In disgusting turn of events, Senate Minority leader Mitch McConnell appears to have lost his mind regarding raising the debt ceiling.
Please consider McConnell Offers ‘Last Choice’ Debt Option
Senate Republican leader Mitch McConnell proposed granting President Barrack Obama unilateral power to raise the national debt ceiling as a “last-choice option” to avoid a default, a move intended to put the burden on the White House to identify future spending cuts.
McConnell’s proposal to let the president increase the debt limit in three stages, while requiring him to propose offsetting spending cuts, offered a potential path out of the impasse over addressing the nation’s long-term debt that has brought the government within weeks of a default. It also signaled the issue may continue to loom during next year’s election campaign if Congress is forced to take further votes on the debt ceiling.
Backlash Against McConnell
Still, McConnell’s plan drew a backlash from conservatives — former House Speaker Newt Gingrich called it “an irresponsible surrender” — and it wasn’t clear whether it could pass the U.S. House.
The president said on “CBS Evening News with Scott Pelley” that, unless the debt ceiling is raised in time, the federal government might not be able to pay Social Security and veterans’ benefits.
“I cannot guarantee that those checks go out on Aug. 3 if we haven’t resolved this issue,” Obama said. “Because there may simply not be the money in the coffers to do it.”
Thoroughly Disgusted with “Point-Scoring” Exercise of Both Parties
The idea that social security checks would not go out on August 3rd is likely sappy hype. Other things would be cut first, unless of course Obama thought he could score political points in doing so.
The whole debate now is nothing but a political-point scoring episode.
Think back a couple months ago. Obama wanted the ceiling raised and did not offer any cuts. Republicans insisted on $4 trillion in cuts. Now, Obama wants to cut $4 trillion and the Republicans don’t want it.
Obama allegedly offered cuts in Medicare, Social Security, and other items if Republicans would only hike taxes $1 trillion.
Is Obama really offering $3 trillion in cuts?
Who the hell knows? I sure don’t. No one has mentioned any details. Doesn’t the public have a right to know? Sadly, we have not seen any specifics from either party. The negotiations have been “hush hush” every step of the way.
Regardless, Republicans blew a big chance to insist on $3 trillion in real cuts and possibly something the US desperately needs such as the end to collective bargaining of public unions and the scrapping of Davis-Bacon prevailing wage laws.
McConnell’s Backbone Limp as Overcooked Spaghetti
In return for a mere $1 trillion in hikes ($100 billion a year), Republicans could have asked for whatever they wanted. Either the president would have backed down or Republicans would have gotten some major chips in return.
Instead, McConnell proposes to piss away this opportunity for nothing. McConnell’s backbone is as limp as overcooked spaghetti.
Grand Compromise of Muppetry
Both sides agree there will be a deal, but the most likely deal now is to do next-to-nothing.
ZeroHedge sums up the likely debt compromise nicely. “The final outcome on the debt ceiling will be a grand compromise of muppetry in which nothing is achieved on either spending cuts, or tax hikes.”
Only 22% of Americans Want to Raise Debt Ceiling, 44% are Against
While the Muppet theater debates what to do in secret, please bear in mind the U.S. Debt Ceiling Increase Remains Unpopular With Americans
Despite agreement among leaders of both sides of the political aisle in Washington that raising the U.S. debt ceiling is necessary, more Americans want their member of Congress to vote against such a bill than for it, 42% vs. 22%, while one-third are unsure. This 20-percentage-point edge in opposition to raising the debt ceiling in Gallup’s July 7-10 poll is slightly less than the 28-point lead (47% vs. 19%) seen in May.
Gallup Question: From what you know or gave read about the discussion of raising the debt ceiling would you want your member of Congress to …
- vote in favor of raising the debt ceiling
- vote against raising the debt ceiling
- or you don’t know enough to say
By Political Party
Public’s Fear of Runaway Spending Evident
President Barack Obama has emphasized that not raising the debt ceiling would force the U.S. to default on its debt payment obligations, leading to economic catastrophe, while Republicans have made their support for raising it contingent on a budget agreement that sharply limits future spending.
A follow-up question finds Americans more sympathetic to the Republicans’ argument than Obama’s. Specifically, when asked to say which is their greater concern, 51% say raising the debt ceiling without plans for major future spending cuts concerns them more, while 32% are more concerned with the risk of a major economic crisis if Congress does not take action.
Reaction in Gold
In a reaction to inaction in the US to do anything about the budget and/or to the inaction or futility of political leaders in Europe to address the Eurozone crisis, gold is responding as it should.
Gold is a fraction of a percent from making a new all-time high.
Bloomberg reports Gold May Extend Rally, Nearing Record, as European Debt Crisis Escalates.
That reaction in gold is not just over Europe. It is about budget stress in the US, credit stress in Europe, rampant inflation in China, and central banker actions in general, globally.
Mike “Mish” Shedlock
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