Political MoJo

House Republicans Hold Hearing on Why Their Shutdown Shut Things Down

| Wed Oct. 16, 2013 1:25 PM EDT
Rep. Darrell Issa (R-Calif.)

On Wednesday morning, House Speaker John Boehner (R-Ohio) ended his two-week standoff with the White House and Senate Democrats, agreeing to bring to a vote a Senate-brokered bill to raise the debt ceiling through February 7 and fund the federal government through January 15. But a light at the end of the tunnel of this latest Capitol Hill crisis didn't mean an end to the GOP political theatrics. Even as House Republicans were capitulating on the demands that had precipitated this standoff, they were convening a hearing to get to the bottom of why the National Park Service had shuttered the memorials on the National Mall, hauling NPS director Jonathan Jarvis before the committees on oversight and natural resources in an effort to portray the closures as a politically motivated effort to turn up the heat on the GOP.

"I regret that [Jarvis] would not come voluntarily and had to be subpoenaed and served by a US Marshal," said Rep. Darrell Issa (R-Calif.), sounding almost as if he meant it.

For 15 days, Republicans have tried to turn Jarvis into the villain of the shutdown by highlighting the closure of popular sites like the WWII memorial. He was the lead player in this right-wing conspiracy theory, in which Obama had supposedly forced parks and memorials to close to make the GOP-cased shutdown appear worse than it really was. On Saturday, hundreds of veterans demonstrated against the closure of this site on the National Mall, joined by Sen. Ted Cruz (R-Texas) and former Alaska Gov. Sarah Palin. At the time, conservatives hailed the protest as a game-changer in the public relations war. And apparently they still do.

At the hearing, Rep. Doc Hastings, chairman of the House Natural Resources Committee, alleged that the monument closures were indeed "an attempt to make the shutdown as painful and as visible as possible" and their reopening was "an attempt to squash the ensuing bad PR."

Republican congressmen had a handy point of comparison for the closures on the National Mall: Occupy DC set up camp on the NPS-maintained McPherson Square for 100 days in 2011 without harassment from park police. "Do you consider it an exercise of your First Amendment right to walk to a monument that you helped build," Rep. Trey Gowdy (R-S.C.) asked Jarvis, "or is it only just smoking pot at McPherson Square?"

Rep. John Mica (R-Fla.) seized on a quote, provided anonymously from a NPS ranger to a Washington Times columnist, that "we've been told to make life as difficult for the people as we can." Over the last two weeks, conservatives have cited this as evidence the White House may have orchestrated the monument closures. Jarvis insisted that it was strictly an NPS decision. He denied any such order to make life difficult and said the quote—which after all appeared in a newspaper that regularly publishes Ted Nugent—was "hearsay." "It may be hearsay," Mica said, but he was sticking to it.

Midway through his opening remarks, Rep. Peter DeFazio (D-Ore.), the ranking Democrat on the House Natural Resources Committee, held up a small blue-edged hand mirror. "If those Republican colleagues will look at me, I will show you who's responsible." Rep. Markwayne Mullin (R-Okla.)—who recently called on the "four branches of government" to work together—stood up from his chair on the far side of his room and stared blankly in DeFazio's direction, then sat down. Most of his colleagues kept their focus straight ahead.

House Republicans may have lost the shutdown war, but at least they still think they're winning.

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Heritage Action CEO: "Everybody Understands" We Can't Repeal Obamacare Until 2017

| Wed Oct. 16, 2013 12:25 PM EDT

When conservative activists began laying the groundwork months ago for their plan to shut down the federal government, their stated goal was delaying or defunding the Affordable Care Act, the equivalent of landing a haymaker on President Obama's signature policy achievement. Sen. Ted Cruz (R-Texas) tromped around Texas railing against the health care law, a banner proclaiming "DEFUND OBAMACARE" hanging behind him.

Yet the ultimate goal of conservative interest groups such as Heritage Action and FreedomWorks has always been the wholesale repeal of Obamacare. Some conservative lawmakers reportedly even insisted on repealing Obamacare as part of a deal to end the government shutdown that began on October 1.

But on Fox News Wednesday morning, Michael Needham, the CEO of Heritage Action, brought some reality to the discussion over repealing Obamacare:

Fox News: With a Democrat in the White House and Harry Reid with the majority in the Senate, what can you do [to stop Obamacare]?

Needham: Well, everybody understands that we're not going to be able to repeal this law until 2017. And that we have to win the Senate and win the White House.

But right now, it is clear that this bill is not ready for primetime. It is clear that this bill is unfair. The president's given a waiver to employers; why can't we give that waiver to the individual people all across America?"

So there you have it. Obamacare isn't going anywhere until Republicans wrest full control of Congress and the White House. They won't get a shot at that until the 2016 elections, and by then, with Obamacare fully implemented, it could be too late.

It's Over: Congress Passes a Bill Ending the Shutdown and Giving Tea Partiers Almost Nothing

| Wed Oct. 16, 2013 12:20 PM EDT

Update: TPM reports that Sen. Ted Cruz (R-Texas) has "no objections" to the Senate voting on the bill today, and will not attempt to block or delay it. He added, "There's nothing to be gained from delaying this vote one day or two days."

Update 2: Politico reports that the Senate will be voting first on the bill, sometime Wednesday afternoon or early evening.

Update 3: House Speaker John Boehner has released a statement about the agreement, promising to support the Senate's bill: "Blocking the bipartisan agreement reached today by the…Senate will not be a tactic for us."  Read the full text of the bill below

Update 4: The Senate passed the billed, 81-18. On to the House...

Update 5: The House of Representatives passed the bill late Wednesday night, 285-144. The bill now goes to President Obama who has promised to sign it immediately.

Update 6: President Obama signed the bill, officially making it into law. The government will open Thursday.

Senate leaders have forged an 11th-hour deal to end the government shutdown and raise the debt ceiling, and House Speaker John Boehner is expected to bring the bill up for a vote, Politico and other media outlets reported Wednesday morning. If the bill passes and arrives on President Obama's desk by the October 17 deadline, the US government will reopen until January 15, and the debt ceiling will be raised until February 7, delaying the budgetary and debt ceiling crises and leaving President Obama's signature health care bill largely intact.

Many concessions that tea partiers attempted to extract from the Obama administration in exchange for reopening the government and raising the debt ceiling are not expected to be included in the bill. Conservative Republicans had, over the course of the budget fight, demanded a one-year delay to Obamacare, a delay or repeal of the act's tax on medical-device manufacturers, and a "conscience clause," which would have allowed employers to block their employees from buying health insurance that covers birth control. None of those measures are expected to appear in the Senate's bill. The only concession Republicans seem to have won is a slightly stricter set of rules for verifying the incomes of Americans who are receiving subsidized health insurance under Obamacare.

According to the Wall Street Journal, the final bill won't include a GOP proposal that would stop the Treasury Department from using extraordinary measures to raise the debt ceiling. But it will include back pay for federal employees who missed paychecks during the shutdown and establish a committee tasked with working out a longer deal ahead of the new January 15 and February 7 deadlines. The bill also reportedly includes a provision that could make it harder to use the debt ceiling as a bargaining chip: At the next deadline, Congress would be required to pass a bill if it wants to block the ceiling from increasing. Otherwise, the ceiling would go up automatically.

The House is expected to vote on the proposed bill first, which would allow the Senate to skip some of its cumbersome procedures and quickly move to a final vote. Politico calls this "an extraordinarily risky play" because the majority of House Republicans are expected to oppose the bill. However, Robert Costa of the National Review reported that Boehner has agreed to pass the bill with mainly Democratic votes. There's still a chance that Sen. Ted Cruz (R-Texas) could go rogue and filibuster the bill in the Senate, dragging out the debate past the October 17 deadline, but his office has not said whether or not he will do so, according to the Wall Street Journal.

Here is the full text of the bill.

 

4 Things the Fed Could Do About a Default

| Wed Oct. 16, 2013 12:13 PM EDT

Congress could finalize a deal to prevent a default by Wednesday afternoon, but it's still not certain if the House will approve of the plan. In the event that we do default, the Treasury Department could possibly stave off total catastrophe for a while by prioritizing certain payments over others. But there are also measures that the Federal Reserve could take, not just to soften the impact of going over the debt brink, but to prevent default altogether. Here are four of them:

The central bank could cancel the nation's debt: We owe a lot of our debt to ourselves, after all. As Rep. Alan Grayson (D-Fla.) wrote in an op-ed for Reuters last week:

The Treasury Department issues U.S. debt, and lots of it. So you would think that America is deeply indebted to its bondholders. Yet increasingly, it is the U.S. monetary authority, the Federal Reserve, and not private investors, who buys this debt.

So a simple solution to the impasse is as follows: Federal Reserve Chairman Ben Bernanke should simply cancel the Treasury debt that it owns. The government can just forgive the government's debt.

This wouldn't solve the debt problem entirely. The Federal Reserve doesn't own all U.S. government debt; it owns only roughly $2 trillion of it. (Well $2,076,927,000,000.00, as of last Wednesday, but who's counting?)

Yet canceling this debt would give the government substantial room under the debt ceiling to manage its finances. It would end the debt ceiling standoff in Congress, and it would prevent a default.

That's probably not going to happen, though.

Fed Chairman Ben Bernanke could lend to the Treasury Department: That might entail breaking the law, but it could be a better option than Armageddon. As the New York Post noted last week:

Some Washington insiders and Wall Streeters are talking about a second option to avoid a default: looking to Bernanke to lend money to the Treasury.

But, it turns out, under normal circumstances, lending to the US Treasury is illegal under the Federal Reserve Act.

But Cullen Roche, founder of the Orcam Financial Group and an expert on monetary policy, believes that in this emergency Bernanke could play a get-out-of-jail-free card.

“If the options are default or no default then I think the Fed should exercise what’s called the ‘exigent circumstances’ clause [of the Federal Reserve Act] and lend directly to the US Treasury,” said Roche.

“They did this with Bear Stearns and AIG [in the 2007-2008 financial crisis] so I think saving the US government is a bit more important than those two entities.

The Fed could keep lending to banks even if Treasurys plummet: If the Fed can't prevent default, then it can at least soften the blow. The Fed makes short term loans to US banks and takes US Treasurys as collateral. But if Treasurys drop in value, they may no longer qualify as adequate backing. The Fed could choose to continue lending to banks nonetheless, something the Fed considered at the height of the 2011 default scare. As Charles Plosser, the president of the Philadelphia Federal Reserve Bank told Reuters in 2011, "Do we treat [Treasurys] as if they defaulted and don't lend against them?" Or, he asks, "Do we treat them as if they didn't default, in which case we would be saying we are pretending it never happened?"

It could prop up the price of Treasurys: If the federal government hits the debt limit and has to stop paying interest on a portion of it's debt, the value of Treasurys will decline. But as Marcus Stanley, executive director of Americans for Financial Reform explains, "the Fed could support the price of that debt on the assumption that the government would eventually continue to pay it off." That would mean the Fed could buy Treasurys from anyone on the market for a reasonable market price instead of the depreciated price.

As Stanley notes, "When you have power to print money, you really have a lot of things you can do."

We're Still at War: Photo of the Day for October 16, 2013

Wed Oct. 16, 2013 11:19 AM EDT

U.S. Army Pfc. Michael W. Daley Jr. (right) and Pfc. Travis B. Woolwine, both Soldiers with 1st Battalion, 506th Infantry Regiment, 4th Brigade Combat Team, 101st Airborne Division (Air Assault), scan their surroundings while on patrol in Paktya Province, Afghanistan. U.S. Army photo by Sgt. Justin Moeller.

 

Rep. Steve King: "I'm Not Worried About This Thing They Term Default"

| Wed Oct. 16, 2013 11:16 AM EDT
Rep. Steve King (R-Iowa).

As Congress gets perilously close to its October 17 deadline to lift the nation's debt ceiling, Rep. Steve King (R-Iowa) isn't worried. Default? King shrugs. If anything, he says, the real risk is President Obama's scaremongering about a partial default by the United States on its obligations.

That was King's message Wednesday morning during an appearance on CNN's "New Day." "I'm not worried about this thing they term default because we are going to service our debt," he said. "But I am concerned about all the rhetoric around this, about the weeks and months building up to this point and the utilization of that term default."

The real risk, he went on, is blowback from Obama's dire rhetoric about the debt ceiling. "I'm concerned that it will scare the markets; I'm concerned that the president's remarks will scare the markets."

King is hardly the only the debt ceiling "denier" in Congress. In fact, there's so many of them that my colleague Tim Murphy divided them up into seven different caucus; they include the Debt-Limit-Is-Too-Damn-High Caucus (those who want to lower, not raise, the debt ceiling), the #YOHO Caucus (comprised solely of Florida's Rep. Ted Yoho, who believes default would be a good thing), the straight-up Default-Deniers (who believe the government cannot default on its debts), and the It's-Just-a-Flesh-Wound Caucus (you get the point).

