Sidestepping a Stock Market Crash
Only the Republican leadership can prevent President Obama from undermining the legislative process. The President has devised a strategy that has bamboozled Republicans into approving legislation they otherwise might not have. A clear understanding of Obama's approach may help the Republicans parry the President's current thrust to raise the federal debt limit.
On Friday, Rush Limbaugh revealed Obama's technique: "In order to keep the public in the dark about what he's doing and to bypass the usual legislative process, Obama waits until the last minute for everything. He doesn't get involved in talks until the final moments, then, when he does get involved, the meetings are in secret." This perfectly describes Obama's steps to date in his debit-limit match with the Republicans.
Rush continues: "He comes out of the meetings framing the issues and some deal gets cut, and the public really has no idea what the details are until there is a vote. This is how he leads from behind, and he only gets away with it because the Republican leadership is somehow caught constantly off guard and lets it happen knowing full well that it's coming."
One fact must be added to Mr. Limbaugh's analysis: President Obama continually warns of an immediate catastrophe that would ensue if the Republicans oppose his proposals. This emasculates Obama's opposition and strips them of reason. The Republicans are caught off guard because they are not thinking clearly: they are distracted by their fear of being blamed if an agreement is not reached. The proximity of the impending debacle does not give them time to recover a rational perspective.
After this weekend of negotiations, Obama almost certainly will point ominously to the threat of a global financial meltdown if his idea of a compromise is not agreed to immediately. The Republicans should laugh off this threat because a default easily could be avoided by paying bond interest with funds flowing into the federal government. Thus, stocks and the dollar might rally if no agreement is reached.
Although no one really knows what would happen, Republicans should respond to Obama's menacing forecasts as they would to empty rhetoric and not feel compelled to succumb to his pressure. Republicans should negotiate from a position of strength and not fear imaginary consequences. Otherwise, we all will lose as the market plummets.