The ghost of Jack Kevorkian for President's Physician: 2016
I think the biggest news here is going sort of unnoticed: Obama favored a debt reduction package bigger than what Boehner wants. Where is the tea party outrage at the guy they just put in charge?
it might impress parts of the Republican base, but those same parts are going to be angry even if there's a compromise at the last possible moment.
they probably have until about July 20th to extend the ceiling with minimal consequences. it should have been done already.
Most likely scenario is that Moody's lowers the bond rating and the markets whine for a bit. There will be no default and, in the long term, not raising the debt ceiling will inspire more confidence in American commercial paper.
Originally Posted by Josie
A smaller deal will get through the House and Senate. It won't be vetoed, as such a move would be reckless. The nation would have a credit downgrade and a long-term increase in its debt service costs were any deal vetoed. Minnesota offers a good case in point. No matter how each side will posture after a deal to re-open the State's government is concluded, each side bears direct responsibility for the increase in that state's debt service costs that will result from its credit downgrade.If a smaller deal gets through the house and the senate, then an Obama veto would risk default - the very think the media has been pounding the Reps on for risking.
In terms of the federal deal, which I fully expect, because so much time was consumed in a negotiating process that was not well-designed, the size of fiscal consolidation will probably be smaller than what might otherwise have been achieved (probably somewhere between the size of the deal $1 to $2 trillion and the $4 trillion to $5 trillion pursued for a larger deal). There is risk that the deal might not even be viewed as credible.