Mike Shedlock
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Four players must agree to do a debt ceiling resolution or nothing gets done. Those players are House Speaker John Boehner, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, and President Obama.

Many have House Minority Leader Nancy Pelosi in that group. However, Pelosi is irrelevant. The house passed the 
“Cut, Cap, & Balance”without Pelosi so the House can pass something without her support again.

The problem is the Senate and President Obama.

Debate Getting More Rancorous, Both Sides Digging In

Both sides are digging in, and if anything the verbal attacks are getting more rancorous.

Boehner and House Majority Leader Cantor both laid into Obama's proposal as noted in Boehner's Blog 
Common-Sense GOP Effort Will Prevent Job-Crushing Default & Deny President Obama a $2.4 Trillion Blank Check.

Highlights from Boehner's Blog

  • Today, House Republican leaders will discuss with lawmakers a new framework designed to prevent a national default while ensuring any debt limit increase granted to President Obama includes spending reforms and cuts that exceed the debt limit hike. This common-sense plan is aimed at stopping President Obama’s indefensible quest for a debt limit increase that would run past the next election without a process in place to ensure spending is being cut as the debt ceiling is being raised.

  • I know the president's worried about his next election. But my God, shouldn't we be worried about the country?

  • President Obama desperately wants a large debt limit increase that will take him past the next presidential election. Granting the president's request would amount to giving the president a $2.4 trillion blank check he can use to continue the spending binge that has driven our nation to the brink of a job-destroying downgrade and default.

  • The president has made it pretty clear he sees this debate as inconvenient compared to his desire to create more ‘stimulus’ programs. “I’d rather be talking about stuff that everybody welcomes – like new programs,” he said at a recent press conference.

  • He is trying to set up a no-win situation for taxpayers: either he gets his $2.4 trillion blank check, or America defaults.

  • Congress can deny President Obama a blank check and protect the American people by passing legislation to prevent a default that is consistent with the principles of the Cut, Cap, & Balance plan that passed the House with bipartisan support.

  • The American people are still asking the question: ‘where are the jobs?’ And they know Washington’s spending binge is part of the problem.

  • For the sake of our economy and our future, we need to stop spending money we don’t have and start creating a better environment for long-term job growth.

Smoke and Mirrors

Over the weekend several people asked what was in the various plans and how much would really be cut. Unfortunately details are scant and the plans keep changing. However, anything short of the "grand bargain" has no real substance. It is debatable if the "grand bargain" has substance.

There will be an agreement. The question is what that agreement will look like. No one knows exactly but the short answer is "smoke and mirrors".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com


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Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.