Senate Republican Leader McConnell Folds On The Debt Ceiling

Tyler Durden's picture

Something troubling happened in D.C. today, where it seems that the Senate Republican leader basically just folded like a cheap suit in the ongoing farscial standoff on the debt ceiling (which luckily should bring the whole comedy to an end and the nation can progress with its previously scheduled ponzi collapse). In essence, as Bloomberg says, according to McConnell's proposed 3-Stage plan, "The debt-ceiling increase could occur without the companion spending cuts, McConnell said." Ironically, when we observing comparable posturing by Boehner from two days ago we said "in two weeks we get news of no tax hikes, and no deficit reduction, which will be spun by the great diversionary media machine as the great compromise, and, of course, leading to a $2.5 trillion debt ceiling hike. Win, win for everyone." It seems precisely this is on the agenda. Details on McConnell's plan to basically let the President do whatever he chooses: "Senate Republican Leader Mitch McConnell proposed a “last choice option” for increasing the U.S. debt limit in three stages in case President Barack Obama and Congress can’t agree on a deficit-reduction plan. McConnell’s plan would let the president raise the limit, while accompanying it with offsetting spending cuts, unless Congress struck down his plan with a two-thirds majority. Don Stewart, a spokesman for McConnell, said the plan would allow Obama to raise the debt limit while putting the onus on him and congressional Democrats for any failure to cut spending." Surely the president would be shaking in his boots knowing that if he were to cut spending the "onus" would be on him. Here is how the Republican justifies this betrayal: "The proposal is “not my first choice,” McConnell said, adding that he wanted to show the financial markets that the U.S. will not default on its debts. He said he continues to seek a broader deal to raise the $14.3 trillion debt limit with congressional Democrats and the White House." Funny: this is the same logic that Jean-Claude Juncker used when validating outright lying to the media, and general public. It appears there are little if any differences between politicians in Europe and the US when it comes to lies.

Some more:

The increases would come in three amounts: by $700 billion, $900 billion and $900 billion, McConnell said. They would occur over the remainder of Obama’s presidential term, in keeping with the president’s call for an increase in the debt limit that would carry through the 2012 elections.

McConnell’s proposal would need approval in both chambers to become the method used to address the debt-limit increases.

Mike Steel, a spokesman for House Speaker John Boehner, said the Ohio Republican shares McConnell’s “frustration” with the protracted debt-reduction negotiations, but didn’t say he would support the proposal.

“The speaker shares the leader’s frustration,” Steel said. “Republicans are unified in our commitment to ensuring that the debt limit is not used as leverage to saddle small businesses with increased taxes that destroy jobs.”

Senate Majority Leader Harry Reid said he is willing to consider McConnell’s proposal, which he said he didn’t fully understand.

“I’m not about to trash his proposal -- it’s something that I will look at,” he said. Reid, a Nevada Democrat, said he had only spoken briefly with McConnell about the idea.

Of course nobody will trash the proposal: it almost certainly represents what the final outcome on the debt ceiling will be: a grand compromise of muppetry, in which nothing is achieved on either spending cuts, or tax hikes, yet $2.5 trillion in additional debt is added, bringing total US 2012 debt/GDP to about 120%... or about where Italy is today. And that's not counting the $6 trillion in government-guaranteed GSE debt.