Tick, tick. August 2nd is the Debt Limit Armageddon. Or Not.

The question now is "at what cost?" It's already a given that interest rates will rise; not if. How much is now the big 64 thousand dollar q.

That is a big unknown, Hawkeye. Some investor's (retirement funds come to mind) can only put money in AAA bonds. A downgrade on Federal debt, and as it trickles down to the state or city levels, could dry up investment.

The question now is "at what cost?" It's already a given that interest rates will rise; not if. How much is now the big 64 thousand dollar q.

Boehner to rewrite bill after CBO verdict on plan

WASHINGTON (MarketWatch) -- House Speaker John Boehner is rewriting his bill to lift the debt ceiling and cut spending after the Congressional Budget Office ruled his plan would have only cut spending by $850 billion over 10 years rather than the $1.2 trillion the Republican sought. The House may end up voting on the bill on Thursday rather than the initially scheduled Wednesday vote.

an official congressional analysis late Tuesday that said his plan would produce smaller savings than originally promised. Of particular embarrassment was a Congressional Budget office finding that Boehner's measure would cut the deficit by just $1 billion next year.

Boehner's office said it would rewrite the legislation to make sure the spending cuts exceed the amount the debt limit would be raised. source

Debt-limit debate wearing on Americans
By William M. Welch, Judy Keen and Rick Jervis, USA TODAY
Updated 32m ago

Washington's latest stalemate has inflamed partisan passions over federal spending, with the threat of an economic calamity in the balance. Yet across the nation, many people see a wearyingly familiar fight — one they simply want to end.

Daryl Herman and Nicole McBride talk about the debt crisis while having lunch at Al's Beef in Chicago's Little Italy neighborhood.

"Just get it done. Work it out," Nicole McBride, 30, says with a touch of disgust as she lunches Tuesday at Al's Beef, a Chicago institution known for its Italian sandwiches.

Her view is widely shared.

At the renowned Café Du Monde just outside the French Quarter in New Orleans, a vacationing Joe Davis blames Democrats and Republicans equally for prolonging a political fight over whether to again raise a federal debt ceiling that has been raised scores of times before, usually without this level of dispute.

"I'm sick of it," says Davis, 73, a retired economist from San Antonio, as he polishes off an order of beignets on an outdoor patio.

"They're playing games. Here we are trying to pull ourselves out of recession, and they can't come to an agreement," Davis says.

As an Aug. 2 deadline draws closer and Washington's political brinkmanship only intensifies, Americans are discussing the potential consequences of failing to raise the debt ceiling, which authorizes the federal government's borrowing to meet expenses that tax collections aren't sufficient to cover.

Patricia Benner, 66, a political independent from Louisville visiting Palm Springs in the California desert, reflects on the political dilemma that has tied the Capitol in knots.

She worries about President Obama's warning that inaction on the debt ceiling could leave the country unable to issue her monthly Social Security check.

However, she wants to see other types of federal spending cut rather than any taxes raised.

"They could settle this today if they really wanted to," she says, expressing disappointment with all sides.

cicerone imposter wrote:

The question now is "at what cost?" It's already a given that interest rates will rise; not if. How much is now the big 64 thousand dollar q.

Cyclo says low interest rates will continue indefinately.

The scramble to pass a debt-ceiling plan represents a test of Speaker John A. Boehner's ability to lead his restive caucus.
By JENNIFER STEINHAUER and CARL HULSE
Published: July 26, 2011

WASHINGTON — House Republican leaders were forced on Tuesday night to delay a vote scheduled on their plan to raise the nation’s debt ceiling, as conservative lawmakers expressed skepticism and Congressional budget officials said the plan did not deliver the promised

The pushback on the bill was the latest chaotic twist in the fiscal fracas on Capitol Hill, as the clock ticked closer to Aug. 2, when the Obama administration has warned that the nation risks defaulting on its bills. The scramble to come up with a plan that could be put to a vote, now moved from Wednesday to Thursday, represents a test of Speaker John A. Boehner’s ability to lead his restive caucus. The expected showdown over the legislation is the culmination of months of efforts by Tea Party-allied freshmen and fellow conservatives to demand a fundamentally smaller government in exchange for raising the federal borrowing limit.

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U.S. May Have Way to Cover Bills After Deadline, for Week
By BINYAMIN APPELBAUM
Published: July 26, 2011

WASHINGTON — It turns out the federal government is sitting on some extra cash.

