Latest Update On Debt Ceiling Melodrama

Tyler Durden's picture

Time for the hourly update on the Congressional soap. The Hill reports that "Congressional Democratic leaders are headed back to the White House on Wednesday for more talks on raising the debt ceiling.  White House press secretary Jay Carney announced House and Senate Democratic would meet with Obama at the White House at 2:50 p.m. Obama called Senate Majority Leader Harry Reid (D-Nev.), Senate GOP Leader Mitch McConnell (Ky.), Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.) on Tuesday night." It adds that after the release of a new proposal Tuesday by the bipartisan Senate Gang of Six, Obama told reporters it was time for leaders to "talk turkey" and work to reach a deal. And while there has been a recent increase in voices against the $3.7 trillion "plan", the fate of the McConnell fall back plan, which as expected is the most likely to pass as it is completely toothless, is also looking shaky:"House Democratic leaders are attacking Senate Minority Leader Mitch McConnell’s (R-Ky.) debt-ceiling fallback plan, characterizing it as a political ruse intended to scapegoat Democrats and taint them at the polls. “I’m not a fan of the McConnell proposal,” Rep. Chris Van Hollen (Md.), the senior Democrat on the House Budget Committee, said Tuesday during a press briefing in the Capitol. “It’s designed to protect mostly Republican members of Congress from taking responsibility for votes that they’ve already made." How this plan makes sense in light of Obama's earlier statement that the House would not compromise a debt ceiling plan based on one time increases to the limit, without a long-term debt ceiling extension is unclear, nor is it clear how any of these plans which are simply window dressing will pass muster from the rating agencies, where even Fitch earlier announced any plan would have to be comprehensive for no downgrade of the US to occur. Translated: the CRAs need more stuffing for the Christmas stockings.

The Hill has more on this melodrama:

The McConnell plan was intended to be a fallback for avoiding a default. But since lawmakers missed the president’s deadline for presenting a plan over the weekend, concerns have grown that Congress will not have enough time to negotiate and vote on a package by Aug. 2, when the Treasury Dept. projects the U.S. will default on its debt.

On Tuesday, the bipartisan Gang of Six senators released a $3.7 trillion deficit-reduction plan. The proposal was met with quick support from both Republican and Democratic senators. President Obama praised the proposal as “good news” and said it was “broadly consistent” with the approach he had urged in negotiations.

Sen. Mark Warner (D-Va.), a member of the Gang, to brief members of the New Democrats in the House about the plan Wednesday.

But even Senate Democratic Whip Dick Durbin (Ill.), a member of the Gang of Six, has conceded that the proposal cannot be turned into legislation and scored by the Congressional Budget Office by Aug. 2. Van Hollen on Wednesday joined Durbin in questioning whether there was enough time to implement the plan and suggested it could only be approved if the debt-ceiling were increased for a short period to give lawmakers more time to score and turn the Gang of Six plan into legislation.

The McConnell-Reid option will likely need to win Democratic support to make it through the House.

Sure enough the political horse trading is now back:

The proposal drew howls of criticism from many conservative groups that hoped the Republicans would use the must-pass debt-ceiling vote as leverage to exact trillions of dollars in federal spending cuts. The rebuke from the right almost certainly foreshadows a number of House Republican defections, likely leaving GOP leaders reliant on some Democrats to pass the bill.

House Democrats, however, are suspicious of McConnell’s motives.

“It’s somewhat clever of Mr. McConnell to, in effect, try to transfer all responsibility [for raising the debt limit] … to the president of the United States, solo,” Rep. Steny Hoyer (Md.), the House Democratic whip, told reporters Tuesday.

And so forth. Two more days until July 22 after which we enter legislative limbo and the 30 Year will be reacquainted with gravity once again.

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Herd Redirection Committee's picture

Its a Dog & Pony Show.  Watch the right hand while the left reaches further into your backpocket!

