A Republican Senate staff member summed it up this week
nicely when he said US House and Senate Republicans cannot see “see the end
game” on the fiscal cliff
negotiations. This has led to discontent within the GOP Senate caucus toward
Minority Leader McConnell (R-KY) who has taken a hard line on the fiscal cliff.
Some Senate GOPers feel McConnell’s drop anchor and hold on strategy didn’t work
before and won’t now. As Sen. McConnell is not directly involved in fiscal
cliff negotiations, that being Speaker Boehner’s (R-OH) job, Senate Republicans
have largely coalesced around an approach to allow top tax rates to increase
and use the debt ceiling to go after spending and entitlement cuts.
Democrats do not think that linking spending and
entitlements to the debt ceiling is a winning strategy and are more than happy
for the GOP to pursue that strategy. Clearly these negotiations will push up
against the yearend deadline with Members being instructed to keep holiday
plans on hold, as reported.
The outlook from Capitol Hill is that the White House
will not budge on linking Medicare and Social Security to the fiscal cliff
talks and thus Republicans will seek a ledge off the cliff and concede to
President Obama’s wishes to raise the top tax rates and leave the rest for
2013. In this scenario then tax reform will be front and center with corporate
taxes taking center stage, triggering a debate between a territorial
v. global corporate tax
code.
With the negotiations squarely around taxes, that leaves
sequestration
to kick in on January 1st. This places the Pentagon front and center at a moment
when a new Defense Secretary will be nominated to replace DefSec Penetta. Former
Senator Chuck Hagel
(D-NE) is the likely nominee now that Sen. John Kerry (D-MA) is expected to be
nominated to be Secretary of State. Hagel is a no-nonsense moderate Republicans
and combat veteran with a steadfast opinion that the Department of Defense is bloated. Hagel would likely
experience a smooth confirmation process but will face tough questions over his
opposition to military strikes against Iran, preferring diplomacy.
The maximum sequestration defense cuts could total
$1 trillion over ten years,
roughly $500 billion more than those mandated by the Budget Control Act of
2011. Among the most effected companies are: Lockheed Martin (termination of the
Joint Strike Fighter and it littoral combat ship), Boeing (terminated
refueling tanker contracts) and General Dynamics (termination of its
littoral combat ship and ballistic missile submarine). Also significantly
affected will be companies that provide modernization of ground combat vehicles
and Army helicopters.
Take Note! TransPacific
Partnership, this issue makes for an interesting alignment between progressives
and Tea Partiers. Progressives dislike it for the impact on labor organizing
and the conservatives are distrustful over sovereignty issues (judicial
jurisdiction). Progressives will work vociferously to derail TPP. The US Trade
Representative is keen on getting this trade agreement before the 113th
Congress with fast track authority. Assume TPP will be granted fast track but
then undergo revision specific to certain producers. US
textile and apparel manufacturers, sugar producers and fisheries will claim
harm by TPP and their lobbyist
will work feverishly for carve-outs.
No comments:
Post a Comment