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Debt Deadlock Inspires Partisan Derision

The gridlocked debt talks not only spoiled the Senate’s July Fourth recess but also have both parties amping up the partisan taunts and stunts as Senators grow increasingly pessimistic about the prospects for a deal.

With Minority Leader Mitch McConnell (R-Ky.) and Speaker John Boehner (R-Ohio) refusing to give in to Democrats’ demand for higher taxes on the wealthy and businesses, it remains unclear how Congress will avert a possible debt default and a broad government shutdown a month from now.

While aides suggested a deal could still emerge from the ashes of the bipartisan talks led by Vice President Joseph Biden — perhaps with the GOP agreeing to eliminate a fairly small package of corporate tax breaks such as ethanol — Senators themselves seemed downright gloomy.

“There’s not going to be a grand bargain in my opinion,” Sen. Bob Corker said after President Barack Obama scolded the GOP at his press conference last week. “At this moment, we’re headed for a train wreck.”

The Tennessee Republican said Senators in both parties are looking for an elusive Plan B solution to the debt ceiling that would avert disaster, but he suggested that the president seems to be in campaign mode. Treasury Secretary Timothy Geithner has warned the U.S. might default on its debt beginning Aug. 2.

“Yesterday was political theater and we all know it,” Corker said of the president’s Wednesday press conference. “I don’t think when people are negotiating in good faith they are up there publicly bashing each other.”

But the bashing has been coming from both sides.

The point-counterpoint started with each party trading insults over who was failing to show “leadership” and then spilled over into everything else.

By the end of the week, recess plans, including a Congressional delegation trip to Afghanistan and Pakistan, were dashed after Obama — and some Senate Republicans — challenged Congress to cancel the recess to work on the debt limit impasse.

Senate Majority Leader Harry Reid (D-Nev.) agreed that the issue was too urgent to go home — only to schedule a resolution authorizing the war in Libya for the floor, given the absence of a deal on the debt. Freshman Sen. Ron Johnson (R-Wis.) objected, in his second floor stunt of the week.

Corker ripped Reid’s move on Libya: “We’re going to burn the week up talking about an issue that has nothing whatsoever to do with the most pressing issue in our country right now, which is the debt ceiling, and it speaks to how dysfunctional this whole place is.”

Reid said discussions on the debt and deficit would take place behind the scenes, including an expected Senate Democratic Conference meeting Wednesday with the president and vice president.

Plus, Democrats finally plan to unveil their own budget blueprint — although they still have no intention of holding a markup or bringing it to the floor for a vote.

“I think a legitimate question was asked by the Republicans: ‘Where do the Democrats stand?’ Well, we’re going to show them,” said Sen. Benjamin Cardin (D-Md.), a member of the Budget Committee.

While Reid was canceling recess, McConnell issued a last-minute invitation to Obama to meet Thursday afternoon with Republicans so he could hear how strongly Republicans oppose voting for more tax revenue.

Republicans skewered Obama for declining the invitation and instead heading for planned fundraisers in Philadelphia that afternoon. But it turns out some Republicans didn’t really want to stick around either.

Sen. Orrin Hatch (R-Utah), ranking member of the Finance Committee, staged a boycott of a 3 p.m. “mock markup” of the South Korea free-trade agreement because he said it would interfere with GOP Senators’ plans to leave town for what was left of their Fourth of July weekend.

If the markup had been scheduled for 10 a.m., or after the holiday, it would have been fine, Hatch said. He blamed the White House, accusing it of a plot to ram through trade assistance for displaced workers.

“We’re not going to be jammed!” he exclaimed, arguing he was sticking up for the minority’s rights to fully debate the trade pact.

On the larger debt issue, Republicans believe they are winning the day with their message that Democrats are holding a debt deal hostage to raise taxes in a recession; Democrats likewise appear convinced that Republicans can’t sustain their opposition to closing corporate loopholes.

The attacks are growing increasingly personal, with Senate Democrats last week spotlighting a $126 million tax break for racehorses authored by McConnell that they dubbed the “Bluegrass Boondoggle.”

Several rank-and-file Democrats said they are happy to see leadership set in motion a tougher strategy intended to force Republicans to defend tax breaks for yachts, corporate jets, hedge fund managers and oil companies while they propose steep cuts to Medicare and Medicaid.

“I think there has been a deference to the group of six and deference to the vice president’s team,” said Sen. Jeff Merkley (D-Ore.), who spotlighted the horse-racing tax break. “They have reached impasses, and it’s important that we push forward hard on the legislative front now and that we not have a deal … that leaves walled-off programs for the wealthy and well-connected.”

This week, Senate Democrats may hold a vote on a nonbinding resolution calling for an end to tax breaks for luxury items and profitable businesses, Democratic aides said.

One factor that Senators in both parties say could spur a compromise is pressure from Wall Street. Top Democrats, including Sen. Charles Schumer (N.Y.), reached out to Wall Street executives last week to urge them to pressure the GOP on the importance of raising the debt ceiling to avert a financial crisis.

But Corker said he was surprised when he talked with Wall Street at how much people there are dismissing the threat of an impasse.

“I can’t believe the markets are this calm,” he said.

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