"It Is Really Disheartening That This White House Did Not Have A Plan B" - A Preview Of The Next Debt Ceiling Crisis

Tyler Durden's picture

As of Friday, total US debt subject to the limit was $16.006 trillion, or $387 billion below the latest and greatest official debt ceiling. In the past 3 months the US has been raising debt at a slower pace than usual precisely for this reason. Debt issuance will now pick up at far faster pace as the trendline mean reversion reasserts itself. It means that sometime over the next few months, and certainly before the end of the year, the US debt ceiling will be breached (with all the usual tactics employed to delay this event from happening as much as possible, including resuming the pillaging of various government retirement funds) as the Treasury itself warned. It also means that either just before or just after the presidential election, the topic of the debt ceiling will be once again upon us. As a reminder, the reason why the market plunged back in August of 2011 is because as the GOP proved unwilling to compromise, suddenly everyone, led by Tim Geithner, realized just how close to a failed auction, read endgame, the US was, and the dire need for a wake up call became paramount. Furthermore as is well-known, the only stimulus Pavlovian politicians react to is a market collapse, which not only instills the fear of the "401(k)" god falling to earth, but lights up the switchboards as concerned "voters" suddenly realize that all their mark-to-Bernanke's market "wealth" may disappear in a puff of smoke. It is now, courtesy of Bob Woodward, that we learn just how close we came. And since the polarity and discord in Congress after the election, already at record levels, will soar to new all time highs after November, it is safe to say that the debt ceiling debacle deja vu is coming, and this time it will make the first one seem like child's play.

From the WaPo's "Inside story of Obama’s struggle to keep Congress from controlling outcome of debt ceiling crisis" - excerpts:

The president told his senior staff that the call with Boehner had led nowhere.


“So we’ve got to figure out Plan B. Which is, how do we get out of this thing?” he said.


The problem was that they did not have a Plan B.


It was increasingly clear that no one was running Washington. That was trouble for everyone, but especially for Obama. Although running things is a joint venture between the president and Congress, a president has to dominate Congress — or at least be seen as dominating Congress. The last president to fold was George H.W. Bush, who gave in to Democrats’ demands that income taxes be raised in a 1990 budget deal. And Bush had been a one-term president.


When Obama learned that the deal negotiated among the congressional leaders would require a two-step increase in the debt limit, he told Rob Nabors, the White House director of legislative affairs, “The one thing I said I actually needed, they didn’t get,” referring to Reid and Pelosi. “I needed this to go past the election, and they didn’t get it for me. This can’t work.”


Obama sent word that he wanted the two Democratic leaders at the White House at 6 p.m. that Sunday, July 24. No reason was given.


Reid arrived in the Oval Office with his chief of staff, David Krone.




“I don’t trust these guys,” the president said dismissively.


Krone either would not or could not conceal his anger.


“Wait a second,” Obama said, interrupting someone else who was about to speak. “I can tell David has something else to say.”


Mr. President, I am sorry — with all due respect — that we are in this situation that we’re in, but we got handed this football on Friday night. And I didn’t create this situation. The first thing that baffles me is, from my private-sector experience, the first rule that I’ve always been taught is to have a Plan B. And it is really disheartening that you, that this White House did not have a Plan B.”


Several jaws dropped as the Hill staffer blasted the president to his face.


“So I don’t have a lot of options, in the past 36, 48 hours, to put together,” Krone continued. “We’re supposed to be the ones that fend off an economic catastrophe. And what we find ourselves is now, with no deal, we’re going to have to root for the worst possible things to happen in order to prove to the Republicans that you cannot be so callous and let the debt limit expire.


“That is a horrible position that we’re in,” Krone said. “And so this may not be the perfect deal, but it’s the only deal that we have on the table right now in the situation that we find ourselves.”


Obama replied: “I understand what you think you’re doing. I’m not doing that. The one thing that we need to bring stability to this economy is not throwing the debt limit increase back into the political arena. I’m not doing that under any circumstances. So if that means that I’m not signing this bill, I’m not signing the bill.”

Cue Tim Geithner:

You can’t veto,” Treasury Secretary Timothy F. Geithner told the group. “You cannot be responsible for default.” Anything had to be done to prevent it. Anything to preserve the global economy.


