Why Obama, Boehner continue to butt heads on the shutdown - KLFY News 10

Why Obama, Boehner continue to butt heads on the shutdown

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The government has been shut down for eight full days, and the nation is coming dangerously close to risking a default on its loans, yet President Obama and House Speaker John Boehner, R-Ohio, continue to talk past each other.

Both leaders say the shutdown should end and that the nation's credit should never come into question. In spite of this, they've found themselves at a stalemate primarily for two reasons: their negotiating history and the current House GOP dynamics.

Mr. Obama and Boehner have tried - and failed - before to work together on large-scale deals. In the 2011 battle to raise the debt ceiling, the pair came close to negotiating a so-called "grand bargain" of tax and entitlement reforms, only for negotiations to fall apart at the 11th hour. Both sides have a different narrative for what went wrong. Boehner's camp said Mr. Obama demanded extra revenue at the last minute; the administration insists the negotiations were fluid but Boehner walked away because he couldn't deliver enough votes.

When the U.S. was on the verge of the fiscal cliff in December 2012, Mr. Obama and Boehner tried negotiating a deal one-on-one once again, and once again they failed. Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., had to step in to avoid a massive tax hike from taking effect.

Such failures have left a bitter taste in the mouth of both parties and left a large trust deficit.

Flash forward to 2013: In addition to the seeds of distrust, Boehner has a Republican conference to placate as well, which includes a group skeptical about the negative effects of a shutdown and - even more dangerous, according to Mr. Obama and Treasury Secretary Jack Lew - the fallout from a default.

"We need to go back and redefine 'default,' " Rep. Steve King, R-Iowa, told RealClearPolitics. "Default would be if you couldn't pay the interest and couldn't manage the principle on our national debt. And that's not going to happen. The resources are there. The cash flow is easily there to pay the interest on our debt."

 "I don't think we're ever going to default," Rep. Dennis Ross, R-Fla, told the Associated Press. "We'll always service our sovereign debt."

"There's no way to default," Rep. Justin Amash, R-Mich., added. "There's enough money coming into the Treasury to pay interest and to roll over principal."

Wall Street and Lew strongly disagree with that sentiment, warning of dire consequences if the Treasury has to default on the country's debts.

"The potential is disastrous," Gus Faucher, senior economist with PNC Financial Services Group, told CBSNews.com. "We would see interest rates spike across the board. We'd see a huge crash in the dollar. People count on lending their money to the federal government and getting it back, and if that trust is taken away -- it's never happened that we haven't met our obligations as a nation -- then that has very, very negative consequences for the U.S. economy."  

On CBS' "Face the Nation" on Sunday, Lew warned that while a government shutdown has had negative consequences, "it's a whole different order of magnitude if we default for the first time since 1789." Lew quoted President Reagan, who once said about the impacts of defaulting, or even the serious prospect of defaulting, "are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets."

Mr. Obama on Tuesday noted that Lew will appear before a Senate committee on Thursday to make a formal presentation on the threat of defaulting. The president acknowledged that raising the debt ceiling can be a "tough vote," but he took Republicans to task for suggesting "default would not be a big deal."

Mr. Obama also acknowledged the politics behind the GOP's intransigence.

"There are a whole bunch of members of Congress right now who privately will tell you, I know our positions are unreasonable, but we're scared that if we don't go along with the Tea Party agenda or some particularly extremist agenda, that we'll be challenged from the right," the president said. "And the threats are very explicit, and so they tow the line... A big chunk of the Republican Party right now is in gerrymandered districts where there's no competition, and those folks are much more worried about a Tea Party challenger than they are about a general election."

Indeed, Republicans won the House majority in 2010 on a crest of tea party anger against Democratic rule, and it's in their political best interest to refuse the president's negotiating terms. Some of those Republicans -- like Rep. Lynn Westmoreland, R-Ga., and Sen. Mike Lee, R-Utah -- campaigned in 2010 on the promise to make dramatic changes in Washington or shut the government down.

So far, these tea party-aligned Republicans have put more pressure on Boehner than House moderates. In the latest CBS News vote estimate, just 13 House Republicans say they'd support a no-strings-attached spending bill.

If Boehner tried to buck this wing of his party and put a no-strings-attached spending bill up for a vote, it could result in another embarrassing failure that calls into question his leadership. Back in July, House conservatives bucked Boehner's leadership and brought down a farm bill, declaring that its $2 billion in cuts to food stamps weren't steep enough. In December of last year, conservatives rejected Boehner's Plan B budget bill.

Boehner, however, insisted on Tuesday, "This isn't about me, and frankly, it's not about Republicans. This is about saving the future for our kids and our grandkids, and the only way this is going to happen is to, in fact, have a conversation."

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