THE BLOG
07/14/2011 08:39 am ET | Updated Sep 13, 2011

Debt Ceiling Just as Predicted! Now, Critical Next Steps

On January 7, 2011, long before the words "debt ceiling" assaulted the public consciousness, it was predicted that Wall Street would herd the cats whose elections they had purchased to protect Wall Street's main interest, its own money, against a default. See, "On the Debt-Ceiling, Silence is Golden: Let Wall Street Battle the Tea Party".

On June 29, 2011, "Only Wall Street Can Resolve the Debt-Ceiling Impasse -- By Pulling Money from Republicans", the same theme was pursued and updated.

These predictions required no great insight. Although, as Julia Roberts said in Pretty Woman, "people surprise the hell out of me", when it comes to money, peoples' actions are as predictable as Mitt Romney disagreeing with himself again and again. That is "sun will rise in the east" territory of certainty.

Although one has not seen the specifics, it was suggested that the Democrats on the Senate Budget Committee had a $4T deficit reduction plan that was signed off upon by the Chair, Kent Conrad (D-ND), and Bernie Sanders (I-VT).

So, on July 2, 2011, it was suggested that, if that were true, the Senate Budget Committee Plan ("SBC Plan") would be an excellent basis for the Democratic Senate passing under reconciliation an Amendment to the Ryan Budget, replacing it in its entirety with the SBC Plan.

Now that the Republicans have heeded their paymasters, there is even more reason for the Senate to pass the SBC Plan, obtain the president's endorsement to sign it if passed, and then let Wall Street target its prodigious might on their wholly-owned subsidiary, the House Republicans.

With the Wall Street letter, and the McConnell "default solution to avoid a default", the Senate's passing the SBC Plan would subject House Republicans not only to increasingly negative public opinion, but also to Wall Street's power. Mitch McConnell would become, at least for a time, a minor annoyance.

Robert Reich wrote this week ("Why Mitch McConnell Will Win the Day", July 13, 2011) that the cave-in plays into McConnell's hands since it is designed to force the President to veto legislation on 3 occasions in the next year to raise the debt-ceiling, enabling the Republicans to run against President Obama in 2012 as a big government guy, and cast themselves as the saviors of the public purse.

[As an aside, it is interesting that even such an experienced stalwart as RR has in his mind that everyone needs to pretend that government (a tool for people acting together as a group) does not play a critical role in a mixed economy. Why not turn around "big government" to "here are the big things government does..."?]

But, to return to the main point, Democrats in the Senate should move forthwith to pass the SBC Plan. Time is running out, and an agreement, if there is one, between Kent Conrad and Bernie Sanders is not something that ought to be cast aside lightly. Moreover, Democrats would have presented and passed something very powerful -- shared sacrifice -- that will compare well to the childishness of McConnell and Cantor.

Wall Street also has a continuing role. It needs to turn the tables on the Tea Party and run more mainstream Republican primary candidates against them. To show seriousness, Wall Street should cancel fundraisers for the RNC and Congressional and Senatorial campaign committees unless and until they behave.

The time is ripe, Senators. Do not let it rot.

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