What did the president say about the wages of default/downgrade in his speech last night, again? Let's review:
For the first time in history, our country’s Triple A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. Interest rates would skyrocket on credit cards, mortgages, and car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis – one caused almost entirely by Washington. Defaulting on our obligations is a reckless and irresponsible outcome to this debate.
Economic catastrophe. A deep economic crisis. Reckless and irresponsible -- unthinkable. And yet:
Senate Majority Leader Harry Reid warned Tuesday that Republicans' deficit-reduction bill is "dead on arrival" in his chamber, as the Obama administration issued a formal veto threat and pushed lawmakers to reach a "compromise."
White House officials appeared to hold back earlier Tuesday when asked whether President Obama would veto the GOP bill, which could be voted on in the House as early as Wednesday. But the administration issued what's known as a "statement of administration policy" Tuesday afternoon saying the president's advisers "would recommend that he veto this bill" should it clear Congress.
Let him be clear: President Obama prefers skyrocketing interest rates and a deep, irresponsible, reckless economic crisis to signing a bill that jeopardizes his re-election. There is no major substantive difference between Harry Reid's plan -- which Obama supports -- and Boehner's plan -- which he says he'll veto. Yes, Boehner's plan has fewer cut-related gimmicks, but the biggest difference between the two proposals is that Reid's pushes this controversy past the 2012 election, whereas Boehner's revisits it next year. That is a calculation based on electoral politics, not economics (see my parting thought below).
Whether the rank-and-file GOP will pass Boehner's plan is an open question -- more on that soon -- but if it survives the House (marking the third time Republicans would have passed a concrete debt solution), will Harry Reid really, truly kill it in the Senate? This is
virtually the same plan he reportedly agreed to
on Sunday before Obama pulled the plug. Which party is risking calamity here, again?
Parting thought: Does any of this even matter?
Gulp:
The United States will lose its top-notch "AAA" credit rating from at least one of the major ratings agencies, said a slim majority of economists in a Reuters poll that also found wrangling over the debt ceiling has damaged the economy. Even though the poll showed only a one in five chance of another recession in the next year, 30 out of 53 economists surveyed over the past two days said the U.S. will lose its AAA credit rating from one of the three big ratings agencies -- Standard & Poor's, Moody's and Fitch.
