehner, Byron?

  • 10:41:45

    YORKThat's always been the place he was going to end up. I personally thought he was going to end up there right before the shutdown, that he would do that and offer some sort of spending resolution and let the House as a whole vote for it. There is this thing called the Hastert Rule which may or may not actually exist…

  • 10:42:01

    REHMThe majority of the majority. Exactly.

  • 10:42:02

    DIONNE JR.Which is not a rule of which Hastert said he didn't even invent.

  • 10:42:06

    YORK...among the House Republicans. But most, I think, speakers like to have a majority of their own caucus before they go ahead with something. Certainly Boehner has wanted to do that, but there has never been any doubt that there was a large group -- you know, we've talked about this group of most conservative members of the House.

  • 10:42:25

    YORKAnd E.J. talked about a smaller group of the moderate members of the house. The bigger group is in the middle and they want to get this over. They would have gone along with this before the shutdown. They will certainly do it now. It's entirely possible you could get a 100-plus votes in the House for whatever comes out.

  • 10:42:39

    REDDYCould I say something about the other side of the politics here, which is for quite a while now a lot of people have said to President Obama and to Democrats, at some point you have to take a stand right at the beginning, an immovable stand to say, we are not going to proceed like this anymore. There was a lot of frustration back in the summer of 2011 when the president did essentially negotiate around the debt ceiling, because he was really worried that the newly empowered Tea Party Congress would be willing to push us into default.

  • 10:43:16

    DIONNE JR.And, you know, there are a lot of people who say, oh no, he should negotiate right from the beginning. Let's look for a solution in the middle. The lesson here is you will never get to the middle period until you stand against this kind of extremism.

  • 10:43:29

    DIONNE JR.And I think the odd thing here is despite the unpleasantness and the dangers of the last few days -- last couple of weeks, I think there is a better chance now that we will move to something like more normal governance because this stand was taken, because this strategy was shown to be so defective and foolish that we actually have a chance to govern ourselves. Now that's optimistic, but we'll see.

  • 10:43:55

    REHMI think many across the country would agree with the hope that we can get to that point, Sudeep.

  • 10:44:05

    REDDYPresident Obama took a somewhat risky strategy earlier this year by saying, we will not negotiate over the debt ceiling. He said, full stop, there will be nothing attached to it. It will clear. And if you try to fight it, it's on your hands, House GOP. If we default, it is your problem. The political consequences are yours. That actually led the House Republican leadership in January to decide that is not the best way to fight these battles, to try to move on from that, to move onto something around a shutdown and the sequester.

  • 10:44:39

    REDDYAnd in some ways, President Obama has been successful in doing what he and White House officials call breaking the fever, getting past this particular moment of using the debt ceiling as a leverage point, a negotiating tool and fighting the battle in other ways, which are very clearly not over. There are still other battles that will be fought here.

  • 10:44:58

    REHMWhat is going to happen to John Boehner, E.J. Dionne, if in fact he lets go of the majority of the majority, uses Democrats and moves this bill forward?

  • 10:45:16

    DIONNE JR.I think there will be some screaming on the Tea Party end, and there'll be a lot of talk on right wing talk radio about a sellout. And there they go again, etcetera, et cetera. But the (unintelligible)...

  • 10:45:26

    REHMThey're not real Republicans.

  • 10:45:28

    DIONNE JR.Right. They're RINOs, Republicans in name only. I think that's going to ring really hollow after the last two weeks. And again, I think the polling has been helpful to all people who want a less radical approach to governance. Republicans in the mainstream -- including, by the way, a lot of very conservative people -- can say, you guys actually want to do this again? Do you really want to guarantee that we lose the 2014 elections? So I think that Boehner may well be just fine. Who wants that job right now is the question?

  • 10:46:02

    REHMAll right.

  • 10:46:03

    DIONNE JR.Who would want to step into that role?

  • 10:46:05

    REHMAnd suppose, Byron, they do postpone the debt limit until say January? Do you really believe Republicans will take it up again then?

  • 10:46:20

    YORKThey just might. Let me go back though and say, don't assume that Boehner's not going to get a majority of the majority.

  • 10:46:26

    REHMOkay.

  • 10:46:26

    YORKRemember 232 Republicans in the House, 117, and you're there.

  • 10:46:31

    REHMRight.

  • 10:46:31

    YORKThis is something that if there's a final deal, it could get 150 Republican votes. Remember there's that big group -- everybody's fixated on that 20 or 30 people that some call Tea Party. I just think they're the most conservative members. And then there's a very smaller group around Pete King on the other side of the spectrum. But that group in the middle is huge and they'll -- they want to get out of this.

  • 10:46:51

    REHMSo you think, number one, Boehner will hold onto his job.