Not a member of any of these caucuses: Speaker of the House John Boehner (R-Ohio). He's tried for weeks to convince and cajole his more conservative Republican colleagues into a deal, with no luck. As ofWednesday morning, media reports suggest that Boehner will bring a Senate-passed bill to the House floor, attempting to pass it with Democratic votes.

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Surprise! Do-Nothing Ex-Senator Fails to Break Debt Impasse

| Tue Oct. 15, 2013 6:48 PM EDT

As a US senator Evan Bayh (D-Ind.) was liked, but not well liked. "He was a popular Democrat in a red state, and most of his efforts seemed to be devoted to keeping it that way," as the Washington Post's Ezra Klein put it upon Bayh's retirement in 2011. Bayh talked a lot about the deficit without doing much to lower it and talked about Washington dysfunction without doing much to ease it.

After retiring, Bayh became a partner at a Washington lobbying firm. His first issue: something called the medical-device tax, a provision of the Affordable Care designed to pay for the bill's expanded coverage provisions by extracting more revenue from companies that manufacture things like pacemakers. "As a result of the looming device tax, production is moving overseas, good jobs are going to Europe and Asia, and cutting-edge medical devices will now be produced elsewhere for import into the U.S," he wrote in an op-ed for the Wall Street Journal last year. "Meanwhile, the impact on the quality of care is incalculable but no less real. Thirty billion dollars must be taken out of operations or R&D. Who knows what lifesaving devices that might have been developed will fall victim to this tax?"

That wasn't really true. As an editorial in Bloomberg View put it, "Just about everything the medical-device industry says about the tax is either untrue or exaggerated." Bayh's claim was based on an industry-funded study that in turn offered no support for its fearful claims; repealing the tax would mean the law no longer paid for itself; and because more people would have access to health care under the law, demand for medical devices was guaranteed to increase.

But the industry's argument took hold. Flash-forward to Tuesday morning, with the nation teetering on the brink of default and the federal government into its third week of a shutdown. After raging against the Affordable Care Act since 2009 as a tyrannical expansion of government, House Republicans appeared to have settled on a final proposal that settled for a far short of repealing or defunding Obamacare: a repeal of the medical device tax. As the Daily Beast's Ben Jacobs pointed out, it was hardly the sweeping victory conservative activists hoped for when they packed the House with true believers in 2010. The push for the device tax repeal made for strange alliances—even Sen. Elizabeth Warren (D-Mass.), whose state is home to a number of major medical device firms, supported it.

Tuesday afternoon, after some conservative Republicans raised concerns that the repeal amounted to "crony capitalism," GOP leaders stripped the device tax repeal from the proposed deal. If it had become law, Evan Bayh's change to the Affordable Care Act would have added $30 billion to the deficit he used to care so much about.

IRS Complaint Filed Against Jeb Bush's Ed Reform Foundation

| Tue Oct. 15, 2013 6:05 PM EDT
Former Florida Gov. Jeb Bush speaking at CPAC 2013

Jeb Bush has long been on the short-list of potential Republican presidential candidates. He was a popular Spanish-speaking governor of a big swing state, Florida, and since leaving office he has focused on education reform through his Foundation for Excellence in Education (FEE). The foundation has provided a platform for working on a bipartisan public policy front—and access to potential donors among big companies (including those owned by Fox News Corp.'s Rupert Murdoch) trying to privatize public schools and tap into billions of tax dollars. (See this Mother Jones story for a closer look at the way Bush has used his foundation to break down barriers to the growth of troubled online charter schools.)

This week, as Bush is back in the limelight in Boston kicking off his foundation's annual education reform summit, a New Mexico advocacy group, ProgressNowNM, has filed a complaint with the IRS alleging that Bush's foundation has failed to publicly disclose on its 990 tax forms thousands of dollars it paid to bring public school superintendents, education officials and lawmakers to foundation events where they had private "VIP" meetings with the foundation's for-profit sponsors. Nonprofits are required to disclose payments for public officials' travel and entertainment if it exceeds $1,000. Public records unearthed by the New Mexico group show payments for travel exceeding that amount for several state education officials whose travel wasn't reported on FEE's 990 form.

