The announcement by House Minority Leader Eric Cantor (R-VA) that there will be a vote on the debt ceiling next week was not a concession. Saying, "we will authorize a three month debt limit increase to give the Senate and House time to pass a budget," is more political brinksmanship.

 

Effectively, Mr. Cantor's offer is a three month extension. The expected extension was six months (see below, January 17, 2013) to allow time for a budget agreement to develop between the House and Senate.

 

Unexpected was that House Republicans would entirely punt budgeting to Senate Democrats. Accompanying the passing of the hot potato to Democrats was the threat of a suspension of pay if a budget resolution was not attained; so clear a violation of the 27th Amendment that it was rejected out of hand by Rep. Darrell Issa (R-CA).

 

House Republicans have not given up on using the debt ceiling as a bargaining tool. They are simply trying to shift the burden from themselves to their Democratic colleagues on the other side of the Capitol (as anticipated in an earlier post this week). Further, they are doing as expected (see below, January 15, 2013) and making dissentience a way of life on Capitol Hill.

 

Mr. Cantor's statement about authorizing a debt limit increase for three months indicates he has the backing of the majority of the majority. We'll know if that is the case next week. It seems hard to believe but it may well be that the central Virginian air helped House Republican leadership get their conference in line.

 

All of this comes at an interesting moment in time in the Senate when its rules governing the use of the filibuster will be the first order of buisness after the current recess. Look for Maj. Leader Reid to shift cloture to the minority by requiring 41 votes to sustain a filibuster, making it more difficult for Minority Leader Mitch McConnell (R-KY) to drop anchor (freeze Senate business) and hold on (until after the 2014 election) when Republicans should historically add seats in both chambers and President Obama's visage will more and more resemble that of a lame duck.

 

Trade:

Pending are two trade agreements: TransPacific Partnership (see below, December 14, 2012) and the US-EU Trade Agreement. TPP involves Pacific Rim nations and is a priority to the Obama Administration as part of its pivot to Asia strategy and as the first agreement fully negotiated by this White House. TPP is controversial and will draw opposition not only from US labor and environmental groups, but from the Republican Tea Party factions. Points of contention will be the use of international tribunals to resolve disputes and China's eligibility given the structure of the agreement's membership ratification process (which could potentially also apply to North Korea).

 

The US-EU Trade Agreement is far less controversial and will not garner significant US labor opposition as European environmental and social welfare standards are more progressive than those in the U.S.

 

Trade tension with China will continue to be a flash-point, further heightened by the debate over the US debt but also including currency manipulation, WTO requirements (i.e. government procurement), tariffs, intellectual property protection, China-owned enterprises and raw material export restrictions among others.

 

This year the US likely expands its Bilateral Investment Treaties as a method to protect US investments abroad in countries where investors are vulnerable, including treaties with India and China.