An interesting aspect of the congressional talks is developing, and I believe it is the reason we are heading toward default. Its a catch-22, and it goes like this:
1. The only thing that will push our "friends" on the right to cave is the reaction of the markets. As the markets plunge today and especially tomorrow (when the bond market opens) Republicans will be desperate to deal.
2. When a deal seems eminent, the markets recover, reducing the incentive for republicans to vote for said deal. Witness the 400 pt rise in the Dow on Thurs-Fri last week as talks began between Obama and Boehner.
3. See # 1
So the incentive for them to deal only exists when they is no hope for a deal. The incentive evaporates as negotiations progress. The market opened down 100 pts today, and has recovered somewhat after Manchin announced they are 85% done. My prediction is that the market will fall later today when they announce no deal has been made near the end of the trading session. This will freak out Senate R's, who will quickly cave. Word of the deal will send stocks higher in the morning, allowing House R's to claim that the market agrees with them that this is no big deal, and they will vote it down. This pattern will continue until well past Thursday (when the market will crater, leaving no doubt what must be done, even for the house majority).
Follow me over the squiggle for a few more thoughts
It is critically important that Dems stick to their guns here. Despite the catastrophic effects a default would have, it may be necessary to break the R's of their extortion addiction. They ask what they get for this behavior? What they need to "get" is a definitive message from the American people that they are never to ever do anything remotely like this again!
The 2014 campaign starts now. I'm fired up and ready to go. I am so looking forward to this campaign, because we can actually argue FOR the role of government in our society. The "smaller govt" argument, like most of their abstract ideas, falls flat when the American people have experienced it first-hand. By Nov 2014 the healthcare.gov glitches will be a distant memory as people experience Obama-care for themselves.
Plus we have concrete evidence of what happens when Democrats dont vote (e.g. 2010). We get an un-representative congress that takes joy in shutting down the government and causing economic calamity.
Never again.