  • 10:46:55

    YORKOh, yeah. I don't think that they're -- in the immediate future there's -- as far as I know, there's not a coup brewing against Boehner because...

  • 10:47:03

    REHMOkay.

  • 10:47:03

    YORK...look how disorganized they are, you know. They're not -- can't do it.

  • 10:47:05

    REHMAnd you're saying also that Republicans will likely want to take this on again?

  • 10:47:14

    YORKOh, as far as the debt ceiling is concerned the issue -- the reason the president had such a hard time with his, I-will-not-negotiate stand, because he did negotiate in 2011 in the thing that resulted in the -- it was a standoff resulted in the Budget Control Act and sequestration. So Obama's message really wasn't, I'm not going to negotiate. His message was, this time I really mean it. Now it's hard to convince people of that when you just did it a couple of years ago. So now Republicans, perhaps they have a different view. They may do differently January or February, but they still might try again.

  • 10:47:46

    REDDYWe have to remember here that John Boehner did not want this fight to play out the way it did. He is not one of the Republicans who wanted a shutdown, who wanted to fight over the debt ceiling. If you look back at the government shutdown in 1995 when Newt Gingrich, the speaker then, was pushing this was actually openly talking about the potential for default and using that as a negotiating tool. John Boehner was on the other side of that argument and saying, we will not default. And that was almost two decades ago in a very different environment.

  • 10:48:18

    REDDYHe didn't want this now but he's actually played this tactically to draw along House Republicans the way they decided they wanted to be drawn along and let that play out. And in the end he's doing what he probably knew in the beginning that he would have to do, and let this come to the floor and take votes from both parties.

  • 10:48:38

    REHMAll right. Sen. Kelly Ayotte has said she understands Senate leaders have reached an agreement to avoid a Treasury default, reopen the government after a 16-day partial shutdown. She made her comments as she walked into a meeting of Senate Republicans in Leader Mitch McConnell's office. All right. To Steve in Houston, Texas, you're on the air.

  • 10:49:10

    STEVEGreat panel today, Diane.

  • 10:49:12

    REHMThank you.

  • 10:49:12

    STEVEI particularly love this today. I've got a back story here in a second that's going to get you all (unintelligible) question.

  • 10:49:17

    REHMYou're going to have to make it brief.

  • 10:49:19

    STEVEIt will be. My wife is the daughter of a Reagan cabinet member, a guy who's still actually active in politics. I'm not going to go into who obviously, but interesting, she's going to be in the Affordable Health Care Act program. Interesting, by the way, how the terminology changes. When you get an application in, it's no longer Obamacare. It's the Affordable Health Care Act.

  • 10:49:39

    REHMOkay, sir, make it brief, please.

  • 10:49:41

    STEVEWhere's it going to -- so the question is where's this going to go over time? I'm beginning to sense an erosion in the base itself. And I grew up in a time when a whole generation -- well, I didn't but my parents and grandparents did, when a whole generation decided we're never going to vote Republican again because of the depression. Is there going to be a memory of this -- a long term memory that's going to cause erosion?

  • 10:50:00

    REHMAll right. Thanks for your call.

  • 10:50:03

    REDDYLet me say something about this particular issue. Look, we all know the Republican Party's problems in the 2012 election, and we can project what's going to happen in '14 and '16. But as far as the Obamacare thing is concerned, in terms of elected officials, most of them are opposed to it.

  • 10:50:21

    REDDYThe fight inside the Republican Party about this whole Ted Cruz defunding strategy was not whether they would like to see Obamacare stopped. It was the ones who were saying, dude, we've only got 46 votes in the Senate, and the president is a Democrat. It can't be done. That was the argument. It wasn't over opposition to Obamacare in which Republicans in the House and the Senate are absolutely united.

  • 10:50:43

    DIONNE JR.Three quick things...

  • 10:50:44

    REHMAnd you're listening to "The Diane Rehm Show."

  • 10:50:48

    DIONNE JR.First, if the Republicans hadn't shut down the government, then the problems with the opening of Obamacare would've been all over the news. So this was worse than shooting yourself in the foot and not having health insurance. Second, my view is that they've got to fix these glitches, and they've got to own them and take responsibility for them.

  • 10:51:09

    DIONNE JR.But the other side is, you saw that A. in states that ran this well, like Kentucky, which has done a really good job, you can make it work. And there's been enormous interest in it. So they got to fix the problems, and then we're going to see where Obamacare goes.

  • 10:51:23

    DIONNE JR.But the third point I think the caller may have been referring to, is there a long term effect of this shutdown? In the Washington Post ABC poll, the most striking thing to me is Democrats were broadly united around Obama's handling of this and their congressional folks handling of this. Republicans were split down the middle, so this strategy was losing Republicans, half of their own party. That's a bad strategy.

  • 10:51:49

    REHMByron.

