One last thing about President Obama’s speech on the national debt. Okay, it’s more like two things I noticed that you might want to file away. They were matter-of-fact statements that need to be heard in the context of the looming crisis over raising the national debt limit.
Thing No. 1: “And if our creditors start worrying that we may be unable to pay back our debts, that could drive up interest rates for everybody who borrows money — making it harder for businesses to expand and hire, or families to take out a mortgage.”
Obama said this in the context of how the mounting debt will hurt the economy and jobs in the long run. But that statement has relevance right now. The nation won’t be able to pay back its debts if Congress doesn’t raise the debt ceiling, which will be reached by May 16. Treasury can hold off the parade of horribles without congressional action until the drop-dead default date of July 8. But J.P. Morgan Chase chief executive Jamie Dimon has already warned that the consequences of inaction will start snowballing in the weeks and months before default actually happens. Keep an eye on interest rates, because we’re in that space right now.
Thing No. 2: “And in early May, the Vice President will begin regular meetings with leaders in both parties with the aim of reaching a final agreement on a plan to reduce the deficit and get it done by the end of June.”
See above to understand why this timing is important. While some folks grumbled about there being yet another panel to come up with yet another agreement, this time it’s different. With Vice President Biden leading the effort with leaders from both parties, there’s confidence that whatever they come up with will become law. More important, this effort could give John Boehner and Mitch McConnell the cover they need to placate some of their Tea Party members on a debt-ceiling vote.
Considering Boehner has little control over his caucus and some Republican senators are considering a filibuster on the debt-ceiling issue, this might be wishful thinking. With the full faith and credit of the United States on the line, this is one wish that simply must come true.