What did Wall Street want to hear when Speaker Boehner appeared before the Economic Club of New York last night? According to Bloomberg, they wanted to hear that Boehner is going to raise the debt limit:
“What Wall Street wants to hear is that they are going to raise the debt ceiling in a timely way,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.
Investors expect “policy makers are going to negotiate and debate,” though they want assurances that “when it comes down to brass tracks they are going to raise that debt ceiling,” Zandi said.
And what did they get instead?
Without significant spending cuts and changes to the way we spend the American people’s money, there will be no debt limit increase,” Mr. Boehner told members of New York’s business and finance community. “And cuts should be greater than the accompanying increase in debt authority the president is given.” Mr. Boehner said those cuts should be in the trillions of dollars, not billions.
Mr. Boehner said the reductions should be “actual cuts and program reforms, not broad deficit or debt targets that punt the tough questions to the future. And with the exception of tax hikes — which will destroy jobs — everything is on the table.”
Note that he didn’t provide any details. He wants to cut about $2 trillion from the budget without raising taxes. Taxes are “off the table.” Boehner wants to play a game of chicken with America’s credit rating and the global economy. But, this time, he doesn’t have much leverage. In fact, the only leverage he has depends on right-leaning Democrats like Sen. Claire McCaskill of Missouri. In theory, the president and the Democrats could simply call Boehner’s bluff and offer him nothing. Unfortunately, we have a lot of lousy Democrats in elected office that want more than a mere fig leaf on deficit reduction and don’t insist that the issue be decoupled from the debt limit.
The Republicans have painted themselves into a corner and they can be put through the figurative electoral wood-chipper over their irresponsibility and desire to gut Social Security, Medicaid, and Medicare without raising taxes on anyone. But, once again, a bunch of stupid Democrats are making it difficult to win this political battle.