Reuters offered a flicker of hope this morning in its report that a House Republican who had initially resisted John Boehner’s revised plan is now optimistic that the bill will pass. Rep. Trey Gowdy of South Carolina, is said to have told CNN:
I think we made progress last night. What we’ll do today, and I predict it will be done today, is for the third time send a plan that raises the debt ceiling in a responsible way.
What a relief, eh? If you believe you detect a note of sarcasm, it’s because you do. Last night’s failure by the Boehner team to persuade GOP holdouts to accept their deal to raise the debt ceiling invites skepticism. One doubts that a vote will be taken in the House before this evening because a failed vote during a market session—especially one in which the Dow opened 100 points down—risks driving the market over a cliff.
The predicted long-term consequences of a default on the debt are dire. Even if a deal is reached at this point, the cuts to the deficit will likely be too small to prevent the U.S. debt from being downgraded for the first time in history from its AAA status. That could lead to higher borrowing costs, which in turn would place a drag on economic growth. The dollar would be vulnerable to long-term decline. The American people would be the big losers.
In the face of such a grim scenario, the immediate consequences of failing to reach an agreement seem almost beside the point. Which may be why the Democrat-led Senate is sitting on its heels, with no plan beyond killing the Boehner bill should it pass the House and head their way.
Oh, I realize that Harry Reid has a plan, only it isn’t serious. It relies on false savings, such a trillion dollars in cuts on war expenditures that were never planned.
And then there’s the president, with his messages of doom and gloom. He too has no plan other than persuading the American people that if the nation fails next week, it is someone else’s fault. He still blames George W. Bush, who he claims put us in this bind by squandering the budget surplus he inherited from Bill Clinton.
There is always a possibility of course that the two warring sides (the president has been on the sidelines since last weekend) will strike an eleventh-hour compromise. But considering the current political climate in Washington and the degree to which the two factions are dug in, I wouldn’t count on it.
- Al Franken’s hypocritical debt debate “joke” on the Senate floor (Video)
- Fear strikes out: Obama threatens “deep economic crisis”
- Liberal pundit: Obama’s 2008 “hope” message becomes 2012 “fear” message (Video)
- Drop dead date for debt default might actually be August 10? Whoops
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