GO
Loading...

Why the GOP has lost the fiscal fight: White

John Boehner
Getty Images
John Boehner

Many commentators and market players are bemoaning the temporary nature of the fiscal deal taking shape in Washington, worrying the nation will be in exactly the same spot in six weeks time, worrying about default and another shutdown.

Don't bet on it.

What we are seeing now is Republicans realizing their strategy of shutting down the government over Obamacare was a disastrous failure, embraced only by the most fervent members of their tea party base.

The latest Wall Street Journal/NBC News poll found that 53% of Americans blame the GOP for the shutdown and only 24% have a positive view of the party.

(Read more: Mood worst since 2008 crisis: Poll)

That stunning level of disapproval indicates the party is suffering a tremendous hit to its national brand. And while it may not cost Republicans the House in 2014, it will certainly hurt in statewide Senate elections and the 2016 presidential campaign and beyond.

Nearly every major business group including the National Retail Federation, the Business Roundtable and other traditional GOP allies have distanced themselves from the shutdown strategy and demanded the debt limit be raised without delay.

(Read more: Big business loses sway over House GOP)

Even the conservative Koch brothers, major underwriters of efforts to defund Obamacare and other conservative causes, distanced themselves from the shutdown effort this week.

One reason Republicans don't listen as much to Wall Street warnings anymore is that they have big cash coming from other more staunchly conservatives sources such as the Kochs. Once that money dries up, so will fervent support for the most aggressive approach to taking on Obama.

(Read more: How safe is your money if the US defaults?)

Republicans have already mostly given up on using brinksmanship to take down Obamacare, realizing they are not going to get their way and will take a big hit in the process.

That means the budget talks set to begin if a deal is struck will not focus on the one issue President Barack Obama has declared off the table, making another crisis much less likely.

As this columnist predicted before all this started, the shutdown made a default less likely by allowing House Speaker John Boehner to placate his tea party base by taking on a huge fight. Now the damage of that fight is sinking in and the cries for blood from House conservatives should hold less weight.

None of this means that the budget negotiations set up by a deal to raise the debt limit and re-open the government will be easy or will result in a big deal that takes all fiscal crises off the table through 2014.

Democrats will have a hard time accepting changes previously agreed to by the president, including restricting Social Security cost of living increases or making any cuts to Medicare. And Republicans will continue to resist Democratic efforts to generate more revenues through closing loopholes.

But these are very resolvable problems. And the GOP leadership, once it extricates itself from the current mess it finds itself in, is not going to want to be dragged into another ugly battle they have no reasonable expectation of winning.

Instead, they will have to find ways to declare victory over restraining federal spending to a level most Democrats hate and slowing the trajectory of near-term deficits by a significant margin. Those are major wins, the GOP just hast to figure out a way to celebrate them.

And if the GOP thinks it's going to eventually use the debt limit as real leverage, they are likely to be disappointed. White House senior advisor Gene Sperling on Friday told the annual meeting of the Institute of International Finance in Washington, which this columnist is moderating, that the president views taking the borrowing limit off the table as a bargaining chip as a long-term legacy issue.

"The era of anyone threatening default has to end," Sperling said to great applause from the standing room only crowd of the world's leading bankers.

(Read more: Some in GOP say: Default? So what?)

So if you think the crisis era is going to return in November, around the time Americans are turning to their Thanksgiving turkeys, you are probably worrying too much.

— By Ben White, POLITICO's chief economic correspondent and a CNBC contributor. White also authors the daily tip sheet POLITICO Morning Money [politico.com/morningmoney] Follow him on Twitter @morningmoneyben.)

Featured

Contact Politics

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More