Check out the latest from the Capital Research Institute "Selling Gold You Don't Have":

"It Seemed Like  A Good Idea At The Time"

"It would be  wise to understand the repercussions of this debt not being paid back.  Those most affected will obviously be those who lent the most money to Greece, Italy, Spain, etc.  It turns out that the governments of Europe have been lending each other the money (that’s right, lending money they don’t have, to their also-broke neighbors, it would land a normal person in jail)!  And not only that, financial institutions across Europe have loaded up on the stuff (government debt).

So that means stay away from government debt and don’t touch bank stocks until after the dust has settled.  Last but not least, currency exchange rates will be affected.  So if you have large savings denominated in either US dollars or Euros it would be wise to reconsider that position.   It is tough to predict how exchange rates will change, because both the Euro and the US dollar will both be greatly devalued 2-3 years from now, but the timing, order and magnitude of the moves that will get them there are not knowable at this point in time.

Anecdotally, the CRI was started at the start of 2011.  At that time the price of gold was $1364/ounce, and today, even after a sharp decline in the last 24 hours, gold is at $1591.  Thats a 16% increase!  Or a 16% devaluation in the value/purchasing power of the US dollar,  if you look at it that way (as we at the CRI do)."

Robot Traders Mom's picture

Really dude? Be the first one to comment just to pimp your shitty little ZH wannabe website?

TruthInSunshine's picture

We're intractably screwed no matter what they do or don't do, and we know it won't be the right thing, anyways.

It isn't just us in the U.S. that are screwed - the globe is screwed.

If an honest mathematician came forward, he'd clearly state that the debt crisis is unfixable. Wait! A mathematician who is also an economist - two of them, in fact (Laurence Kotlikoff and David M. Walker) - have done just that!

Check out minute 23 onward of this speech given by Michael Burry, linked by ZHer kridkrid (which is one of the reasons this place is so fantastic; you won't see TRUTH anywhere else) in another thread:

by kridkrid
on Wed, 07/20/2011 - 14:03

Here is a lecture of his at Vandy -


Thank you for linking that +1000.

Everyone here should watch at least from minute 23 onward - it's epic, amazing and a keeper (about QE, Bernanke's REASON for meddling, public unions, debt and the gravity of our situation).

Quixotic_Not's picture

 Insanity: doing the same thing over and over again and expecting different results ~ Albert Einstein

CompassionateFascist's picture

Einstein would know...his own ponzi-scheming tribe has been at it for 3,500 years.

SDRII's picture

Doesn't matter bank stocks are up on because as Geithner stated the complex is safe. Tomorrow Buffet will release an editorial in the NYT imploring the retail yo yo to buy stocks once again - just like BLK's Fink warned this am the dumb money is making a big mistake pulling equity allocations - reiterating dolldo CNBC chest pounding

HungrySeagull's picture

How is it possible to sit on fat ass and wait for the Government to get anything DONE?

Christ almighty, if my crew sat around waiting for me or my boss, we all would be fired for wasting the clock.

baby_BLYTHE's picture

it really is simply disgusting.

If these past elections don't solidify into stone the regulatory capture of both political parties, there really is no hope for this country.

The Tea Party, inspired by Ron Paul, started as an organic movement independent of political party association with a true message of sound money, limited government, End the FED, End the Wars, etc. but was quickly hijacked by the Neo-Cons in the Republican party and Fox News.

Unless you have the backing of a fascist billionaire overlords, like Soros on the left, Kock brothers on the right. You cannot get your message in the MSM or front & center in any political debates.

It really does feel hopeless. Thus, I am extremlly pessemistic about the future of this nation.

Vic Vinegar's picture

I am extremely optimistic about the future of this nation because of people like you baby.  Think about it - you are dropping dimes on Zero Hedge and you are only 21.  You have a bright future.

baby_BLYTHE's picture

Thanks, but I am not 21 yet.

 but will be in four days!!

