Government Shutdown/Debt Limit - Issues and Timelines for Investors

[CapitalistOppressor]

Im at the movies and im a bit confused. U say its not likely they will make a deal on the debt ceiling?

Despite what the Republicans are putting forward to the press, they are not putting forward a clean debt limit increase. Instead it will force negotiations on Republican priorities, with the only acceptable outcome of those negotiations being Democratic capitulation, under threat of a continued shutdown. The only thing Democrats would get from his is a guarantee of a default in. A month instead of a couple of weeks.

If Obama agrees to what the Republocans are proposing he would be agreeing to something he ruled out at his press conference. I doubt that he will agree, and I doubt the Senate will either.

 

[sleepyhead]

CO - thanks for you tireless research on this topic.

I personally can't stand politics and that is why I don't follow this stuff. My guess is that something positive will get done sooner rather than later. Because if you wait till last minute then the economic damage has already been done.

There are many politicians who understand this and that is why I am optimistic. This is just pure uneducated speculation on my part though and I have faith that they will move forward by the end of the week (whatever that means).

 

[CapitalistOppressor]

Nice post from Greg Sergant -

House GOP leaders look for a way out - The Washington Post

 

[justdoit]

Nice post from Greg Sergant -

House GOP leaders look for a way out - The Washington Post

CO thanks for all your great posts and insights.

 

[CapitalistOppressor]

Ezra Klein seems to think this is a done deal.

The shutdown just saved the world - The Washington Post

Ezra is brilliant, but I still think this fails unless Republicans abandon the requirements to negotiate the shutdown on their terms while linking the future debt limit increase to the result of those negotiations.

 

[Norse]

Im thinking that aswell. Market does not

 

[CapitalistOppressor]

New post from Greg Sergeant.

Dems sense a GOP cave

It makes clear that the "plan" being talked up in the press wont pass muster with the President, but also notes the ambiguity in the Republican position that has been driving me crazy all morning.

Still, I don't think it's necessarily because Republicans are ready to cave. I think it's because they don't actually have a plan beyond wanting to do something on the debt limit.

But what happens when Obama nixes the proposal that Republicans seem to be pushing, which links a debt limit increase with negotiations on Republican terms over the shutdown, with the future debt limit increase being tied to Obama essentially capitulating?

Greg Sergeant and the Democrats think that the Republicans will cave and agree to a clean limit. Where I would disagree is that I don't think their leadership has the capacity to shift gears on the fly in a meeting with the President, which starts at 4pm EST I think.

Instead, it seems more likely that the Republicans will dissolve back into an incoherent mess until leadership goes back to the conference and has another big meeting to find some new "consensus".

With the market set to close, I'm worried that the news tomorrow will be about a "collapse" in the debt ceiling talks after Obama stiff arms Boehner.

Still, even if my thesis is correct and there is no agreement today, Republicans might manage to publicly announce a clean increase in the debt limit before the market opens tomorrow. But I don't think I'm going to bet any money on that.

 

[SteveG3]

CO thanks for all your great posts and insights.

+1

CO really appreciate all your contributions!

 

[CapitalistOppressor]

Important details from National Journal, which tends to have excellent Republican sources -

Signs of Thaw as House GOP Proposes Short Debt-Limit Extension - NationalJournal.com

House Republicans are planning a short-term debt-limit increase that will last six weeks without asking for any specific policy concessions in return, a plan that was panned by some conservatives but seems to have majority support within the conference.

The only condition of passing the bill[/B], lawmakers said following Thursday morning's GOP conference meeting, is getting a verbal agreement from President Obama to appoint budget conferees for a working group that will negotiate long-term fiscal issues during that six-week period. House leadership is meeting with Obama at the White House on Thursday afternoon to discuss the plan.

If this is what their plan is, Obama will agree.

- - - Updated - - -

More from the National Journal

There will be no specific language attached to the bill mandating any negotiating framework from the White House. "It's just a handshake," said Rep. John Fleming, R-La.

- - - Updated - - -

And yet more -

"It only goes forward if the president agrees to appoint budget conferees, and agrees to come to the table to negotiate the reopening [of government] as well as a debt-ceiling solution," said Rep. Kevin Brady of Texas. "I wouldn't term it 'clean.' "

Just a big pile of ambiguity when you put it all together. I don't see how to interpret this in the absence of seeing the written proposal.

Also no mention of whether the President must agree to negotiations only on Republican terms as stated in the public announcement.

- - - Updated - - -

Thinking about it, I don't see why the president would agree even verbally to negotiations he will refuse to undertake. His credibility would be destroyed. So again, i don't see why he will agree to this proposal, but again, who knows what the actual proposal is.

Edit: I guess I should re-read the quotes I am posting. I included this one because of it's contention that there would be no set framework -

There will be no specific language attached to the bill mandating any negotiating framework from the White House. "It's just a handshake," said Rep. John Fleming, R-La.

Obama and the Democrats want negotiations as long as their isn't a specific framework. They'll talk about Chained CPI, cuts to Medicare and Tax Reform, if the Republicans will talk about modest increases to revenue. But only if those talks can succeed or fail on their merits, instead of being predetermined by the negotiating structure.

