Chad’s Morning Brief: Republicans Looking to Deal, What Really Happens on October 17, & Other Top Stories
Here is your Morning Brief for the morning of October 10, 2013. Give me your feedback below and tune in to The Chad Hasty Show for these and many more topics from 8:30 to 11am. Remember, you can listen online at KFYO.com or on your iPhone/Android with the radioPup App.
What Are Republicans Up To?
Are Senate and House Republicans looking for a way out of the shutdown and the debt ceiling? Two different reports show that this could be the case. According to FOX News, House Republicans are looking for a short-term deal on the debt ceiling.
As House Republican leaders prepared to meet with President Obama Thursday, conservative lawmakers were exploring the possibility of a short-term increase in the debt ceiling, perhaps trying to seize the opening after the president said he would consider the option.
Members of the Republican Study Committee, the most conservative bloc in the House, told Fox News they’re looking at that possibility. Their inclination is to consider a short-term increase only if there is an agreement on a broader spending framework.
But the option could help buy time for lawmakers to nail down the specifics of a longer-term deal. The U.S. government is facing what the Treasury Department says is an Oct. 17 deadline to raise the nation’s debt ceiling.
Though a short-term deal would by definition be only a stopgap fix, the development Wednesday pointed to at least a sliver of possible common ground — something to potentially work toward, after nine days of a partial government shutdown during which lawmakers seemed to mostly talk past one another.
“Clearly, Republicans want to avoid default,” Rep. Kevin Brady, R-Texas, said, adding they also want to cut spending.
Obama, speaking to reporters for over an hour on Tuesday, reiterated that he does not plan to negotiate with Republicans until a spending bill is passed and the debt ceiling is raised.
But he said he’s “absolutely” willing to accept a short-term measure to fund the government and raise the debt ceiling, and negotiate with Republicans after that.
But that’s not all folks. Senator Mitch McConnell is leading a group of Senators who are looking to make a deal that would reopen the government and raise the debt ceiling according to Politico.
After taking a back-seat role in this fall’s fiscal battles, Senate Minority Leader Mitch McConnell and fellow Republican senators are quietly seeing whether they can break the political impasse between House Republicans and Senate Democrats.
Behind the scenes, the Kentucky Republican is gauging support within the Senate GOP Conference to temporarily raise the debt ceiling and reopen the government in return for a handful of policy proposals. Among the ideas under serious consideration are a repeal of medical device tax in the health care law, a plan to verify that those seeking subsidies under Obamacare prove their income level and a proposal to grant additional flexibility to federal agencies to implement sequestration cuts.
The under-the-radar effort is the latest sign that Republicans in the Senate are actively looking for a new way out of a fiscal crisis that polls show is causing their party more harm in the eyes of voters. Since Republicans refuse to accept Democratic demands for a straight extension of the debt ceiling and a stop-gap spending measure, Republican senators are trying to more clearly spell out what it wants out of the fight — after the party was badly divided on whether to make the fight about gutting Obamacare.
Those proposals could be paired with a two-month increase of the national debt ceiling and a six-month continuing resolution to reopen the government at a $986-billion funding level that both parties have agreed to, under one package discussed among McConnell and GOP senators on Wednesday, sources said. McConnell is not endorsing the proposal, aides stressed, but is simply taking the temperature of his caucus.
It appears as though Republicans are starting to cave folks. At 9:35am, Senator Ted Cruz will join me to discuss this.
What Happens on October 17?
So what happens if the debt ceiling isn’t raised on October 17? If you listen to President Obama, all hell will break loose. If you look at the facts, then nothing will happen. Here is a great post from the folks at Rare.
As the nation nears its borrowing limit on Oct 17, the Treasury Department and half of Congress ramp up warnings of a potentially global economic catastrophe without a debt ceiling hike – but with just over a week to the deadline, Senate budget buffs and economist think tanks grow vocally skeptical with how real the danger of default is.
“We always have enough money to pay our debt service,” North Carolina Republican Sen. Richard Burr said Tuesday in the New York Times. “You’ve had the federal government out of work for close to two weeks; that’s about $24 billion a month. Every month, you have enough saved in salaries alone that you’re covering three-fifths, four-fifths of the total debt service, about $35 billion a month. That’s manageable for some time.”
A member of the Senate Finance Committee, Burr makes an argument vastly under-reported in the doomsday headlines dominating Capitol Hill’s debt ceiling coverage. In addition to the revenue generated by not paying government salaries – which it is worth noting will be back-paid when the government reopens – Treasury continues to receive unpredictable amounts of revenue in its millions of transactions daily, making an exact default date difficult to determine.
That argument seems to coincide with a Monday memo from top national credit rating agency Moody’s.
“We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.”
Moody’s went on to say the danger is much smaller than it was in 2011, when the agency itself issued compelling warning in light of a significantly higher deficit than in 2013. The last minute raise by Congress still resulted in a credit rating downgrade by the Standard & Poor index, which rebounded earlier this year.
“There’s zero chance that the U.S. government is going to default on its debt. It’s unfortunate that people have conflated this idea of not raising the debt ceiling immediately on Oct. 17 and somehow defaulting on our debt,” Pennsylvania Republican Senator and Banking Committee member Pat Toomey said Wednesday on MSNBC, reiterating that tax revenue would bring in enough for Treasury pay interest on its loans.
In a Wednesday letter to President Obama, Senate Republicans said the administration’s warnings ”are not only misleading in our view, but they threaten to destabilize financial markets and could raise borrowing costs for families and small business.”
The letter states the U.S. “cannot and will not default on its debt, with some members furthering the argument that the Treasury Department brings in enough revenue to make the necessary interest payments on U.S. debt. Republicans however did concede that raising the debt ceiling was an eventual inevitability anyway.
“But I think the real date, candidly, the date that’s highly problematic for our nation, is Nov. 1,” Tennessee Republican Sen. Bob Corker, another Senate Banking Committee member, said in the New York Times Tuesday.
Treasury faces about $73 billion in outgoing payments to bond interest, Social Security, Medicare, civil service and military by Halloween according to the Congressional Budget Office, with Treasury Secretary Jack Lew continuing to insist he will be left with only $30 billion in cash reserves by mid-October without a debt ceiling raise.
“The one thing we know for sure is that by Nov. 1, they will be out of money,” Goldman Sachs analyst Alec Phillips said in The Hill on Tuesday.
- See more at: http://rare.us/story/what-you-arent-reading-about-the-debt-ceiling/#sthash.NQMIEqGN.dpuf
Other Top Stories:
These and many more topics coming up on today’s edition of The Chad Hasty Show. Tune in mornings 8:30-11am on News/Talk 790 KFYO, streaming online at kfyo.com, and now on your iPhone and Android device with the radioPup App. All guest interviews can be heard online in our podcast section after the show at kfyo.com.