The complaint alleges that Bush's foundation disguised travel payments for officials as "scholarships" to hide the fact that the nonprofit was basically facilitating lobbying between big corporations and public officials who control local tax dollars. The complaint notes:

The unorthodox manner of these scholarships—and the fact that they are used as a vehicle to meet with for-profit education corporations—further raises suspicions around the Foundation's failure to properly disclose payment of travel expenses in 2010 and 2011. Additionally, it is possible these unreported payments to the government officials may be deemed to provide a private inurement in violation of IRS regulations.

In its complaint, ProgressNowNM notes that New Mexico’s education secretary Hanna Skandera received foundation funds to travel to Washington, DC, to testify before a US House committee on the expansion of "virtual" education in her state. Skandera asked House members to consider providing more flexibility in federal funding to pay for virtual schools. Some of the for-profit providers of those virtual schools—among them the troubled K-12 Inc.—in New Mexico are also donors to FEE. Using tax-exempt funds to subsidize congressional testimony, ProgressNowNM says, is an "apparent violation" of IRS regulations. 

“This tax-exempt organization is serving as a dating service for corporations selling educational products—including virtual schools—to school chiefs responsible for making policies and cutting the checks,” ProgressNowNM's Patrick Davis says in a statement. “Just like [the American Legislative Exchange Council] brought together gun manufacturers with legislators to pass ‘stand your ground’ laws, FEE is using it’s tax-exempt status to hide thousands of dollars it’s using to connect big private education businesses to government policy makers."

FEE did not respond to a request for comment.

*UPDATE: Jaryn Emhof, communications director for the Foundation for Excellence in Education, released a statement Tuesday night responding to the IRS complaint. She said, "It’s not surprising that Progress Now New Mexico, a partisan organization that has a history of opposing education reforms that put students first, would attack efforts to improve the quality of education for children across America...We fully comply with IRS rules when providing policy research and expertise and will continue to do so. This is nothing more than a politically motivated complaint by opponents of education reform."

Here's the House GOP's Final Debt Ceiling Offer (Update: Or Not)

| Tue Oct. 15, 2013 5:55 PM EDT
Sen. David Vitter (R-La.)

Update: Heritage Action, the political action arm of the right's top think tank and a leader in the anti-Obamacare crusade, is urging members to vote against House Speaker John Boehner's latest proposal to end the shutdown and debt ceiling crisis. After the tea partyish organization declared its opposition, the House Rules Committee postponed a Tuesday night hearing on the bill, an indication Boehner's plan might be dead even before arrival within his own caucus. So...buy gold.

Update II: It's official: No vote on Tuesday.

On Tuesday afternoon Speaker of the House John Boehner (R-Ohio) unveiled his final offer to end the shutdown and stave off a catastrophic federal default. The GOP's proposal would fund the federal government through December 15 (setting up a possible Christmas shutdown; hooray!), raise the debt ceiling through February 7, and incorporate what's known as the "Vitter amendment"—language prohibiting congressional staffers from receiving subsidies for the purchase of health insurance. It would also prohibit the Secretary of the Treasury from taking "extraordinary measures" to prevent the default—which some Republicans have previously suggested might help stave off the crisis—due to fears among GOP congressmen that Secretary Jack Lew was using his powers to fudge the deadline.

Not included in the bill are several provisions that had been discussed previously, such as a "conscience clause" to exempt employers from having to include birth control as part of their insurance plans, and a delay of repeal of the Affordable Care Act's tax on medical device manufacturers—a proposal supported by donors but rejected by some conservative members. Boehner is set to bring the bill to a vote Tuesday night, leaving it up to the Senate, where Democrats have previously opposed all efforts to include the Vitter amendment in impasse-ending legislation. Some House Republicans had considered ditching town after the vote, in the hopes of forcing the point.

We'll keep you updated. In the meantime, you can read the bill:

 

Obama-Hating Oath Keepers Aim to Form Paramilitary Units

| Tue Oct. 15, 2013 4:59 PM EDT

Oath Keepers, the anti-government group profiled by Justine Sharrock in our March/April 2010 issue, just got a little creepier. The group recruits active and former military members, cops, and other law-enforcement types who claim they are worried about government tyranny, but seem to be equally driven by a deep loathing of President Obama. At their gatherings, members take an oath that they will disobey "unconstitutional" orders. What's unconstitutional is pretty much left up to the individual—even if, like it or not, this isn't how our democracy operates.