If Fight Club were real I'd buy first round for every ZHer lol

slewie the pi-rat's picture

hippo birdies two ewes, b_B!

say hi 2 jack 4 everybody!  this is from my salad daze: ?Jethro Tull - Living In The Past 1969?‏ - YouTube 

wisefool's picture

The Tea Party, inspired by Ron Paul, started as an organic movement independent of political party association with a true message of sound money, limited government, End the FED, End the Wars, etc. but was quickly hijacked by the Neo-Cons in the Republican party and Fox News.


+1. Michelle Bachmann is the new "leader" of the Tea Party. She is leading the polls in Iowa. Michelle Bachmann has had two jobs outside of the home.  #1 LLM in taxation IRS agent. #2 Congressperson. Michelle's husband has a corporation with a sophisticated finance/tax structure that tries to make people "not gay".

In the presidential debate, Ron Paul said (para) "the state should not recognize, subsidize or punish the institution of marriage. That is between consenting adults and thier ethos/religion/God.  Civil Unions can handle the nessecary aspects of household law" ... The MSM calls him crazy.

Capture indeed. Very astute young person!

baby_BLYTHE's picture

Agreed on Bachmann

hard to believe a little over a year ago she was hosting Ron Paul at an event in Minnesota heaping praise on the congressman leading the crowd to believe she endorsed his positions.

A year later she sells out on the principels of individual liberty by voting on the renewel of the Patriot Act.

cosmictrainwreck's picture

No worry on Michelle B...she's a flash in the pan; word's already out she's prone to migraines [totally under control, per Her Ladyship], and we already know about her hubby (ha!)...can't wait to see the next nugget(s). Tis a shame she's a sell-out, true, but - hey - she's a politician, right?

What I wanna know is WTF does it prove to "run" for POTUS? Book deals, PR, extra payola? Why do these chumps do it? Gotta be a payoff.


InconvenientCounterParty's picture

stick around. Someone has to pick up the pieces.

InconvenientCounterParty's picture

stick around. Someone has to pick up the pieces.

the not so mighty maximiza's picture

Obama will have money printing machines delivered to the White House, him and the first lady will single handily print money for the good of the country to avoid default. 

Z Beeblebrox's picture

What, return the money creation power to the actual government? Rothschild would never stand for that.

GeneMarchbanks's picture

It looks like this week will see no deal. So gravity it is.

Cassandra Syndrome's picture

Do you reckon? It is a bit coincidental that the crucial EU summit is happening simultaneously. Would they seriously risk both failing, and a Nash equilibrium of outright chaos?

The Shootist's picture

*Gets popcorn* -That I would like to see!

nonclaim's picture

I'd bet in one of them failing while propping up the other rather than both failing. Which one 'wins' is a matter of chance.

For the massive dislocation we may see there's no other instrument available in quantities other than EUR or USD. One may park in precious metals before the event but not while it is happening. And I would not consider chinese assests while not being a chinese national since they may claim it back as you paid for it with 'worthless paper'.

GeneMarchbanks's picture

We'll see. They need a deal this week. They'll get one next week methinks. When they get back to the markets is when it gets... er... how should I say... interesting.

Eurozone is buying time for this Eurobond plan.--------Epic Fail.

Oh regional Indian's picture

The great Debt Sealing Mellow Drama.

Up and down the POTUSmack they ran, book in hand and agenda on the sly, from pillar to host, calling Bobby from K street, In the Lobby of the Watergate, running late, white house, what a louse, douse, the flames, red headed dames, Rue and no so pert anymore, Ding Ding, it's a Pie, in the Sky, no less, or more...

is it a ceiling, or is it a floor?


monopoly's picture

This is all so absurd. Need to put them all in a time out and take away their snack. I have one answer for all this.... 1,600 and 40. Stay tuned.

Slippery finger, sorry.

the not so mighty maximiza's picture

We must assist, the president will start going through withdrawal if he can't spend money.

