Here is the latest on the GOP's government shutdown and default.

- President Obama formally rejected the House GOP proposal to extend the debt ceiling and end the government shutdown for a limited time subject to the ransom of medicare cuts.  It was no surprise to sane minds that the President rejected the proposal.  The surprise is that the House GOP seemed genuinely surprised and angry about it.  Such is the delusional mentality of the House GOP.

- President Obama came out firing in his Saturday radio address, slamming the House GOP shutdown/default by name and demanding a simple end to the hostage strategy.

- Harry Reid firmly rejected the less hostile, but still offensive, GOP proposal from Senator Collins which provided too little in the way of ending the debt ceiling and government shutdown crisis and demanded some changes to the ACA, some of which were potentially far reaching from a budgetary standpoint (delay of medical device tax) and from an eligibility standpoint (income verification).  As Senator Patty Murray succinctly stated:  the GOP has to stop using hostages as a pre-condition to allow the people's government to function.  For his part, Senator Reid bluntly stated that opening the government and lifting the debt ceiling are not concessions to Democrats but are two of the basic functions of the US Congress.  Therefore, presenting such proposals were simply inappropriate.

- Harry Reid emerged to take over direct negotiations in place of the White House.  Susan Collins, Lisa Murkowski and Lindsay Graham are out (thank god!).  Mitch McConnell and Lamar Alexander are now talking with Reid and Schumer.  There is some reporting to suggest that Senate Democrats were a bit wary of a late inning White House cave, and Reid seized control from Obama before that weed could take root.  In truth, Obama and Reid seemed much more coordinated in their responses.  President Obama rejected the House GOP proposal within the same hour that Senator Reid rejected the Senate GOP proposal.

- Paul Ryan, the dark lord of the GOP and orchestrator of the default strategy (which, believe it or not, makes the tea party look sane by comparison) seemed especially perturbed by the President's rejection of his proposal and Boehner's willingness to punt the issue to the Senate.  He was reportedly very animated, defiant and angry, demanding that the House GOP reject any Senate crafted proposal (including the Collins proposal (which Reid had already rejected)).  He riled up the GOP caucus which further encouraged Boehner to punt the issue to the Senate and look the other way.    Never has the US seen a more ineffective Speaker of the House than John Boehner.

- Harry Reid has pushed the Senate GOP very aggressively.  He wants a longer debt ceiling extension and a shorter CR in order to replace the sequester. It also appears that he is looking to replace much of the sequester in this proposed legislation, meaning that much of the sequester could theoretically be repealed effective this month.  

In my view, Harry Reid has been given free rein by the President to push the GOP to repeal the sequester.  Obama first brought up the issue with Lindsay Graham in the context of the Collins proposal.  Obama and Reid were of the same mind on the crappy Paul Ryan House GOP proposal that it was an insulting non-starter.  Regarding the Senate GOP proposal, Obama was willing to entertain some concessions in order to replace the sequester but Reid prevailed to push Obama to remain philosophically consistent and convinced the President that the Collins proposal was a bit of a Trojan horse.  Reid now has a few days to run the show to play bad cop to Obama's good cop.  Neither cop wants to do business with the House GOP. Boehner is only too happy to sit on the sidelines and watch football this weekend.  The Senate GOP feels embattled but doesn't think it can trust the House to do anything.

Mitch McConnell has willingly accepted the role of GOP negotiator and has openly stated that he intends to reach a compromise with Democrats.  This is potentially significant because McConnell is more likely to bend to the Democrats because he faces a credible Democratic opponent in the 2014 Senate elections (Grimes) and Democratic Governor Steve Beshear is almost single-handedly validating Obamacare through the Kynect program.  He also doesn't seem to be too threatened by his tea party opponent (Bevin)in the GOP Senate primary (a harbinger of things to come in red states in 2014?)

In addition, Chuck Todd reported that when McConnell recently tried to sell the sequester as  GOP success to base GOP voters, it did not move them very much.  Therefore, McConnell may be more willing to jettison the sequester than we realize, particularly since it was hurting the GOP long before the shutdown and because most of the year 2 sequester cuts will fall on the military.

So Harry Reid has a shot to get an agreement that extends the debt ceiling for a longer period (6 months to 1 year), ends the shutdown with a shorter CR and/or replaces the sequester.  If Reid fails, he may be able to push the Overton window far enough to the left where the GOP might feel that simply passing a clean CR and debt ceiling increase at current levels might be the best solution.

The problem, of course, is the House of Representatives and particularly Paul Ryan.  The good news is that Obama's firm rejection of the House GOP offer forced the dark lord out of his crypt and into the open, and everyone in DC saw him for what he is:  a maniacal power hungry nihilist who values leverage above all and would rather see the country default than to hand a victory of any kind to Democrats.  This man is a sociopath and must be stopped.  

Ryan seems, in my view, concerned that Boehner might bring up a Senate passed bill and let it pass in the House with Democratic votes.  That's why he was so angry and boisterous in the House meeting.  He wants to whip the GOP House to unite behind him, which is a road to nowhere.  Ryan has made it clear that he will deny Boehner a majority of GOP votes.  The tea party will be aligned with Ryan on this particular vote.  Boehner controls at most only 20-25 votes.  Ultimately this is all about Boehner.  If he does undercut Ryan, he can say that he is acting for the good of the country and the survival of his party.  That will open him up to recriminations within the GOP and their media and perhaps a leadership challenge.  

The Democrats will be on solid political ground to pass the bill they want in the Senate and then force the House to deal with the issue and absorb most of the blame should they fail to act to avoid a default.  This requires Democrats to be unafraid of the GOP taking the country into default if Ryan has his way.  Democrats cannot save the GOP from itself, even if not stepping in results in a default because of the GOP's inability to govern.

For his part, President Obama will need to resist the temptation to offer anything of substance to the GOP. Boehner will come calling again, but he cannot deliver anything approaching a majority of the GOP caucus so he should be ignored.  Boehner simply has to be told to let whatever bill comes out of the Senate have a floor vote.

The risk of default remains high mainly because of Paul Ryan's unwillingness to let go of hostages and the tactic of hostage taking.  However, with many GOPers seeing the writing on the wall, the Democrats have an equally reasonable chance to impose their will and obtain the right result.  Stay tuned.

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