The US economy is at crisis point, with the government having a deadline of August 2 to renegotiate its debt ceiling or default and lose its triple A credit rating, plunging it markets into uncertainty.
But can the parties overcome political bickering in order to steady the economy?
There are two rival plans competing to succeed, with the Democrats — led by Senate majority leader Harry Reid — calling for $2.5 trillion in debt retirement, which includes $1.2 trillion in tax rises. The Republicans are anti any plan that raises taxes and instead in a plan supported by house speaker John Boehner only want to raise the debt ceiling until next September and say they’ll slice debt by cutting social programs such as Medicaid and social security.
The New York Times have an interactive side-by-side comparison of the two plans. Obama and Boehner spoke passionately about their duelling plans on Monday night. But which one will get over the line?
Jay Newton-Small outlines in Time the six different possible paths available to law makers. Could the bills be combined?
“There’s only a week left till the deadline, but — theoretically — if both chambers end their game of chicken and pass their own bill by the end of the week, House and Senate leaders could go through a quick conference process to reconcile their differences. There are many similarities between the two bills, and the two chambers could bang out a compromise over the weekend and ram it through both chambers before the deadline. The likelihood that the bills will pass, the leaders will get along and both chambers will pass a new version in time is not good. But it’s still a distant possibility.”
Guy Rundle applauded Obama’s conduct during debt negotiations in Crikey yesterday:
“Some on the Left dismiss this as a pseudo-crisis, but the truth is that it could pitch the country and the world into a renewed credit crisis. Ultimately what might threaten is a collapse of inter-banking loans, and hence the basic credit functions of the economy grinding to a halt. The stakes are huge.
In that respect – and given as one has to repeat ad nauseum that a PRESIDENT IS NOT A PRIME MINISTER and must share government –I think Obama has played it much better than others suggest. To include any tax raises at all has been to go up against a Republican Party that fully intends to politically satisfy its base at any cost.”
Why aren’t the Republicans taking this seriously? asks John Avlon in the Daily Beast:
“This is starting to give Kabuki theatre a bad name. The competing congressional debt ceiling plans presented at grimly choreographed press conferences. Bipartisan language used to fig leaf nakedly partisan bills. Last night’s duelling primetime speeches by Obama and Boehner offered as the clock ticks closer to default with no constructive compromise in sight.
The markets still seem to be in denial about the growing prospect that America might fail to raise the debt ceiling for the first time in our history. They are assuming rationality from an ideology-first crowd in congress. But make no mistake: we are heading into unprecedented territory.”
Don’t be confused, this is essentially a presidential campaign now, writes Roger Simon at Politico:
“As the days have gone by, it has become more and more clear that the current negotiations have nothing to do with ‘debt limits’ and ‘deficit cuts’. They don’t even have to do with Aug 2, 2011. They have everything to do with Nov 6, 2012…
So in order to take down the president and his party, strengthen their grip on the House and possibly win the Senate, the Republicans cannot allow Obama to have a victory in the current negotiations.”
But a deal needs to be made, and quick. As Alex Frangos reports in The Wall Street Journal:
“Global investors voted thumbs down on Washington’s failure to come up with a debt deal, sending the US dollar to record lows against select currencies in a possible preview of what will happen if the Obama administration and Congress fail to reach a consensus.”
When America falls over, I think I’ll be picking up a few bargains in the fire sale.
JOHN64: Dibs on Alaska.
Seriously, the Debt Ceiling is just a facade for the real battle: both sides want to raise the debt ceiling, but the Republicans are fearful of the Tea Party that is eating into their Right flank. Both sides support contuined propping up Wall St at the expense of the man in the street, both support the MilInd Complex, both support pork-barrelling of their own electorates. The only major differences is that the Republicans/TP want to keep rich taxes low while the Dems want to maintain the Health Care package they finally got through after decades of trying.
Let’s say these are your balls.
Seriously? “Balls” puts me in moderation?
I have heard that, should they default, it is likely the US would choose to pay its foreign creditors and default on pay and entitlements internally. So are the Republicans using this as a way to force the ‘small government’ implosion of federal agencies they say they want? Throw an EPA on the barbie, for example.
@ Bellistner
Its a balls up!!