Could I actually veto it? Obama asked, adopting his law professor manner. What would happen on the day of the veto? The day after?


“It would have massive effects,” Geithner said. Treasury had to conduct a bond auction in the open market in about five days, the regular Tuesday auction, with settlement on Thursday. That first auction could be a kind of tripwire, setting off a chain reaction. The federal government couldn’t pay its bills. “Why would anyone buy U.S. bonds if it’s an open question whether we are going to have the authority to pay for them?”


Another possible outcome, Geithner said, was perhaps worse. “Suppose we have an auction and no one shows up?”


The cascading impact would be unknowable. The world could decide to dump U.S. Treasuries. Prices would plummet, interest rates would skyrocket. The one pillar of stability, the United States, the rock in the global economy, could collapse.


“So,” the president said, “if we give $1.2 trillion now in spending cuts” — the amount in the House bill to get the first increase in the debt ceiling for about six to nine months — “what happens next time?” The Republicans would then come back next year, in the middle of the presidential campaign, and impose more conditions on the next debt ceiling increase. He could not give the Republicans that kind of leverage, that kind of weapon. It was hostage taking. It was blackmail. “This will forever change the relationship between the presidency and the Congress.

This is 100% wrong: the relationship did change forever, but not between the presidency and the Congress, which are simply two of the three branches of the US government purchased exclusively to do the bidding of Wall Street. It changed between Washington DC and Wall Street. And Wall Street won, as it always does. And all it took was a 20% drop in the S&P for EVERYONE to cave in.

As to what comes next:

Obama never had to confront the veto question. A few days later, House Republicans dropped their insistence on the two-step plan [ZH: after the market tumbled]. The final plan accepted a debt limit increase that would take the country through the 2012 presidential contest. It also postponed $2.4 trillion in spending cuts until early 2013.


The long-term deficit crisis had not been solved, but merely put off, leaving the United States at the edge of the fiscal cliff, where it remains today.

Fiscal cliff yes, but also new debt ceiling fight in a few short months. And the winner, contingent on a 20%, 30%, or 40%+ slide in the stock market, will once again be Wall Street, which will again take America's 300+ million population, and its preoccupation with various numbers indicating one's monthly fluctuating "wealth", hostage to achieve its goals.

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jcpicks's picture

Borrow to infinity, print to infinity!

LMAOLORI's picture



Democrat's say once you vote black you never go back. Hey jobs be damned for the middle class you don't need no stinkin jobs obama will give you (with other people's taxes) food stamps, extended unemployment, disability for your vote and the 1% inconceivable wealth.


Jobs rut tips scales in favor of Fed stimulus



Guess Which President Has Been Best for Stocks?


Is the Stock Market Voting for Obama?


Analysis: I expect QE3 on Sept 13th


Economists Expect Fed to Deliver QE3 and More Next Week



Four More Years...and Social Security Disability Will Be Broke


Even the MSM is now reporting unemployment at 19%


Lost Middle-Class Jobs Being Replaced by Burger-Flipping and Retail Gigs: NELP Study

In short a vote for obama = insane amounts of money for the 1%, welfare programs for the masses until AFTER the election because then watch out the benefits will be cut and then if your lucky you can find a job flipping burgers or cleaning toilets.



Vampyroteuthis infernalis's picture

Here is how it will go down. Romney is a loser candidate allowing Obama to be reelected on a very slim majortiy. The House and Senate will be a sea of Republican red. Congress will force default in the new year and impeach Obamao out no problems. Democrats will be forced into a point of crisis with no answers to what will pass. Prepare for chaos.

bank guy in Brussels's picture

Yet the 'reporter' who wrote the above piece trashing Obama, is a US intelligence agency operative who was planted in the media, and who led the early 1970s intelligence agency coup d'état that brought down Richard Nixon.

Yes, Watergate was another US coup, less bloody than the JFK killing in 1963, and Bob Woodward is a fraud and fake as 'brave reporter'.

In the late 1960s Bob Woodward was in the US Navy working for Naval Intelligence under Admiral Thomas Moorer. In 1970 Admiral Moorer became head of the US Joint Chiefs of Staff - head of the whole US military - and Woodward left the US Navy to become a planted Washington Post 'reporter'. -

Also in 1970, Admiral Moorer started running a spy ring against the Nixon White House, with the US military thinking Nixon and Kissinger were getting 'soft on Communists' etc. Navy Yeoman Charles Redford stole many White House documents and so on for the joint chiefs, US Admiral Elmo Zumwalt getting some of the documents.

