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Why Speaker Boehner Will Have Problems With His Debt Ceiling Plan Today

July 24, 2011

What idea would Speaker Boehner hatch to deal with the skittish Asian markets when they open Monday morning?  That was the question I posed to a neighbor last night as we talked on the lawn about the mess in Washington concerning the debt limit.  What is being considered, as far as the ones that seem to know, present far less of a real plan than what will be required.

At the end of the day there must be a revenue component to this package.  The Republicans must step up and start to understand their role in government.

–A Democrat familiar with the negotiations: “Boehner has pledged that [today] he will present a BIPARTISAN plan to raise the debt ceiling. Inside the room and in talks with leaders, he is pushing for a short-term extension where there may need to be a second vote on the debt the ceiling. But Obama and Pelosi are adamantly opposed, and Reid put out a statement saying he opposes one and has said privately it can’t pass the Senate. So nothing short-term will be viewed as serious by the markets, or would prevent the negative reaction that Boehner is trying to preempt with [today’s] announcement. The rating agencies have said a short-term could lead to a downgrade. Boehner cannot unveil anything that looks, smells, or sounds like a short-term extension. Otherwise, it will be dismissed in minutes, because it can’t pass the Senate.”

–Standard & Poor’s, July 14: “[W]e believe that an inability to reach an agreement now could indicate that an agreement will not be reached for several more years. We view an inability to timely agree and credibly implement medium-term fiscal consolidation policy as inconsistent with a ‘AAA’ sovereign rating, given the expected government debt trajectory.”

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