Top Story/Debt-Ceiling Drama
The historic faceoff between Republicans and Democrats over an increase in the debt ceiling continued over the weekend with a surprise announcement by House Speaker John Boehner, a warning from the incoming head of the IMF, talking heads from both sides blabbing on about the state of play, and a meeting at the White House ending with an agreement to convene again today.
In short, nothing was accomplished. Or if it was, it wasn’t disclosed.
Boehner’s step-back from consideration of President Obama’s aggressive proposal to aim for cuts of $4 trillion from the national debt—instead of $2 trillion—suddenly complicated had seemed like a compromise-in-the-making and raised the drama level considerably. But perhaps the direst warning—albeit couched in the language of diplomacy--came from new IMF chief Christine Lagarde in an exchange with Christiane Amanapour on ABC’s This Week.
Amanapour asked if failure to reach an agreement on the debt ceiling would jeopardize the U.S. position as the world's most stable economy.
“It would certainly jeopardize the stability,” said Lagarde, “but not just the stability of the U.S. economy. It would jeopardize the stability at large.”
Translation: Blow the default deadline, and all hell breaks loose around the globe.
Earlier, Obama Chief of Staff Bill Daley told Amanapour: “By the second of August, there's no question in my mind that the leaders of America will…not allow the first default in the history of the country to occur. I'm confident of that. But this is not just about the debt ceiling being extended. This is about bringing fiscal soundness so that the world and Americans can know that we can solve our problems ourselves, and do it in a way that there is shared pain and there is shared responsibility.”
But Daley obviously hadn’t been listening to Tea Party kingpin Senator Jim DeMint of South Carolina.
“Do you believe, Senator, that the country risks default or major economic consequences if the debt ceiling is not raised by August 2?” Bret Baier asked on Fox News Sunday.
“No, I don't,” said DeMint. “I think Secretary [Tim] Geithner has been irresponsible. He's playing Chicken Little here. The fact is we will pay our debts if it's the last dollar we have. There are enough assets in Social Security and Medicare to pay the benefits of those programs for several years. Other programs can be funded from tax revenue. There would certainly be disruption, Bret, but this is not a deadline that we should rush and make a bad deal and do something that cuts benefits from seniors without giving them better choices.”
On Meet the Press, Geithner—the man who has to pay America’s bills—was considerably less cavalier about the prospect of cruising past the August 2 deadline.
“Let me explain what happens on August 2,” he told moderator David Gregory. “ On August 2, at that point we run out of the ability to borrow to meet our obligations. Remember, we have to borrow now 40 cents for every dollar we spend. …On August 2, if Congress hasn't acted, we're left with the cash we have and the cash we're going to take in. And every week starting the week of August 2, we have to go out and finance roughly $100 billion in maturing obligations of the government. We make [out] 80 million checks a month to Americans--55 million people on Social Security benefits, millions more Americans on veterans benefits, Medicare, Medicaid, people who supply our troops in combat. Eighty million checks a month. …If Congress doesn't act by [August 2], they will downgrade our credit, first time in history, and if that happens, you're going to see catastrophic damage across the American economy and across the global economy.”
“Has the recovery stalled?” Geithner was asked on Meet the Press.
“The economy absolutely slowed in the first half of the year. There's no doubt on that. And when the economy slows, job creation will slow, and that's what's happening. It slowed because…gas prices went up a lot because we had a huge supply disruption in the Mideast. You saw some really terrible weather across the country, which slowed construction spending. State and local governments across the country are having to…tighten their belts. You saw Japan suffer catastrophic damage. A lot of concern out of Europe still. And those factors together account for a large part of the slowdown. Not all of it, but a large part of it.”
“But is the economy recovering still?” David Gregory asked.
“Business economists…still believe the economy is going to strength in the second half and strengthen into next year,” Geithner said.
“When do you think recovery is actually going to start feeling like recovery?” Gregory asked.
“Oh, I think it's going to take a long time still,” said Geithner. “ This is a very tough economy.”
Christiane Amanapour asked Obama Chief of Staff Daley, who served as Commerce Secretary under Bill Clinton, what he is saying to the business to encourage investing and hiring.
“There's no question that there's a tremendous amount of profit on company books. But they are looking to see the signs of confidence for them to invest. …I talk to business leaders every day. They don't have as negative an attitude about the economic situation…[as] Washington seems to have. On the other hand, they want to see leadership. What I say to the business community is, you complain and whine about the political system all the time. Get involved….”
“Are you too dull to be President?” David Gregory asked former Minnesota Governor and GOP Presidential candidate Tim Pawlenty on Meet the Press.
“Look, if people want the entertainer-in-chief, they should vote for somebody else,” said Pawlenty. “But we've had three years of a President [whose] soaring rhetoric gave all these false hopes and false promises to the country. If you want somebody who's had executive leadership, who has…had results on taxes, on spending, on health care, on jobs and the like, then vote for me. And the other thing I would say, David, I've got the record of toughness better than anybody else in this race. My goodness, I was the first governor in Minnesota's history to shut down the government. I set a record for vetoes. I took more money out of the budget using an executive authority than all the other governors combined in my state. So in terms of demonstrating fortitude... I'm an old hockey player. I've been in more fights than the rest of these candidates combined.”
The News of the World Scandal
Rupert Murdoch, who controls News Corp and its British publishing arm News International, arrived in London after attending Allen & Co.’s bigwig media conference in Aspen. The chatter is that he is personally taking charge of damage control in the tabloid scandal that is rocking his media empire.
In answer to a question about whether Murdoch’s empire is at risk, Michael Wolff, editorial director of Ad Week and author of The Man Who Owns the News: Inside the Secret World of Rupert Murdoch, said on This Week: “I don't think News International is necessarily at risk. These are good assets. What is at risk is the management of this company by people named Murdoch.”