The spy ring - US military against the White House - was discovered at the end of 1971. But just like with the military 'business plot' planned coup in the 1930s against US President Franklin Roosevelt, exposed by US Marine General Smedley Butler ('War is a Racket'), and Roosevelt's agreement not to prosecute the American elite (including grand-pappy Bush) ... Nixon agreed to cover-up the military spy ring.

Likely fearing to end up dead like JFK, Nixon always feared to publicly denounce it for the rest of his life, tho did not deny it.

Despite Nixon's agreement to shut up and not prosecute, the military remained unhappy, along with the American elite, who wanted Nixon out  ... Nixon, for all his flaws, had come to the same conclusions as Jack Kennedy ... in other words, make some peace with the commies, and try to build a better life for Americans ... Nixon even tried to give everyone in the US European-style health insurance (His 'CHIP' programme.)

So Watergate was magnified into a scandal for a coup, the Washington Post brave 'reporters' Woodward and Bernstein - with Woodward still loyal to his old boss Admiral Moorer ... they took Nixon down.

A major ally was the manipulative John Dean, Nixon's lawyer in the White House, working his own angles, and betraying Nixon to the coup plotters, and made a 'media darling' from among the Nixon gang, tho Dean maybe was the worst snake among the bunch.

And ever since, Bob Woodward's fake Washington Post - John Dean version of the Watergate 'story' has dominated. ... and the truth still basically squashed today, by the dominant media framework ... Nearly everybody believes Watergate was some kind of pro-populist 'exposé'.

A lot of the Watergate facts has come out from investigators Len Colodny and Robert Gettlin, a book 'Silent Coup' ... more detail on this on a website associated with them


Scalaris's picture

Why are you apes junking the bank guy?

Inconsistency of journalistic content, as well as evidence fabrication, is, and has been one of Woodward's fortes.

Isotope's picture

Woodward is well known for his lies and fabrication. Like when he claimed to have sneaked into DCI Casey's hospital room using scrubs as a disguise and got a "deathbed" confession from him about the Contras.

max2205's picture

Awesome story....can't wait for the movie

Clashfan's picture

Bank Guy is fast becoming one of my faves on here.

Don't forget the clear Nixon/Watergate connection to the JFK hit. Can't miss it.

I think you've got some of the pieces, sure. But the JFK connection there throws a bit of a monkey wrench into the whole Watergate thing, not to mention a certain, timely plane crash.

I can't pretend to know the whole Watergate truth--still a bit cloudy for me. But calling out Woodward is a good job. Can't believe you got so many junks for that one. Good call, that.

TruthInSunshine's picture

Common sense says that Woodward wouldn't be allowed access to events and/or allowed to publish things (real or ficticious) that they didn't allow him/want him to.

And there can only be one reason for this.


I'll take "straight from Joseph Goebbels playbook" for $2,000, Alex.

Element's picture

Exactly what I was thinking TIS, there's no way such detailed inner-circle direct quotes emerge like that, after a bit over a year.

TruthInSunshine's picture

Woodward further reports that:


"Back in 2009, Obama was furious, and picked up his telephone in order to call Eric Placeholder, to authorize a full-scale, take-no-prisoners, as-many-resources-as-it-takes, investigation, forensic analysis and, ultimately, prosecution of some of the most well known names (of both firms and persons) on Wall Street, for conspiracy, racketeering (RICO -Racketeer Influenced and Corrupt Organizations Act), collusion, price-fixing (e.g. LiborGate) and other statutory and common law violations, but that Timmay Geithner lunged over the President's desk and overpowered Obama, and while pinning President Obama to the floor and stilling Obama with a perfectly executed WWF-style figure 4 leg-lock, screamed "I will not allow this, and I am confident you know who I speak for."

Urban Redneck's picture

It`s called a LEAK, they happen all the time and they have it down to a very intentional art

Whether it`s true and who it`s intended to influence and how and why are completely different issues, and almost never disclosed or dissected publicly.


10mm's picture

Then chaos is shall be.Obammer will not be impeached.

goldfish1's picture

the 1% inconceivable wealth.

