All That Matters: Today's DC Agenda
Since all macro and micro news has now become redundant, with politics, specifically headlines, the sole driving force behind each and every market move, especially today when Boehner's plan is expected to pass Congress only to be deadended in the Senate, here is a complete list of what is on the docket in DC today. Keep in mind that this list is most likely to change on a moment's notice as DC comes up with "new and worse" plans virtually by the minute.
House votes on debt limit bill late afternoon, while the Senate waits...
The endgame is coming into focus a bit more now, with discussion of the potential modifications the Senate could make to the House bill taking place and producing some specifics. As we have noted in recent days, the crux of the issue is deciding on an enforcement mechanism that provides reasonable certainty regarding the debt limit after this week, but that also makes it nearly certain that Congress will act on a second round of savings from a special committee envisioned in both bills. Ideas on the table at this point are (1) a“clawback” of the debt limit increase if the committee reforms haven’t become law, which would not require a second vote if the fiscal committee follows through, but would require another vote if they did not; (2) a provision that makes the recommendation of the fiscal committee law automatically if Congress fails to consider it; or (3) simply shortening the extension of the debt limit so that it expires around October, which might give the committee enough time to develop savings, but would not push another debt limit increase vote into next year.
9:00 am – House Democrats hold closed meeting.
Morning – Senator Reid expected to release revised version of Senate debt limit bill. The Congressional Budget Office estimated that his bill would save $2.2 trillion (counting $1.1 trillion in savings from Iraq/Afghanistan drawdown that is likely to occur regardless), rather than the $2.7 he had previously announced. Speaker Boehner had the same problem with his bill. Coming up with an extra $200bn to match the $2.4 trillion debt limit increase should be manageable. The modified bill, however, is not yet likely to include what has become the key component of reaching a bipartisan deal noted above: devising an enforcement mechanism for the deficit reduction committee that would be established that does not require a second vote on the debt limit increase, but also guarantees that the reforms the commission is charged with producing are actually achieved. But any news of compromise on this sort of mechanism will be the key sign that an agreement is close at hand.
10:45 am – House Minority Leader Pelosi press conference. It is expected that very few (low single digits) Democrats will vote for the debt limit legislation that comes to the floor later today.
11:00 am – White House daily press briefing…
12:00 pm – House starts debate on Boehner debt limit bill.
1:00 pm – Rep. Michelle Bachmann speaks at the National Press Club. Bachmann is a Republican presidential candidate and one of the few House Republicans who voted against the House’s “Cut Cap and Balance Act” due to her strong opposition to raising the debt limit.
1:30 pm – House Speaker Boehner and other Republican leaders hold press conference…
Late Afternoon– House votes on Boehner debt limit bill. As noted above, the House will start considering the Boehner debt limit bill at noon. It will consider the “rule for debate” on the bill for one hour, vote on the rule, then consider the bill itself for two hours, and conduct one or two votes (the vote on final passage, and perhaps one other motion). That makes three hours of debate total, plus two or three votes, putting the final vote right around the market close at 4:00 pm if everything runs according to that schedule, but potentially a bit later if any delays occur. After looking yesterday as if it lacked the support needed to pass, the Boehner bill now looks likely to get the necessary votes. The revised version is now estimated to reduce the deficit by $917bn over ten years; it would establish a committee to find more savings by year end. All 53 Democrats (and independents who caucus with them) sent Speaker Boehner a letter yesterday indicating they would vote against this proposal, leaving its status in limbo. But since the Reid bill does not appear to have enough support to pass both chambers either, additional changes are likely (for instance, the “clawback” idea for the second debt limit vote) that could be enough to produce common ground ahead of the Aug. 2 deadline.
Source: Goldman Sachs