James Pethokoukis

Debt ceiling update: What Wall Street thinks is happening

July 22, 2011

One reason financial markets have been relatively sanguine about the debt ceiling negotiations is that investors have been almost certain that something gets done by August 2. Here is what one bank lobbyist told me today:

The impact of U.S. credit rating downgrade

July 20, 2011

It does not appear to be as frightening as I might have assumed. Here is a bit (via Business Insider) from a Goldman Sachs conference call this morning where the impact of a AAA downgrade is discussed

How would U.S. react to a debt crisis?

July 20, 2011

If the U.S. doesn’t get a handle on federal debt, there will be a financial and economic crisis. By 2035, debt as a share of GDP could be 250 percent, though a panic would surely happen long before that point was reached. But if a crisis came, how would Washington react? What drastic measures would be taken? I think there would be a huge push for a massive tax increase, probably via a value-added tax. Here is some of what the Comeback America Initiative sees happening:

Americans still think raising debt ceiling a dodgy idea

July 20, 2011

These results from a survey by Northwestern’s Kellogg School of Management (via its Financial Trust Index site) are sure to get noticed in Washington:

Why the House GOP will deep six the Gang of Six

July 20, 2011

Will the House GOP play ball on the Gang of Six debt reduction plan? The Paul Ryan-led House Budget Committee is giving members all the ammo they need to take a pass (bold is mine):

Will coming debt ceiling deal save America’s AAA credit rating?

July 15, 2011

Keeping America’s gold-plated credit rating may take both a deal to raise the debt ceiling (which will happen) and a meaningful deficit reduction plan of around $4 trillion (which is not happening). Moody’s says it wants a  ”deficit trajectory that leads to stabilization and then decline in the ratios of federal government to GDP and debt to revenue beginning within the next few years.” And here is Standard & Poor’s in a report released last night:

The roof is on fire! A mid-day debt ceiling update

July 14, 2011

A brief rundown on what’s happened so far today in the Mother of All Budget Battles,  and what folks are saying about it:

Maybe Cantor should have stormed out instead

July 14, 2011

Here is how Reuters delicately describes the tense budget meeting:

The U.S. talks on Wednesday lasted nearly two hours and were the stormiest yet. They ended with Obama telling Republicans that “enough’s enough.”

Can the Ryan plan rescue Republicans?

July 13, 2011

So what are Republicans, particularly those in the House, going to do? Debt ceiling deadlines are fast approaching. And many in the GOP leadership, particularly in the Senate, think the party’s anti-tax resolve will dissolve if markets start to tumble, resulting in a deal far less appetizing than any discussed during the Biden talks. Certainly no hard spending caps or structural changes to entitlements or any other of the big things on the tea party wishlist.

The McConnell Plan and the GOP House

July 13, 2011

So just how hostile  is the GOP House toward McConnell’s new debt ceiling gambit (not to mention tax increases)?  Here are some excerpts from a chat I had early yesterday evening with a GOP Hill source with good knowledge of the caucus. I think it gives some pretty good color: