Oct. 07 - The ongoing government shutdown and debt ceiling crisis could be the start of an emerging political strategy that could severely impact the U.S. Bobbi Rebell reports.
Playing a recurring game of chicken on the budget highway is the new negotiation tactic in Washington D.C. If given the chance, Republicans are expected to repeatedly threaten debt default- on short term deadlines- to extract from the President what they want- say analysts. It is daring, dangerous and potentially destructive. And it's worth a shot says Mizuho Securities Chief Economist Steven Ricchiuto: SOUNDBITE: STEVEN RICCHIUTO, CHIEF ECONOMIST, MIZUHO SECURITIES (ENGLISH) SAYING: "I think it is a strategy that will be somewhat acceptable to the American people in that you don't default. But by the same token, each of those debt limit bills may have something attached to it that tries to move the funding forward". Conservative strategist Grover Norquist predicted even before the last election- Republicans will do everything they can to keep the President on what Norquist refers to as a short leash: SOUNDBITE: GROVER NORQUIST, PRESIDENT, AMERICANS FOR TAX REFORM, (ENGLISH) SAYING: "The Republicans will never again give Obama a year and a half of debt ceiling. They will give him debt ceiling increases 2 weeks long, one month long. The allowance that he is going to be on is going to be very short." But Chris Krueger of Guggenheim Securities says it's a no-go for Obama: SOUNDBITE: CHRIS KRUEGER, SENIOR POLICY ANALYST, GUGGENHEIM SECURITIES (ENGLISH) SAYING: "The month by month theory is sort of predicated on the idea that Obama is going to give on something of significant value to Republicans, and at this point we don't see the President entering into a scenario like that because if he does you are in this endless fiscal cliff environment with the President having to give on significant items in his legacy which quite frankly he views as a ransom payment." Lawmakers, mainly Republicans, have long used short term deadlines on funding the government to put the squeeze on opponents on the other side of the aisle. It was just such an attempt to use the budget as a lever on Obamacare that led to the current government shutdown. But until now a 2 year extension, rather than 2 or 3 months- or weeks- has been the norm for raising the debt ceiling. The Obama administration concedes Congress can kick the can down the road - over and over and over again. National Economic Council Director Gene Sperling: SOUNDBITE: GENE SPERLING, DIRECTOR, NATIONAL ECONOMIC COUNCIL (ENGLISH) SAYING: "The longer the debt limit is extended, the greater economic certainty there will be in our economy which will be better for jobs and growth and investment. That said it is the responsibility of Congress to decide how long they, and how often they want to vote on doing that. The important thing is that they not threaten default and that they not put our country on the brink of that." But the impact is still up for debate: SOUNDBITE: CHRIS KRUEGER, SENIOR POLICY ANALYST, GUGGENHEIM SECURITIES (ENGLISH) SAYING: "These continued re-litigations of the fiscal cliff is going to continue to cause uncertainty, is going to cause people to question whether or not Washington really knows what it is doing." SOUNDBITE: STEVEN RICCHIUTO, CHIEF ECONOMIST, MIZUHO SECURITIES (ENGLISH) SAYING: "What we are really looking at is a temporary drag on the economy as we leave more and more projects and programs in delay mode and I think that will start subtracting from people's GDP numbers." Ricchiuto adds that the exact economic impact won't be known for a while- because those government workers who put out that economic data- are currently not working.