Chris Krueger of Guggenheim Washington Research Group has a crackerjack research note out this morning that shatters any illusions there will be a mega-budget deal between Democrats and Republicans. Here’s some of his analysis:
1. No Trust.
2. No Time.
3. No Down Payment or Trigger. For Republicans, a “down payment” is essential to begin any negotiation that would reopen the government (and perhaps raise the debt ceiling). This is something along the lines of the Keystone XL pipeline, medical device tax repeal, delay of the individual mandate, etc. For Obama and most Congressional Democrats, a “down payment” is a fancy word for a ransom. Without some form of serious down payment, it seems very unlikely that any grand bargain would eventually materialize unless you attach a huge enforcement mechanism (“trigger”).
4. No Mitch McConnell (Yet…). McConnell is currently waging a bitter re-election campaign in Kentucky with both a Tea Party primary and a general election opponent. Without McConnell re-engaging on a bland bargain, it remains extremely unlikely.
5. No Staff. Grand bargains are not produced with skeleton crew staffs.
6. Entitlement Reform. For Obama, entitlement reform is probably close to a 1:1 trade between provider cuts and beneficiary cuts. This will be a very tough sell with Republicans.
7. Revenues Very Hard. Obama will likely only give on entitlements for substantial revenues (close to a 1:1 ratio), which are likely to come from the individual deductions of those making above a certain income threshold. That will be a non-starter with most Congressional Republicans.
8. House GOP. If the current House GOP leadership overextends itself by going for too big a deal, it is not difficult to see broad replacements of the current leadership with more Tea Party-focused lawmakers.
9. Jack Lew. His relations with Congressional Republicans are less than stellar; in a nutshell: they don’t trust him and he doesn’t trust them.
10. 2014. A huge deal on deficit reduction would likely eliminate any chance for Democrats to retake the House. Doing a huge deficit reduction deal in the wake of a government shutdown and debt ceiling hostage brinkmanship would likely strike many Congressional Democrats as rewarding (and encouraging) bad behavior.