–House Majority Leader Says No Current Debt Limit Plan Can Pass House
–Admin, Hill Dems Speak More Favorably Of McConnell Plan Than GOP
–U.S. Debt Hike Talks Likely To Extend Into Next Week
By John Shaw
WASHINGTON (MNI) – Most budget experts can envision the outline of
a balanced ten year fiscal plan that begins to tackle the U.S.’s serious
Unfortunately, few political experts can envision any plan to cut
deficits and increase the statutory debt ceiling passing Congress right
House Majority Leader Eric Cantor, in a stark admission to
reporters about how complicated and difficult debt limit politics have
become, said Wednesday that he does not see a clear way ahead.
“Currently, there is not single debt limit proposal that can pass
the House of Representatives,” Cantor said.
Moody’s Investors Service Wednesday placed the ‘Aaa’ bond rating of
the United States on review for possible downgrade, citing the rising
possibility that the statutory debt limit will not be raised on a timely
basis, leading to a default on U.S. Treasury debt obligations.
“The review of the U.S. government’s bond rating is prompted by the
possibility that the debt limit will not be raised in time to prevent a
missed payment of interest or principal on outstanding bonds and notes.
As such, there is a small but rising risk of a short-lived default,”
In conjunction with this action, Moody’s has placed on review for
possible downgrade the ‘Aaa’ ratings of financial institutions directly
linked to the U.S. government, such as Fannie Mae, Freddie Mac, as well
as securities either guaranteed by, backed by collateral securities
issued by, or otherwise directly linked to the government or the
affected financial institutions.
The U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary Timothy Geithner has said that Congress must pass
legislation increasing the debt ceiling by August 2.
Seeing a serious impasse gripping both chambers of Congress, Senate
Minority Leader Mitch McConnell outlined Tuesday a “last choice” option
to increase the debt ceiling.
McConnell said Tuesday that if no agreement on the debt ceiling is
reached soon he will back a plan that would allow the debt ceiling to be
increased in three tranches of $700 billion, $900 billion and $900
billion over the next year.
To get these increases in the debt ceiling, the president would
have to introduce spending cut packages of the same size — and
Democrats would have to defeat Republican motions to disapprove of the
Tellingly, McConnell’s plan has engendered more interest from the
White House and congressional Democrats than Republicans.
Senate Majority Leader Harry Reid and House Minority Leader Nancy
Pelosi have spoken of the plan respectfully, if cautiously.
House Speaker John Boehner said Tuesday evening on Fox News that he
understands McConnell’s “frustrations” but pointedly declined to support
Boehner said “there are other ideas out there in terms of backup
plans,” but did not elaborate.
One Republican lawmaker, Rep. Steve LaTourette, said Wednesday that
when he first heard of McConnell’s plan he thought it was a “joke.”
Sen. Lindsay Graham, a Republican senator, told Market News
International he sees McConnell’s alternative as a “a good political
move” but one that “doesn’t help us accomplish what we set out to do.”
Graham said that he expects the McConnell plan to face serious
skepticism in the House.
White House press secretary Jay Carney told reporters Wednesday
that President Obama still believes a sweeping $4 trillion deficit
reduction plan is possible.
** Market News International Washington Bureau: (202) 371-2121 **