  • 10:51:50

    YORKIt's left them losers and divided. There's no doubt about it. It's been terrible for the Republican Party.

  • 10:51:54

    REDDYIt has been terrible tactically and people are now looking at Obamacare as something maybe they actually want to see if it works. Maybe give it a little bit more time because the opposition to it has been so shrill and has led people to maybe take another look. You can actually see that in the polls. As popularity ticks up, it's still weak, but popularity of the Health Care Act is ticking up.

  • 10:52:19

    REDDYAnd ultimately this is something that will have to be judged over the course of months and years and not days and weeks, as a lot of people are trying to do. This is -- the healthcare problem that we have was decades in the making. And it's a little silly for us to try to make a judgment on it at this very moment.

  • 10:52:36

    REHMWhat about the Fitch threat of a downgrade? How is that affecting even discussion on Capitol Hill, Sudeep?

  • 10:52:46

    REDDYIt seems to have actually pushed the discussion on Capitol Hill because the memory of the 2011 downgrade when Standard & Poor's -- days after we actually saw a deal, Standard & Poor's downgraded the United States credit rating for the first time. That was a moment that everyone will look back on as a key turning point in our political dialogue about this issue, about the debt ceiling.

  • 10:53:14

    REDDYThe stock market did drop 16 percent over that period of the fight. And you could see that consumer confidence took about six months to recover. Business confidence was weak into the end of the year. It clearly cost us hundreds of thousands of jobs and a lot of consumer and business spending that we are still paying the price for. Nobody wants to see that again. I think in financial markets people are kind of looking at it as -- they're almost laughing it off. Fitch is coming in somewhat late in the game saying a lot of what we already know, that our political system is somewhat broken.

  • 10:53:50

    REHMOf course there's blame enough to throw all over the place but Phil wants to discuss the Koch brothers role in the government shutdown, E.J.

  • 10:54:02

    DIONNE JR.I'd actually like to hear what Byron has to say about this. Having written a book about the vast left wing conspiracy, he can tell us about the vast right wing conspiracy. I think what was so interesting is the Koch brothers who have financed many of the groups that were urging this on issued a statement through their company saying, no, no, no, the Koch brothers really aren't crazy about what's going on here.

  • 10:54:25

    DIONNE JR.Real hardcore conspiracists say there was then a weakening of Republican opposition. Obviously that didn't seem to affect the Tea Party folks here. But I think we're going to have a lot of discussion of all of these right wing groups and how they are distorting the strategy and the politics of the Republican Party.

  • 10:54:42

    YORKWell, you know, I think that we've seen -- what we saw with Heritage Action, for example, is that these outside groups still can exert significant influence. And that's basically through the fear of a primary challenge. So you have all these Republicans in the House, and many of them are terrified of a primary challenge. So they can do that. As far as the Kochs are concerned, they're businessmen. They did not want to see the United States default.

  • 10:55:05

    YORKI think as far as a shutdown is concerned -- I can't speak for them -- but a lot of conservatives thought that it wasn't as bad as they originally thought, mainly because so much federal money continued to pour out of the government at a regular pace. So the bottom line is the conservative world is divided over this just as the Republican Party is divided over it.

  • 10:55:24

    REDDYBut you know what was really shocking is -- it's a line I quote all the time from former Republican Sen. Bill Cohen -- government is the enemy until you need a friend. You had all these Republicans who had had almost, you know, consistent antigovernment rhetoric suddenly declaring all the parts of government they really loved. Of course, those military monuments in town, but including the WIC program that feeds low-income women, they had to abandon their core rhetoric and adopt the other side's rhetoric. That's...

  • 10:55:52

    YORKDid it occur to you that perhaps they were thinking a little more strategically there? Were they worried that the NLRB was furloughed? Were they worried that the EPA was furloughed? It was a way actually to shut down some of the things they don't like in the government.

  • 10:56:04

    DIONNE JR.And David Vitter apparently -- Sen. David Vitter put out a statement saying how wonderful it was the EPA was shut down.

  • 10:56:10

    REDDYAnd it is -- the shutdown is accomplishing that goal for a lot of Republicans by at least stymieing the machinery of government, preventing government activities.

  • 10:56:19

    REHMHow long is that going to last, though? That's the question, whether that sequester is going to stay in place.

  • 10:56:28

    DIONNE JR.Well, I think the chances of changing it and lifting it now are pretty good because I think there are Republicans who want to lift it on the military. And so you can have a real negotiation, when both sides want to do something. I think in terms of the government, my hunch, it'll back to running pretty quickly.

  • 10:56:44

    REHME.J. Dionne of the Washington Post and Brookings Institution, Sudeep Reddy of the Wall Street Journal, Byron York of the Washington Examiner, we shall watch this space and wait with hope. Thank you all so much. And thanks for listening, all. I'm Diane Rehm.

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