Seeing how the 1%'s wealth was stolen from we the people, I think it should be confiscated leaving a total per 1% of $500 million, period. Same with corporations...

Pay down the national debt with the rest and then let's see where we are.

bunnyswanson's picture

Seizing the ill-gotten gains after a forensic audit and returning them to the source would be the least painful solution.  System restore to 1999 so to speak.  

rfaze's picture

Mongo no like sheriff Obama.......

A Nanny Moose's picture

Murder, print, borrow, and print.

theMAXILOPEZpsycho's picture

"The extension of women's rights is the basic principle of all social progress."
Charles Fourier

I've been furthering my readings into liberal french philosophy; many would do well to follow my example - posters here are transfixed, paralyzed by our governments borrowing. Well borrowing is exactly what they should be doing. True I campaigned for Obama, but have grown a little disappointed that he panders to much to the capitalist class. What I'm campaigning for now is the most pressing issue of the day: the war on women. We MUST end the war on women, and give more respect to womens rights. Every woman has the right to be treated as mans equal. I'm calling on Obama to do something to get more women into the board rooms. And where employers discriminate against women who want to have children they should feel the full force of the law and have their assets stripped. Oh and the debt ceiling, of course it should be raised. Only rabid right wingers with their one ounce of gold and ten ounces of silver looking at themselves in the mirror all day and thinking they're michael douglas out of wall street would think otherwise

MillionDollarBoner_'s picture

The War on Women?


My daughter has grown up under the umbrella of "Womens rights". She now skets around town with impugnity and has no moral base. Men are a means to an end, only. Yet her intellect and talent go unnoticed. How is this an advancement?

Women as playthings, men still in charge.

MillionDollarBogus_'s picture


I think you are in the wrong forum.

MDBoner...like the handle...

On a more serious note, the Baltic Dry Index is rapidy closing in on the 52 week low. 

What recovery...???  


Element's picture

Nice compilation. 

Asia's major consumer exporters are not plunging all of a sudden in those charts, but trending down rather solidly and similarly, and a regional trend like implies a global structural problem, and those sorts of trends don't turn around so easily with a bit of stimulus and settings changes.

boogerbently's picture


the "war on women" means they want us to continue to pay for their abortions.....you know that, right?

Joy on Maui's picture

Consider that such is cheaper (not to mention greener)  than 18+ years of welfare subsity.

boogerbently's picture

It's not ALL about the $$$.

Would dems agree to "rape only" abortions???

It's a moral issue. I'm hoping the "silent majority" comes out to vote, en masse. (90% believe in God, 77% are Christians).

Urban Redneck's picture

The fundamentalist Muslim solution is even cheaper, just shoot every unwed bitch that gets knocked up.  Cut two welfare checks with one bullet. 

StychoKiller's picture

Just so long as the pecker that did the deed is ID'd, cut off, and the remainder spends the rest of its life doing forced labor...

A Nanny Moose's picture

It also means that women aren't doing enough as dutiful tax livestock. We gotta get all of those stay-at-home moms out into the workforce earning a taxable wage...or start paying stay-at-home moms the $100K salary they are estimated to be worth.

Pure Evil's picture

Women who seek to be equal to men lack ambition.

Zero Debt's picture

A worthy challenger to the quality of MDB satire has finally arised.

El Oregonian's picture

Those idiots are not in control... These idiots are:


AND, Speaking of idiots! theMAXILOPEZpsycho, your right up there dude...

Michael's picture

I'm sure a number of our brand new 30,000 pound bunker buster bombs can open the Rothschild's vaults, so we can repossess the stolen by fraud, USA's peoples owned Fort Knox gold.

Clashfan's picture

Can't let that one pass w/out an up arrow from Clashfan, Michael.

Clashfan's picture

TY, El O. Calling the right family there--and Bill Still is way cool.

boogerbently's picture

We ARE Greece.

We want what we want. We shouldn't have to "inconvenience" ourselves, at all. WE'RE AMERICANS.

Give us our money!

But we don't have any money.

We don't care. Give us our money.

If America falls, so does EVERYONE invested in us......which is EVERYONE.

