Obama Negotiates a Short Delay from the Threat of Default

A spokesman from the opposition says that the meeting with Obama has been “very useful.”

The U.S. political and budget crisis has turned into a confusing situation and by no means reassuring, although they may be able to delay for six more weeks the economic catastrophe that was expected within six days — although much is still uncertain. The Republican Party has proposed extending the debt ceiling until Nov. 22 in order to avoid the feared default at least until that date, in exchange for Barack Obama’s agreement to negotiate the reopening of the federal government, which has been shut down for 11 days and will continue to be indefinitely.

The offer has been presented this afternoon to Obama, who rejected it in its current form, but accepted the possibility of discussing it with some important modifications, especially that of an end to the government shutdown. After the meeting, which lasted a little over an hour at the White House, Republican Eric Cantor, the second in command in the House of Representatives, said that the conversation had been “very useful” and that his party, clearly pressured by surveys that found them guilty of causing the situation, would continue to discuss a viable solution for Obama throughout the night. Boehner left the presidential residence without any comments.

Before this meeting, they went through a few intense hours going back and forth between hope and pessimism every minute between sweeping statements, surprising bets, threats and rumors. But even in this climate of a political duel, Wall Street, which is anxious to escape the sword of Damocles hanging over the economy, blew up upon finding out that the drama would be delayed.

The day began with an appearance before Congress by the Secretary of the Treasury, Jacob Lew, warning that the Republicans were “playing with fire” and that the government did not have any tools, not one, to avoid defaulting on its debts without raising the debt ceiling, which would cause a global cataclysm: “Destabilizing credit markets, significant drop in the value of the dollar, substantial increase in the U.S. interest rates, negative consequences for the entire global economy and a risk of financial crisis and recession similar or worse than that of 2008.”

Lew had barely finished speaking when Boehner appeared before the press, surrounded by the main party leaders of the House, to reveal their offer to increase the debt ceiling without conditions and for a short period, while keeping the government closed in order to negotiate with the president. He did not say exactly what they were going to negotiate. One of his colleagues merely added, “on a wide range of issues,” without specifying which ones.

It is important to see how this proposal becomes a law able to be passed by the House of Representatives, probably on Friday. Some of the members of the tea party, the origin and engine of this crisis, have already confessed some doubts about Boehner’s initiative. Meanwhile, the Democratic congressmen are going to wait throughout the night for the results from the meetings between the White House and the Republicans before making a decision. It is still not clear what kind of law may result from all this and with how much of a majority it can be approved.

White House spokesman Jay Carney did not say much about Obama’s reaction to Boehner’s proposal. He said he was “happy to see that the Republicans have understood that default is not an option” and that the president is willing to sign a bill that temporarily raises the debt ceiling without any conditions. But he also insisted that he would not pay any ransom to reopen the government or pay U.S. debts.

The White House’s position has been from the beginning that Obama would not negotiate with a gun at his head, and he was not willing to talk until the Republicans approved the budget to reopen the government and avoid default. With its latest proposal, the Republican Party is making the president’s position even more uncomfortable, since they are forcing him to negotiate with the government closed or assume responsibility for the default.

Negotiate is always a magic word. Usually, whoever opposes negotiating loses the argument in the public opinion, even more so in a matter of such complexity that is hard to comprehend, such as this one. The problem is that the negotiation here is difficult to understand, to put it mildly. First, the Republican condition to avoid the budget crisis was to end, reduce or eliminate health reform. Now their focus has opened up and they are trying to negotiate in six weeks on the deficit, public spending and taxes, something that the two parties have not agreed on in years.