Over the Cliff? Markets Lose Ground World Wide, but….

So Speaker John Boehner didn’t have the votes lined up after putting out a last minute muddle trying to get his dingoes in line.  Might have done Obama, and us, a favor says Paul Krugman:

As in 2011, then, the Republican crazies are doing Mr. Obama a favor, heading off any temptation he may have felt to give away the store in pursuit of bipartisan dreams.

And there’s a broader lesson here. This is no time for a Grand Bargain, because the Republican Party, as now constituted, is just not an entity with which the president can make a serious deal. If we’re going to get a grip on our nation’s problems — of which the budget deficit is a minor part — the power of the G.O.P.’s extremists, and their willingness to hold the economy hostage if they don’t get their way, needs to be broken. And somehow I don’t think that’s going to happen in the next few days.

The markets around the world have dropped a percentage point or two, which isn’t large in the big scheme of things, though in the context of normal fluctuations it is more than nothing.  I’m no expert in these matters but it looks like to me that the months of uncertainty around the U.S. budget and debt have inured many of the big players to being surprised.  The GOOP walk out, leaving no one to bargain with before the hammer falls, means it will likely fall: taxes will rise for everyone back to Clinton levels, the Pentagon will be slashed big-time.  Ipso Facto the deficit will be reduced.  Of course it’s like going cold turkey or on a crash diet — one which will hurt the vulnerable more than the wealthy:

“Low-income households are most affected by expiring expansions of the child tax credit and earned income tax credit (food stamps, children’s health insurance, meals on wheels, unemployment benefits). Middle-income households are affected most by the payroll tax and income tax ( foreclosure prevention). Households at the top income level are most affected by the income tax and the tax increases on unearned income such as capital gains.” [Wiki]

If the sequestration takes place the best hope is that on day one, the President and majorities in both houses act fast to repair the most devastating results.  It would be interesting to see the Republican dingoes trained to hit only the  No button, do  it on a bill to lower taxes…

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The constituents of the extreme right were on the phones all day — not the voters, but the big money, big lobbyists..

“We were on the phone all day long today, talking to members of Congress,” said Mike Needham, executive director of Heritage Action, the political arm of the powerful conservative nonprofit Heritage Foundation. “I think we definitely changed people’s minds today, absolutely.”

…A leading Tea Party group, TheTeaParty.net, said it enlisted the help of former Rep. J.D. Hayworth (R-Ariz.) to urge Republicans in Congress to vote against Boehner’s plan. “For the last three days, we’ve had Hayworth calling members of Congress,” said Teaparty.net spokeswoman Scottie Nell Hughes. “And other staffers of ours have been calling chiefs of staff to make sure they knew what our positions are.”

A spokesman for the Club for Growth, another major conservative group cited as an active participant, said that after it publicly issued a statement opposing Plan B on Wednesday afternoon, group representatives needed to make few phone calls on Thursday.

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