The tone for the 113th House was set on the opening day when Speaker John Boehner (R-OH) narrowly retained his leadership position due to 12 Republicans either abstaining or voting for somebody else. This portends a tough year for Boehner who may not last until December 2013 as House Speaker, and a tougher year for compromise.

 

The tone for the 113th Senate will be set when the chamber returns from recess next week when Senate rules reform (specifically, Rule 22, filibuster reform) is considered. The Levin-McCain bipartisan reform package would limit debate on the motion to proceed (thus the calendar would speed up slightly) and allows two guaranteed minority amendments. This is a great deal for Republicans because it allows them to offer amendments to bills where often they were precluded due to majority leader prerogative. If Majority Leader Harry Reid (D-NV) spurns that proposal for Senate Resolution 4 (which makes the motion to proceed non-debatable and enforces a talking filibuster, among other reforms) it will only pass via the constitutional option (less that the 67 votes required by Senate Rule V). To do so will infuriate Republicans and set a nasty tone for this Senate. That said S. Res. 4 is the better reform package but resisted by Republicans because it does not resolve the issue of the minority being able to offer amendments.

 

House Republicans and the White House have dug in their heels over the debt ceiling. There is little apprehension among House Republicans over shutting down the federal government; been there done that and will do it again (between November 1995 and January 1996 federal government employees were furloughed and non-essential service suspended for 28 days). The odds for any kind of agreement going into March is less likely than a Fiscal Cliff grand bargain was heading into the end of 2012.

 

Senate Republicans are acclimating to the idea to not allow an increase in the debt ceiling. Senator Ted Cruz (R-TX) is advocating this tactic to force the US Treasury to live within its means; prioritize expenditures (suggesting debt service be the first item paid) from revenue receipts and cut spending. Sen. Cruz is not alone in both the Senate and House Republican conferences. Congressional Republicans see a government shutdown as the pivot to balancing the budget, citing the ’95-’96 shutdown that they suggest led to government surpluses during President Clinton’s term. Now more than ever before House Republicans and some of those in the Senate are resigned to pursue the ‘starve the beast’ objective no matter the consequences.

 

These same GOPers do not see a credit rating downgrade as a realistic corollary to a government shutdown, attempting to place the onus on President Obama to decide what obligations to pay first out of existing revenue receipts. However, that perspective was distorted today when Fitch Ratings addressed the debt ceiling debate saying, “In Fitch's opinion, the debt ceiling is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline.” The potential for a downgrade of the country’s credit rating remains very real.

 

Look for continued dysfunction over the debt ceiling. The White House stated clearly it will not negotiate revenue and spending under the threat of default. After the Fiscal Cliff negotiation where Republicans miscalculated President Obama caving on taxes the WH should be taken at its word. House Republicans are kicking around the idea of raising the debt ceiling month-to-month to extract spending cuts and entitlement reforms, meaning dissentience as a way of Capitol Hill life.

 

Do not count on Speaker Boehner agreeing to any proposal that can only pass the House with less than a majority of the majority. One more vote like that and he’s done as House Speaker. House Democrats will resist the GOP hard edge approach for political reasons (reluctance to touch the third rails of Medicare and Social Security reform) and a rejection of austerity measures.

It is worth noting that Republican intentions are so determined that many congressional GOPers are getting comfortable with the defense cuts in the sequester if it means spending reduction.

 

While comprehensive tax reform is a challenge for the 113th Congress embraced by many Democrats and Republicans alike, the fact is that with multiple confirmations looming (State, Defense, CIA and Labor), the White House’s intent to pursue immigration reform, and the debate over gun control, tax reform gets kicked down the road.