Eureka Springs's picture

Siegniorage, Mister President... lest you be two sides of the same one party tea coin we have today. Perpetuating another big lie for the purpose of furthering the Shock Doctrine upon the masses.


Throw all these bums out!

CrashisOptimistic's picture

There are only two rules:

1) Only FY 2012 spending matters.  Not ten year cuts.  Not tax increases.  Only FY 2012 spending cuts.  Increase taxes if you want, but only FY2012 spending cuts matter.

2) If cubicles do not empty, then you did not cut.

bgilliam83's picture


Everyone better check their preps, martial law is a go.

Larry Darrell's picture

Homeland Security "Special Response Team" in front of a K-Mart lol

Maybe they are gearing up for all of the shoppers getting ready to mob the stores for "back to school" season..........wait, what's that?  The consumer is dead? 

What pray tell could be the purpose of said vehicle then?

No, no, no.  There could never be food riots in the US.  Our stores are stocked deep enough to last a whole 3 days.  They wouldn't be prepping for that.



Quixotic_Not's picture

This melodrama is starting to get entertaining...

So, who is gonna flinch first and pee their pants?

All TPTB have to do is put a 15% tax on personal funds wired to say India, China or Mexico et al. and they'll have enough increase in revenue to end the deficit, along with a little theft from Social Security suckers...

Time for a little payback from all those H1B/L1 visa zombies!

Jonas Parker's picture

So the turkeys are gathering to "talk turkey" with the "head turkey" of the flock. Looks like chicken feed for us dumb clucks again...

oldmanagain's picture

We are having another austrian moment of non-reality. Not only do tax cuts pay for themselves but econ collapse is even better.

KrugmansChauffeur's picture

Does anyone actually believe the debt ceiling won't get moved?  July 22 or no?

Cognitive Dissonance's picture

Can you hum a few bars for me?

It was an acid rock group from a few decades back, right?

TruthInSunshine's picture

What would you think if I sang out of tune
Would you stand up and walk out on me

Lend me your ears and I'll sing you a song
And I'll try not to sing out of key


--or how 'bout?--

If it keeps on rainin', levee's goin' to break
If it keeps on rainin', levee's goin' to break
And the water gonna come in, have no place to stay

Oh cryin' won't help you, prayin' won't do no good
Oh cryin' won't help you, prayin' won't do no good
When the levee breaks, mama, you got to lose

Bob's picture

Funny, the Dems being "suspicious" of putting everything in the hands of the "Democrat" POTUS!

Looks like they're starting to recognize that he's not one of them. 

Cognitive Dissonance's picture

And all of "them" are not one of us.

Bob's picture

I hear ya!  We're all just wave functions, though, and there are all those moments when intersections happen.  It's the means by which we each organize our individual and group phenomenological worlds. Too bad the frequency of real intersection decays so rapidly with distance from the origin. 

But then who am I to talk?!

I know this: Democrats are going through some profound cognitive dissonance these days.  Poor fucks. 


KrugmansChauffeur's picture

“It’s somewhat clever of Mr. McConnell to, in effect, try to transfer all responsibility [for raising the debt limit] … to the president of the United States, solo,” Rep. Steny Hoyer (Md.), the House Democratic whip, told reporters Tuesday.


Odder still...wouldn't the Dems love Obama having the responsibility of doing God's work all to himself?  The American people are behind raising the debt ceiling 100% are they not?

carbonmutant's picture

Before this administration is over that that "Teleprompter Puppet" is going to be blaming the Democrats for not supporting his socialist fantasies.

Mr Lennon Hendrix's picture

Why the 22nd?  Did we spend all of the public pensions already?

Quixotic_Not's picture

Just wait until we have to pay those "public pensions" back! lol

MillionDollarBonus_'s picture

These people complaining about a raise of the debt ceiling need to learn economics. Highly respected economists have warned that failure to increase the debt ceiling could result in a devastating collapse. Luckily, the President can legally raise the debt ceiling by executive order, much to the disapointment of the crazies like Rand Paul.