Thanks to an inflow of tax payments and maneuvering by the Treasury Department, the government can probably continue to pay all of its bills for several days after Aug. 2, providing potentially critical breathing room for Congress to raise the debt ceiling, according to estimates by several Wall Street banks and a Washington research organization.

The consensus is that the government will not run short of money until Aug. 10, when it would be unable to cut millions of Social Security checks without borrowing more money.

Seems they have a little bit more breathing room to pay government expenses.

cicerone imposter wrote:

The question now is "at what cost?" It's already a given that interest rates will rise; not if. How much is now the big 64 thousand dollar q.

Cyclo says low interest rates will continue indefinately.

By NBC’s Chuck Todd, Mark Murray, Domenico Montanaro, and Brooke Brower

*** Boehner’s boxed in: Speaker John Boehner had to walk away from the negotiations with President Obama, in large part because too many members of his House GOP conference wouldn’t accept the deal (even before the controversy over that extra $400 billion in revenue). Now, a growing number of House conservatives -- along with the Club for Growth and the Heritage Foundation’s political arm -- oppose Boehner’s go-it-alone debt plan. To make matters worse for the speaker, the Congressional Budget Office determined that his legislation cut less spending than promised, and a vote is now postponed until tomorrow as he goes back to the drawing board. What’s more, Standard & Poor’s said on CNBC it’s “concerned” about Boehner’s plan requiring the debt limit to be raised once again in early 2012. Bottom line -- Boehner is boxed in. But there’s an escape hatch: Does he go back to House Majority Leader Eric Cantor and his GOP conference and make his case that a “grand bargain” with the president is an easier lift than what they have now, since at least they'll have the help of Democrats to pass something and the "grand bargain" actually could change the deficit trajectory?

*** Boehner now has a harder argument to say that Reid and Dems are on board: Here’s another consequence of the CBO score: Boehner has argued to his caucus that Senate Majority Harry Reid accepted his plan (which Reid denies, but clearly the similarities between Reid and Boehner on the first round of cuts show there's some truth buried in there), and therefore Reid and Senate Democrats will ultimately vote for it if it reaches the Senate. But now that Boehner has to go back to the drawing board to fix his legislation, is it harder for him to argue that Reid and the Dems will accept it? And does Boehner "fix" the bill so much in order to get the votes that it becomes even less credible as a compromise vehicle?

*** Desperately searching for an acceptable trigger: Before yesterday’s CBO score, we can report that Boehner and Reid were in agreement on a two-step process to reduce the deficit. But the sticking point is the enforcement mechanism for the second round of cuts. Boehner wants that enforcement mechanism to be a second debt-ceiling hike to get through 2012. Reid, on the other hand, wants the second step to be deficit reduction that ISN’T tied to another debt-ceiling raise. In that respect, Boehner and Reid are stuck in the same place where Boehner and Obama were last week -- looking for an acceptable enforcement mechanism or “trigger.”
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*** The odds of a short-term extension are now more likely: Due to this impasse, the CBO score, and the general uncertainty that anything is going to get done, the odds that the White House could sign a short-term debt extension (by 10 days or so) are MUCH more likely. It’s clear that everyone needs more time. Folks, this isn't speculation; this is a whisper that is growing louder among the players involved. By the way, with SO much uncertainty in the talks today, don't be surprised to see/hear all sorts of things today: Obama-Boehner talking? Reid-McConnell? Reid-Boehner? Gang of Six? It's all possible today. Thunderdome? In all seriousness, the new "key player of the day": Mitch McConnell. When does he simply cut a deal with Reid again and help move the ball forward?

*** Talk about business uncertainty: Last year, Boehner often attacked the Obama White House’s policies, arguing that they created business uncertainty. But as we’ve pointed out before, the GOP’s insistence on tying the debt ceiling to deficit reduction has created plenty of business uncertainty, too. Indeed, the Wall Street Journal reports that businesses are hoarding cash and delaying hiring because of the possibility of a U.S. debt default. “While companies generally expect Washington to resolve the debt-ceiling impasse at the last moment, they are lining up extra sources of financing, and carefully husbanding cash just in case a deal falls through. All the uncertainty comes just as businesses were starting to spend some of their record piles of cash. The confusion is also giving them another reason to delay hiring and investment.” Source