It's still an open question whether they'll agree to do this while the government is shutdown, but I think they've said enough to indicate they are.

Still, I'm to the point where I don't trust half of what I see, because everyone on the Republican side seems to have their own idea of whats going on.

 

[CapitalistOppressor]

Early returns from the Democrats, not so good -

Reid: No negotiations without ending shutdown

Senate Majority Leader Harry Reid (D-Nev.), emerging from a nearly two-hour meeting with President Obama, said Senate Democrats would not negotiate with House Republicans over the budget until the government is reopened.

“Not going to happen,” Reid told reporters when asked whether Democrats would enter negotiations amid a continuing government shutdown.

Article goes on to note that Dem's are waiting to see the actual proposal. Still, I see this as a warning shot across Boehner's bow.

 

[Norse]

Early returns from the Democrats, not so good -

Reid: No negotiations without ending shutdown



Article goes on to note that Dem's are waiting to see the actual proposal. Still, I see this as a warning shot across Boehner's bow.

But doesnt this only apply for the shutdown? They can pass a clean bill regarding the debt ceiling?

 

[CapitalistOppressor]

But doesnt this only apply for the shutdown? They can pass a clean bill regarding the debt ceiling?

Probably. If the debt ceiling plan is actually clean.

However, 99% of the public reports of what the Republicans intend to propose indicate something other than a clean bill. And whatever the public reports say, IMHO a lot of the positive spin in the press right now is based on the deal that Boehner discussed with Pelosi and Hoyer, which is now off the table.

We have no clue what the Republicans are going to propose, but the Democrats are making it clear that to the extent that it requires negotiations while the government is shut down, they will oppose it.

In other words, if the Republicans want to take the debt limit off of the table by passing a short term extension, while maintaining the status quo on the government shutdown, Democrats will agree to that. Anything that forces negotiations under threat of shutdown and default will be opposed.

Also, there are technical aspects of the proposal that the Democrats would probably oppose in any case, especially with regard to the Republicans forbidding the use of emergency powers to manage money when we are against the debt limit, as we have been for the past few months. That proposal would drastically increase the chance of an unintended default.

 

[justdoit]

Probably. If the debt ceiling plan is actually clean.

However, 99% of the public reports of what the Republicans intend to propose indicate something other than a clean bill. And whatever the public reports say, IMHO a lot of the positive spin in the press right now is based on the deal that Boehner discussed with Pelosi and Hoyer, which is now off the table.

We have no clue what the Republicans are going to propose, but the Democrats are making it clear that to the extent that it requires negotiations while the government is shut down, they will oppose it.

In other words, if the Republicans want to take the debt limit off of the table by passing a short term extension, while maintaining the status quo on the government shutdown, Democrats will agree to that. Anything that forces negotiations under threat of shutdown and default will be opposed.

Also, there are technical aspects of the proposal that the Democrats would probably oppose in any case, especially with regard to the Republicans forbidding the use of emergency powers to manage money when we are against the debt limit, as we have been for the past few months. That proposal would drastically increase the chance of an unintended default.

CO, if a short term clean bill to raise the debt ceiling is passed what will be the likely hood of having a standoff again in a few weeks? It seems like this would only be a 6 weeks extension. I'd assume part of the negotiations (if dems to go with this) to open the gov. would include a longer debt ceiling bill?

Another concern is even if a short term clean bill is passed to open the gov and raise the debt ceiling then the markets will continue to be in limbo until something more concrete is hashed out.

 

[Norse]

Probably. If the debt ceiling plan is actually clean.

However, 99% of the public reports of what the Republicans intend to propose indicate something other than a clean bill. And whatever the public reports say, IMHO a lot of the positive spin in the press right now is based on the deal that Boehner discussed with Pelosi and Hoyer, which is now off the table.

We have no clue what the Republicans are going to propose, but the Democrats are making it clear that to the extent that it requires negotiations while the government is shut down, they will oppose it.

In other words, if the Republicans want to take the debt limit off of the table by passing a short term extension, while maintaining the status quo on the government shutdown, Democrats will agree to that. Anything that forces negotiations under threat of shutdown and default will be opposed.

Also, there are technical aspects of the proposal that the Democrats would probably oppose in any case, especially with regard to the Republicans forbidding the use of emergency powers to manage money when we are against the debt limit, as we have been for the past few months. That proposal would drastically increase the chance of an unintended default.

I cant imagen that the republican can pass a short-term-pass only if they get negotiations. If they get the debt ceiling of the table then they can really focus on their issues with obamacare or whatever. They have to decide whats more important. Everyone wins if they just get done with the debt-ceiling. I also think the polls will support them later if they do.

 

[CapitalistOppressor]

Boom. McConnell finally moving to end this nonsense from the House.

Competing proposal to end shutdown emerges in Senate

Going to quote it all -

House Speaker John A. Boehner’s proposal for a six-week extension of the debt limit fell flat in the Senate Thursday evening, where members of both parties were clamoring to end the government shutdown, now in its 11th day.

