Hitting the Ceiling

++The Chamber of Commerce has reaped great benefits in backing the new Republican majority in the House. Former corporate employees have become staff members and virtually gutted regulation on oil and gas, the environment and have tried to gut the new Consumer Protection Agency.

++But it's clear for all the gains in real influence and power that the members they elected are economically illiterate and obtuse to the point where they really could bring down the economy. The Chamber is frantically lobbying the House to pass the Tan Man's plan. Wall Street is now beginning to realize that the prospects for a debt ceiling deal are not good and the stocks are plunging.

++By late afternoon it was reported that Boehner after telling his Caucus get "their ass in line" would get 217 votes for his bill.

++The irony is that bringing to the bill to the floor tomorrow would violate the House's new three day rule to allow floor debate. But since they no longer read the constitutional justification for legislation as they promised, why are we not surprised by the latest breach of etiquette?

++The new version of the bill , as scored by the CBO,has the cuts now totalling $950 billion, still below Boehner's orginal $1.25 trillion. This could prove problematic for the teabaggers who were told to get in line.

++Judson Phillips of the Teabaggers held a rally of ten--not thousands or hundreds--outside the House. Phillips has demanded Boehner resign as speaker.

++House Republicans still have three reservations about the bill. Not enough discretionary spending will be spent. They will have to go through this debate again rather shortly because it is a two-stage process and their constituents are furious and their poll numbers are diving. And, thirdly, the bill omits their Holy Grail--the much vaunted Balanced Budget Amendment,which wouold require a two-thirds vote to raise any taxes.

++John McCain lost it today over the demands by the "teaparty hobbits". McCain said that the demands by conservatives for a Balanced Budget Amendment on a debt ceiling law was "bizarro". This is the reason, McCain said, that the Republican party ends up with a Sharron Angle and Christine O'Donnell as a Senate candidate. He lectured the new Senators from the teaparty that it is nuts to believe they can have their way with a Democatically controlled Senate and a Democratic President.

++Hey, but that didn't stop John Boehner from appearing on right-wing radio soliciting support because President Obama, Nancy Pelosi and Harry Reid hate his bill. His public pitch is that his bill is a vote against President Obama. It's not for some national interest--heaven forbid.

++Iowa Christianist Steve King claimed that Obama would be impeached if the debt ceiling isn't lifted. Not so fast, legal scholars claim that with the 14th Amendment and the House's responsibility in the Constitution for generating the budget, it would be Speaker Boehner who would face impeachment.

++So far, all Democratic House members and Senators have pledged not to vote for the Boehner Plan.

++The Black Caucus unanimously voted today to vote against anything but a clean debt ceiling bill. They also urged the White House to use the 14th Amendment.

++James Clyburn came out today and urged President Obama to use the 14th Amendment As the third-ranking Democrat, he would signalled to the White House that the Democratic caucus would provide him cover if he did.

++White House spokesman Carney shot the suggestion down today saying the White House didn't want to get into an esoteric legal discussion.

++Alice Rivlin said the whole debt ceiling was a big fraud. Rivlin was the founder of the CBO and later a member of the Clinton Administration.

++Yves Smith, author of Econned, said that the Administration should call everybody's bluff. She said that there were at least three ways to handle the situation. The first was to invoke the 14th Amendment. The Second was for Treasury to selectively default on the nearly $1.5 trillion bonds held by the Federal Reserve as part of the recent Fed stimulus move. The Third was the very artful suggestion that the Mint produce a $1 trillion coin for Treasury and that would then be deposited in the government's acount. She basically said that Geitner has not been imaginative in his approach to this. And that no one could stop the Administration.

++Smith says that Wall Street does have a Plan B in case of default. Hedge Fund managers are ready to scoop up Treasuries because everyone on the Street believes a default would be temporary.

++Smith warned that the new mantra on austerity is dangerous. As consumers are trying to pay down their debt, the government must pick up the slack to allow them to. If not, you have situations like Ireland where austerity programs have caused the economy to shrink by 20%. She coted Latvia and Greece as other examples where industry is de-leveraging now and as a result debt to GDP ratios actually worsen.