McConnell’s Debt Plan Gives Split Signals (Bloomberg)

[chill_wind]

McConnell’s Debt Plan Gives Split Signals
By Mike Dorning and Roger Runningen -

Senate Minority Leader Mitch McConnell’s offer to hand President Barack Obama unilateral power to raise the national debt ceiling lent some market analysts confidence that the U.S. will avert default, while Senate Majority Leader Harry Reid today praised the plan.

In a move intended to put the burden on the White House to identify future spending cuts, the Kentucky Republican offered his “last-choice” plan as an alternative to deficit-reduction talks at the White House that have yielded no apparent progress.

“It would make it much easier to raise the debt limit, which should reassure markets,” Gus Faucher, director of macroeconomics at Moody’s Analytics in West Chester, Pennsylvania, said in response to an e-mail today. “I haven’t heard of any market reaction yet but it does imply much greater willingness to make a deal, which is a positive.”

Mark Zandi, chief economist at Moody’s Economy.com, said markets are comforted, at least to a degree, with McConnell’s plan because it suggests that lawmakers recognize the gravity of a default.

(snip)

Reid described McConnell’s proposal as “thoughtful and unique,” even as he called on both sides to pull together on a more ambitious deal. “This is a serious proposal, and I commend the Republican leader for coming forward,” the Nevada Democrat said on the Senate floor today.

more: http://www.bloomberg.com/news/2011-07-12/mcconnell-said-to-propose-three-stage-process-for-raising-u-s-debt-limit.html

[AlinPA]

1. "it suggests that lawmakers recognize the gravity of a default" That's B.S. if he's

referring to the republicans. The teabaggers who control the GOP have no clue what they're getting into by wanting to go into default.

[chill_wind]

3. That's simply Wall Street talk. When the Wall Street SCREAMING begins

in earnest, I have no doubt Boehner, McConnell and Wall Street Dems will get everybody in line in whatever manner they must and a deal will get done.

[AlinPA]

4. It does seem that Obama believes the republicans are crazy enough to vote against raising

the debt ceiling otherwise he would ignore them in their threats of default and just wait for them to back down and vote it cleanly. IMO they are crazy enough to cause default to hurt the president. People in this country would see it as his failure because they don't understand it.

[chill_wind]

5. Well, nobody has a crystal ball,

but guys like Baker or Galbraith say even if this got all the way to the panic stage, it would probably be analogous to what happened with Tarp.

http://prospect.org/cs/articles?article=qa_china_will_not_demand_their_money_back#

http://www.politico.com/arena/perm/Dean_Baker_88501EBB-2534-4ABE-A537-0729A3D92F08.html



There is really no political upside for them in the most extreme scenario. None.
Not now. Not longer term.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x612698

[AlinPA]

6. On the last link: Republicans control the Supreme Court, so the legality doesn't matter.

This morning Cantor said there is no way that the debt limit will be raised by the house.

[damntexdem]

2. Hey, if the children are tired of playing with the fate of the economy, ...

then it IS time to put it into the hands of the adults.

[chill_wind]

7. Obama, Lawmakers Said to Focus on Spending Cuts in Debt Talks

http://www.bloomberg.com/news/2011-07-13/obama-congressional-leaders-said-to-focus-on-spending-cuts-in-debt-talks.html