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The Washington Report – October 11th, 2013
11 Oct 2013

The Washington Report – October 11th, 2013

A few excerpts from this week’s Washington Report. To read the full write-up click here. To sign up, click here.

On Day 11 of the shutdown, the drama continues in Washington, D.C.
Something to think about, at least nine S&P 500 companies have more cash on hand than the federal government right now. Nobody panic. (H/TDavid Yanofsky, Quartz).
And now for some highlights of the week.

The Capstone National Partners Team (John Rogers, Alan MacLeod, Steve Moffitt, Diane Rogers, Erik Oksala, Kate Venne, Jodi Hrdina and Joyce Rubenstein)

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A SHORT-TERM DEAL IS TAKING SHAPE. REALLY. Speaker John Boehner and House Republicans offered President Obama a deal increasing the debt limit for six weeks, through Nov. 22, during a late-afternoon summit at the White House. … But after a 90-minute meeting at the White House, the two sides remained at odds over how and when to end the government shutdown with Obama insisting that Republicans reopen federal agencies before negotiations over broader budget issues can begin.
INQUIRING MINDS WANT TO KNOW, WHO BLINKED National Journal writes, “Democrats and Republicans made concessions nearly simultaneously … both sides are budging, in part because they can willfully deny doing it first. Children, meet playground.” The Speaker offers a six-week extension and in return, the President is willing to talk. GAME ON.
“I’m on your side. Don’t screw it up, OK. I’m on your side.”
— Senate Majority Leader Harry Reid, to D.C. Mayor Vincent Gray (D), after Gray “crashed” a Senate press conference as part of his campaign against the federal government shutdown. (WRC-TV)

WHY REPUBLICANS ARE LOSING THE SHUTDOWN BLAME GAME The Fix writes, “The new NBC-Wall Street Journal poll not only contains a slew of bad news for the Republican Party but also an explanation for why the GOP is losing the blame game over the government shutdown. The answer is simple: The American public views the Republican Party’s motives in the shutdown as overwhelmingly political. And looking political is the absolute worst thing that can happen to a political party.” A single question in the NBC-WSJ poll captures that sentiment. Seven in 10 people agreed with the statement that Republicans are “putting their own political agenda ahead of what is good for the country” while just 27% said that the GOP is “demonstrating strong leadership and standing up for what they believe in.” Compare those numbers to where President Obama stands on that same question. Forty-six percent of respondents said he is “demonstrating strong leadership” while 51% said he is putting his own political agenda first. Those aren’t stellar numbers for the president but they look a whole heck of a lot better when compared to where Republicans stand at the moment.

PIECEMEAL FUNDING From the Washington Post. Here’s a really neat graphic that puts the piecemeal approach in perspective

WHERE HAS PAUL RYAN BEEN? The New York Times writes, “Representative Paul D. Ryan may have temporarily receded into the Capitol shadows … but he remains a powerful presence among House Republicans, earning the respect of hard-line conservatives for his budget blueprint and the trust of anxious moderates for his pragmatism. Now, the impasse that has shuttered much of the government and steered the nation toward a default has offered the Wisconsin congressman a new opening to reassert himself – and suddenly a man who seemed in danger of being eclipsed as the face of his party has re-emerged as essential to its rescue.”
AND WHERE IS DEALMAKER-IN-CHIEF JOE BIDEN? He’s effectively sidelined by Senate Majority Leader Harry Reid, who believes Biden has given away too much in concessions during previous budget negotiations. (Politico)

A HOUSE DIVIDED CANNOT STAND First Read writes, “…there’s a simple reason why the GOP is losing this fight: It’s divided. Tea Party Republicans approve of the job congressional Republicans are doing by a 72%-25% margin. However, a plurality of NON-Tea Party Republicans disapproves by a 49%-42% … And then there’s this: Among Tea Party Republicans, Ted Cruz has a 52%-4% fav/unfav rating. But among non-Tea Party it’s 13%-23%. As the saying goes, a house divided against itself can’t stand. And that’s what’s going on in with the shutdown. As Morning Joe Scarborough said this morning, there are now two Republican parties.

SINKING CRUZ SHIP Sen. Ted Cruz (R-TX) has been talking (a lot) in recent weeks. And the public is listening. That’s both good news and bad news for the fiery freshman senator. According to a new Gallup Pollreleased Thursday, the good news is that his name ID has climbed substantially, from 42% to 60%. The bad news is that the more people have gotten to know him, the less they like him. From a 6-point favorable rating to a 10-point NEGATIVE rating. (Important to note this is among all adults, while Cruz has been courting a specific subset of that group, Tea Party Republicans.) That said, First Read writes, “Republican Senator Ted Cruz showed no signs of backing down from his hard-line stances Friday despite new NBC News/Wall Street Journal polling numbers showing his party receiving broad public blame for the ongoing government shutdown and high negative ratings for him personally.
LESS POPULAR THAN PELOSI For the first time, Gallup found House Speaker John Boehner with a 50%+ unfavorable rating in its latest survey conducted from Oct. 3-6. It also marks the first time that Boehner has a higher unfavorable rating than the former Democratic Speaker, House Minority Leader Nancy Pelosi.

THE GREAT POLITICAL DEPRESSION While Democrats and liberals might howl at any kind of concession by the President, the NBC/WSJ poll contains a big flashing warning: in the poll, 60% say they would fire every member of Congress if they could. If you’re the party of government, you sometimes have extra motivation to restore faith in government.

A VIEW OF THE SHUTDOWN FROM OUTSIDE THE BELTWAY Defense companies, investors and rating agencies are nervously watching what happens next in Washington. “There is real concern and it’s disruptive at many more levels than perhaps folks in Washington even envisioned when they were contemplating the consequences,” said Russell Solomon, a senior vice president at Moody’s who rates aerospace companies.

DEBT CEILING IMPACT – ONE POWER POINT SLIDE EVERY MEMBER OF CONGRESS NEEDS TO SEE The Fix wrties, “..The best illustration comes courtesy of Republican pollster Bill McInturff whose analysis of the political and economic impact of the last debt ceiling fight was seminal stuff. Here’s the slide. It speaks for itself.

DEBT DENIERS Politico writes, “… Treasury Secretary Jack Lew warned Congress on Thursday that lawmakers who have cast doubt on the impact of a government default are gravely mistaken and are putting the U.S.economy at risk. Treasury has said that the government will run out of its ability to borrow money starting on Oct. 17 and will soon after not be able to pay all the government’s bills on time and in full.
JUST IN CASE “The nation’s largest manager of money-market mutual funds (Fidelity) said Wednesday that it no longer holds any U.S. government debt that comes due around the time the nation could hit its borrowing limit.” (Ken Sweet,AP)

WHY IT MATTERS About the best thing the federal government has going for it right now is the world’s absolute faith that it will pay back its debts. That’s why the country can continue to borrow money at outrageously low rates even though it’s $17 trillion in debt. If lenders were to lose faith and demand higher rates, it could set off the type of sovereign-debt crisis that brought Greece to its knees: Higher borrowing costs increase debts, increased debts shake investor faith, shaken investor faith produces higher borrowing costs, and the cycle repeats. Fidelity’s move is only a tiny step in that direction, but it’s a step, and a reminder of how dangerous it is to even hint at default.”

HOW THE PRESIDENT CAN RAISE THE DEBT CEILING…WITHOUT CONGRESS The Fix writes, “He could (in theory): 1. Invoke the 14th Amendment. 2. Mint a trillion-dollar coin. 3. Try to prioritize which bills get paid when.” Options explained in this clip.

WHO COMES AFTER ASH? “One defense source quickly rattled off three names to replace Deputy Defense Sec Ash Carter (who is departing): Michèle Flournoy, former head of DoD policy and one front-runner for the SecDef job before Hagel got it; Linda Hudson, the head of BAE Systems’ U.S. operations who has announced her retirement; and Frank Kendall, currently the undersecretary of Defense for acquisition, technology and logistics.”

OBAMA SIGNS LAW REINSTATING MILITARY DEATH BENEFITSReporting for Defense One, “President Obama signed a bill to allow the families of United States troops killed during the shutdown to receive death benefits. The relief for those families comes one day after the Fisher House Foundation had agreed to foot the bill until the government shutdown ends.”

SINGLE BIGGEST STRATEGIC MISTAKE REPUBLICANS MADE WITH THE SHUTDOWN The Fix writes,” By virtually any measure, the rollout of the health-care exchanges — a central element of the Affordable Care Act — has been a disaster.  Technical glitches abound and a new poll conducted by the AP – GfK shows that just 27% of Americans believe the unveiling of the exchanges has gone well. That’s front page/top of broadcast sort of news.  And it’s all bad for President Obama. Except that the federal government is shut down, a story so big that it has SUCKED UP ALL THE MEDIA OXYGEN that under virtually any other circumstances would be spent on the problems with a centerpiece of Obamacare. … The struggles of the exchanges to get off the ground would be Exhibit A to reinforce the Republican argument that the program is simply not ready for prime time and needs to be delayed and/or reexamined. Instead, the problems with the rollout of the health-insurance exchanges are on the back burner. What’s on the front one? The divide within the Republican Party over the best way forward on the shutdown and the broad fiscal debate.

SINCE IT’S BASEBALL PLAYOFF SEASON Republicans took a hanging curveball and not only didn’t swing at it but closed their eyes when it was thrown. And they will almost certainly look back with regret on that decision.

BOOMERANG EFFECT From the First Read, “Here are maybe the most worrisome numbers for the GOP in the NBC/Wall Street Journal Poll: After the shutdown, the health-care law has become MORE popular, and a majority believes the government should be doing MORE.”

YELLEN NOMINATED TO BE NEXT FED CHIEF With current Fed Chairman Ben Bernanke standing by, President Obama announced his nomination of Janet Yellen, the central bank’s current vice chair, to become the next chief when Bernanke’s term finishes at the end of January. Obama called Yellen “one of the nation’s foremost economists and policy makers.” (NYT)
WATCH OUT WALL STREET Yellen has a reputation, and a record, of being a tough-as-nails financial regulator.(NJ)

LYING POLITICIANS The Atlantic writes, “Do facts matter in politics? The cynic says not. Politicians seem to lie with impunity, brushing off the disapproval of the press; voters cocooned in ideology will believe anything that reaffirms their worldview and ignore anything that contradicts it. … A couple of political scientists, Brendan Nyhan of Dartmouth and Jason Reifler of the University of Exeter, recently set out to test this despairing view with a field experiment. Their findings suggest it’s not so hopeless after all: Politicians actually do seem to care whether they get caught lying, and they lie less when they know they’re being watched.”

TAKE NOTE OF THIS SUPREME COURT CASE.  IT WILL MATTER.Hotline writes, “The Supreme Court heard oral arguments this week for the biggest campaign finance case since Citizens United. Its eventual ruling could open the floodgates for more spending in 2014. McCutcheon v. FECasks the Court to consider eliminating the restrictions on an individual’s overall political contributions to candidates ($48,600) and committees ($74,600).   Everything you need to know about McCutcheon vs. FEC .

NOW IT’S GETTING PERSONAL The government shutdown “has closed an obscure agency that quietly approves new breweries, recipes and labels, which could create huge delays throughout the rapidly growing craft industry, whose customers expect a constant supply of inventive and seasonal beers.” (AP)

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