As the House prepared to vote on Boehner’s proposal Friday, Senate Minority Leader Mitch McConnell (R-Ky.) was holding meetings with his rank and file to develop a competing proposal to re-open the government and raise the federal debt limit for as long as three months.

The package was being assembled by Sen. Susan Collins (R-Me.) and has attracted the interest of Senate Democrats, sparking the first bipartisan negotiations since the stand-off began in early September.

“I was surprised that the House decided to deal only with the debt limit and not with the continued closure of government,” Collins said Thursday. “I think that we have to deal with both issues and we need to do so quickly.”

Senate Democrats were intrigued by Collins’ proposal, but unhappy with its demand for Democratic concessions. Those include repeal of a tax on medical devices needed to fund the new health care initiative and new income verification procedures for people who receive tax subsidies to buy health insurance on the law’s new exchanges.

In addition, Collins’ proposal would maintain deep cuts known as the sequester through at least March. Though it would grant agencies flexibility to decide where the cuts would fall, the sequester remains a red flag for the White House and many Democrats, who want to restore funding for domestic programs.

I see this passing. Democrats have wanted a deal to end the Medical Device tax since it was signed into law. And the other requirement to verify income is already required by the Affordable Care Act, but was temporarily delayed because of technical issues. This legislation would likely have to include the funding to fix those issues, which mainly occurred because Republicans have been starving the government of funds to implement Obamacare.

There is no reason for Democrats to oppose things they support. This will likely pass, and be signed by Obama.

The key unknown is that it will jam House Republicans, but I expect Boehner can justify voting on this because of the wide support from Senate Republicans.

 

[justdoit]

Boom. McConnell finally moving to end this nonsense from the House.

Competing proposal to end shutdown emerges in Senate

Going to quote it all -



I see this passing. Democrats have wanted a deal to end the Medical Device tax since it was signed into law. And the other requirement to verify income is already required by the Affordable Care Act, but was temporarily delayed because of technical issues. This legislation would likely have to include the funding to fix those issues, which mainly occurred because Republicans have been starving the government of funds to implement Obamacare.

There is no reason for Democrats to oppose things they support. This will likely pass, and be signed by Obama.

The key unknown is that it will jam House Republicans, but I expect Boehner can justify voting on this because of the wide support from Senate Republicans.

This is definitely promising news. If this doesn't go through then I don't know what will.

 

[stopcrazypp]

I see this passing. Democrats have wanted a deal to end the Medical Device tax since it was signed into law. And the other requirement to verify income is already required by the Affordable Care Act, but was temporarily delayed because of technical issues. This legislation would likely have to include the funding to fix those issues, which mainly occurred because Republicans have been starving the government of funds to implement Obamacare.

So what you are saying is that these are pretty much false concessions that Democrats might be willing to make? I tried looking up some sources and it appears there's a group of Democrats (most likely from states which primarily make these medical devices) who agree with this, but not really most of the party. Repealing that tax means there must be another funding source found to fund the ACA, which is unlikely with the current situation.

 

[arashlzy]

Boom. McConnell finally moving to end this nonsense from the House.

Competing proposal to end shutdown emerges in Senate

Going to quote it all -



I see this passing. Democrats have wanted a deal to end the Medical Device tax since it was signed into law. And the other requirement to verify income is already required by the Affordable Care Act, but was temporarily delayed because of technical issues. This legislation would likely have to include the funding to fix those issues, which mainly occurred because Republicans have been starving the government of funds to implement Obamacare.

There is no reason for Democrats to oppose things they support. This will likely pass, and be signed by Obama.

The key unknown is that it will jam House Republicans, but I expect Boehner can justify voting on this because of the wide support from Senate Republicans.

I tend to agree with you...but TSLA and other stocks are sinking in AH trading ?

 

[hershey101]

Obama rejects the GOP offer. CNBC breaking news.

 

[CapitalistOppressor]

So what you are saying is that these are pretty much false concessions that Democrats might be willing to make? I tried looking up some sources and it appears there's a group of Democrats (most likely from states which primarily make these medical devices) who agree with this, but not really most of the party. Repealing that tax means there must be another funding source found to fund the ACA, which is unlikely with the current situation.

There is not much of a constituency that is affirmatively in favor of a medical device tax because of some principle or ideology. There are many constituencies that are in favor of repealing it.

The only thing that has prevented a deal to date is the Democratic requirement that a deal be revenue neutral. In other words, they wanted some other tax or fee or eliminated loophole to replace it so that it does not increase the deficit. In contrast, Republicans want to replace it with cuts.

I'm sure the negotiations that are ongoing over this issue right now are over which choices to make in terms of keeping this deficit neutral. The dollar amount is quite small, just ~$39b over 10 years (if I recall correctly). It will not be difficult to find the right set of horses to trade to make it work.

It's certainly possible that negotiations might be derailed, but unlike previously, these are tiny issues of little consequence as opposed to dealing with core budgetary chips like Chained CPI, or Medicare Beneficiary cuts, or major non-budgetary items like the core provisions of Obamacare. If Republicans want to claim victory for hustling pocket change after repeatedly beating themselves in the face, I doubt Democrats will make a big issue of it.