Skip to Content

CEO Daily: Saturday, September 26th

Saturday Morning Post: The Weekly View from Washington

To understand what happened in the House yesterday, it’s helpful to rewind the clock. Precisely a year prior, John Boehner was doing one of the things he does best: Crisscrossing the country to raise campaign cash for House Republican candidates. Specifically, that day, the House Speaker was in Portland, Maine, headlining a closed-door fundraiser for a former state treasurer named Bruce Poliquin, who was locked in a tight, open-seat battle to represent the state’s sprawling northern reaches.

Poliquin, a Harvard-educated former investment manager, typified the brand of Republican that Boehner urgently needed in the House — ideologically conservative but also tactically practical, with an understanding there was no dividend in the torch-and-pitchfork crowd’s approach. A small band of rightwing reactionaries had spent four years turning Boehner’s tenure as Speaker into an unending migraine. They almost precipitated the nation’s first debt default in 2011, forced a disastrous government shutdown in 2013, and made progress on major compromises in a still-divided government impossible. More personally for Boehner, one of their ilk had knocked off his deputy, House Majority Leader Eric Cantor, in a June primary, scuttling the Speaker’s plan to step down at the end of that Congress. Boehner felt compelled to delay retirement until his party found surer footing.

So in hotel ballrooms and private living rooms across the country, Boehner spent last fall making an explicit appeal to Republican business types: Contribute to the cause of electing a “governing majority” — that is, one with enough padding to ensure Boehner could ignore his troublesome right flank (“knuckleheads,” as he called them in one such session) while marshaling votes from more cooperative members to actually get stuff done. On Election Day, Poliquin won, one of 13 Republican pickups that Boehner helped deliver to secure the biggest GOP majority in the chamber since the 1920s. The results, along with the Republican takeover of the Senate, renewed hope in the party’s business wing for a return to normalcy following its bout of Tea Party dyspepsia.

It wouldn’t last. On Jan 6., after swearing in an historic majority, Boehner made history again, suffering the biggest intraparty defection against his reelection as House leader in more than 150 years. The 25 Republicans who revolted formed the core of a rump group that’s of late been agitating for his ouster, and another shutdown, over federal support for Planned Parenthood.

Poliquin has done his bit. He joined ten other Republican freshmen this week on a letter to colleagues urging them to avoid a stunt they called “unnecessary and harmful.” But the inertia of the GOP’s rightward lurch has proved insurmountable. The evidence lies in the work undone on Boehner’s business-friendly agenda: a Pacific trade deal enabled but incomplete; an Ex-Im bank in liquidation; infrastructure investment imperiled rather than expanded; tax and immigration overhauls as remote as ever. The Republican presidential field’s near uniform embrace of his resignation spells clearly what Boehner himself knows. Despite its best efforts, the establishment is losing the battle to reclaim the party’s soul.

Tory Newmyer
@torynewmyer
tory_newmyer@fortune.com

Top News

• Boehner eyed a November resignation announcement that he moved it up after the Pope’s visit

House Speaker John Boehner already had retirement in his sights: He’d circled his birthday, Nov. 17, as the date he’d announce his deferred decision to step down as the leader of a troubled, fractious caucus. After 25 years in Congress — a roller coaster ride to the heights of power, down and back again — he was ready to move on. Following the emotional apogee of a papal visit the devout Catholic had spent years angling to secure, the Ohio Republican felt the moment had arrived and moved up the announcement. Politico

• Don’t cry for Boehner; his money-making options are manifold

Boehner may look like the victim of a resolute band of dead-enders in his caucus that forced his exit. But the longtime legislator will have plenty of opportunities to cash in now that he’s leaving. They start with the cash he’s already got in the bank, so to speak, from his two campaign accounts. That is, he can tap the roughly $3.8 million he’s stashed in his reelection fund to distribute to favored charities or Republican candidates. And federal law allows him to use the more than $1.1 million in his leadership political action committee more liberally — for mortgage payments, a boat purchase, or whatever, really. That’s to say nothing of the untold riches he can easily earn from lobbying work, speaking gigs, and directorships.  Fortune

 The feds still need to find a way to pay the bills, and it will be no easy task

Boehner’s ouster likely only complicates the difficult work of forging compromises between President Obama and a GOP-controlled Congress. While lawmakers appear to have settled on a course that will avert a government shutdown in the immediate term, the more consequential task of raising the federal borrowing limit remains. The U.S. Treasury will exhaust the special maneuvers to avoid a debt default as soon as late October, with a borrowing hike due by early December at the latest. Translation: Boehner’s successor will have his work cut out, and soon.   Fortune

Around the Water Cooler

• Chinese President Xi Jinping scrambles U.S. climate policymaking

Republican resistance to the adoption of an American regime regulating industrial carbon emissions has long relied on a common refrain: the U.S. can’t single-handedly tackle a global pollution problem without bringing developing nations like China aboard. Chinese president Xi Jinping confounded the argument on the first day of a U.S. visit by joining President Obama in announcing a joint agreement to tackle the problem. Xi committed his nation to imposing a cap-and-trade program to curbing carbon in 2017. But Republican presidential candidates expressed skepticism that China would hew to its professed standards.  New York Times

A new Sino-American agreement on industrial cyber-spying offers promise and perils

In the “that’s great but let’s see what actually happens” category, the American and Chinese leaders announced another breakthrough from their first huddle. Obama administration officials have emphasized they’d use the Chinese visit to secure a commitment from the regime to swear off economic cyber-espionage. And Obama indeed proclaimed the leaders have forged “a common understanding on the way forward” on the issue. But the contours and enforceability of the accord remain tenuous.  Washington Post

Do prediction markets trump polls on election outcomes? 

To believe the public opinion polling, the contest for the Republican presidential nomination is a roiling free-for-all that currently favors a bombastic real-estate billionaire-cum-reality show star. But some statisticians and political scientists swear by another measure entirely: The answer to the question of who observers expect to actually win. By that method, Donald Trump places a distant third behind former Florida Gov. Jeb Bush and his onetime acolyte, Florida Sen. Marco Rubio. And an impressive historical record shows the predictive index proves more accurate than traditional polling.  Wall Street Journal