BlackholeDivestment's picture

911 WARNING!!! 

Rosemary's Baby, AKA POTUS, the pride of the Drag Queen Bride, that aborted God and omitted Israel and Jerusalem, has called for 3 days of 911 National Prayer. http://www.christianpost.com/news/obama-proclaims-3-natl-days-of-prayer-for-9-11-victims-motive-questioned-81276/ 

The blind Laodiceans, that accept the official 911 Report of Lies, are falling for it, and the Harbinger set up is in place for judgment to come. http://www.wnd.com/2012/09/millions-turning-911-into-day-of-prayer-for-future/

There is also a 3 Week Alert in progress for the DOD Gay Pride Military http://www.stevequayle.com/index.php?s=33&d=109 

Angel In The Whirlwind http://defenderpublishing.blogspot.com/2009/04/read-it-before-it-is-banned-by-us.html 

Angel in The Whirlwind Occult Speak http://www.youtube.com/watch?v=pZuH9lWxS_k&feature=related 

Whirlwind(s) In NYC and Damaging Storm in D.C. http://www.usatoday.com/news/nation/story/2012-09-08/okla-storm-deaths/57696152/1 

50 Days http://www.israelnationalnews.com/News/News.aspx/159724#.UE0X8o2PUy5 

October Surprises http://www.wnd.com/2012/09/israel-readies-secret-weapon-for-iran-attack/ http://www.timesofisrael.com/iran-to-hold-massive-air-defense-drill-in-october/ 





Isaiah 9 Harbingers, all upon this generation now,, and the last debt ceiling speech Rosemaey's Baby gave, he declared victory by; pointing to the 1776 July 4 Second of Sirius 666 Occult obelisk ''Point Within The Circle'' over his shoulder, through the White House (discount window lol) window, he declared was still open for business and still screwing Americans like a drunk whore fallen from the saddle of the (beast posing as King of Kings) Lion of Babylon. http://ferrelljenkins.files.wordpress.com/2009/05/babylon_lion-t1.jpg LMAO. 145 Days after that New World Secular Order of the mark of debt was established, a 5.8 earthquake next to a nuclear plant in Virginia caused the permanent shut down of the symbol of the Presidential sealing of the debt mark upon the whole of American labor which was aborted for the sake of continuing the strong delusion of the market slush fund whores of Babylon. http://www.youtube.com/watch?v=rvhZhGeMwoo

Clint Liquor's picture

The 'Debt Ceiling' will be raised and Gold will go over $2,000.

Gully Foyle's picture

Clint Liquor

For five minutes.

Then Soros sells at a profit because he knows Digital Currency will arrive the next morning during the Great Reset.

What the fuck think is more likely, a new Gold standard or a reset to digital currency? What can be tracked to every last nickel, Gold or a government controlled Digital currency?

Better yet, a Digital currency based on say Carbon credits soo all the shit head Hipsters can feel good about being as Carbon neutral as possible.

Will any of that affect the Uber-rich?


Only the little people get scammed and are willing to play along.

Michael's picture

It's only money, a mental construct that has no value.

Say Bye Bye,

Bye Bye.

boogerbently's picture

What will give the "digital currency" value?

Digital currency is just money, without the paper to back it up.

We, basically, have digital currency right now.

Clint Liquor's picture

My Bank can't even handle 'Direct Deposit' without fucking it up and the whole world will have digital currency? If you need an excuse for why you haven't any Gold/Silver, try confiscation. The logistics of confiscation are daunting, but at least possible, unlike a worldwide digital currency.

boogerbently's picture

They can't "confiscate" investment in foreign miners.

Of course, the brokerage firm could "lose" my money, with inadequate segregation of accounts......

People here always talk about "physical".

I think, as gold prices skyrocket, mining co. margins improve.

There will always be "costs of production", but ABX, GG, NEM, AUY....

all make more money as gold prices rise.

I believe gold price will rise faster than production costs.

Clashfan's picture

Booger, we are allowed several companies w/my college teaching retirement--I use all three, and w/one (and only one) of them, we have mining options. So I chose the miners, all in, on that one. It has performed the poorest even as gold and silver have risen? Wanna know why? Or should I let you guess? Down 18 percent this year.

Reason--I can't separate gold and silver (or platinum--or other) miners from the iron ore miners. Neat trick. Money vanishes when I put it into miners.

MiltonFriedmansNightmare's picture

It's hard to fathom, but we may soon long for a return to the *paper standard*.