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Re: The Strategic Storm-Out: Obama’s Hand Improves

I agree with John that Obama misspoke when he cautioned Eric Cantor, ”don’t call my bluff.” But was it because he meant to say, “don’t call my bet,” thinking he has a winning hand, or because he botched the metaphor, not understanding poker? Poker, after all, is a quintessentially American game, with origins going back to the 18th century and which reached its modern form in the mid-19th on river boats plying the Mississippi and its tributaries. There is so much about this country and its character that seems alien or unfamiliar to the president.

I’m not sure he holds the winning hand. Imagine this scenario. It’s August 1 with no agreement. World financial markets are as jumpy as can be, with wild swings in equities, gold, U.S.  treasuries and commodities. The House passes a bill that raises borrowing authority for three months and imposes spending cuts of $90 billion, a billion a day. Such a bill would, surely, pass the House easily. The bill goes to the Senate. There Harry Reid can keep it off the floor. Would he, and take on the sole responsibility for the impending default? I don’t think so. Would the 53 Democrats in the Senate then vote it down? Not with many of them up for re-election in states that went strongly Republican in 2010. So it goes to the White House. Does Obama sign it, or veto it? If he signs it, he just folded his hand, i.e. he was bluffing. If he vetoes it, he has sole ownership for the consequences of an American default, and they would be ugly. A stroke of the pen and financial markets breathe a huge collective sigh of relief, and we dub it the Obama rally.

 

There is one data point supporting the Republicans. The Minnesota government has been shut down since July 1 for lack of a budget. The governor, Mark Dayton–like so many Democratic office holders these days, very rich, thanks in his case to inherited wealth from a department store fortune–demanded new taxes and increased government spending. The Republican controlled legislature refused any new taxes but did increase spending by seven percent, not enough to satisfy Dayton. Now it seems Dayton has just caved and dropped his demand for new taxes, accepting the legislature’s last offer with a few face-saving caveats. John Hinderaker, a Minnesotan and close student of its politics, thinks it’s because he was getting some bad internal polling numbers.

We’ll see what happens next in Washington. It sure will be interesting. It’s going to make the World Series of Poker look like a couple of old ladies playing cribbage for pennies.