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  • By Julia Edwards
    National Journal

    What started as hot air has now become a thunder cloud. Should Congress fail to reach a compromise to raise the debt ceiling, a multitude of economic sectors could take a hit—if not come to a screeching halt. We review the effects as forecasted by economists and ask "Should you worry?" The answer, in short: Yes, probably so.

    1. Global economy: Asian and European stocks "shuddered," on Monday, as William Alden of the Huffington Post put it, after Congress failed to reach a compromise by the end of last week. The tumble was slight for now, but Alden suggests that the fall was just the first tremors of a greater catastrophe waiting when the stalemate in Washington triggers panic on Wall Street.

    2. Government programs: If the Treasury loses its authority to borrow, economist Nigel Gault of IHS Global Insight predicts that the government would have to cut its spending by 40 to 45 percent. Highway projects, federal courts, Pell Grants, and food stamps are all

    Read More »from Six costs of not raising the debt ceiling
  • Click image to see more photos. (AFP)Click image to see more photos. (AFP)
    By Major Garrett
    National Journal

    Washington may have become, as President Obama said on Monday, a place where "compromise has become a dirty word," but in the context of the menacing debt-limit crisis there was a far dirtier word he didn't utter.

    Veto.

    While Obama warned House Speaker John Boehner not to turn Americans into "collateral damage," he did not vow to veto the bill Boehner's now pushing to lift the debt ceiling by $1 trillion (good for six months). Boehner's two-step process would impose $1.2 trillion in spending cuts and establish a select congressional commission to propose an additional $1.8 trillion in savings by Thanksgiving.

    If Republican leaders were sifting through Obama's speech for one word it was "veto." Its absence gives Obama, Boehner, and the Senate room to maneuver if, as now appears likely, Boehner's bill squeaks through the House and arrives in the Senate as a viable, though less-than-optimal, alternative to default.

    MULTIMEDIA: 6 Costs of not raising the

    Read More »from As Washington struggles over debt crisis, Obama stays mum on veto threat
  • By Major Garrett
    National Journal

    The aspirations don't match the situation.

    To hear them talk, the White House and every key player on Capitol Hill wants to avoid the first-ever default in American history. That's the aspiration.

    The situation is no bill exists in the House or Senate that can raise the debt ceiling above its current $14.3 trillion limit. Forget whip counts. There's nothing to whip. Every indication is the House and Senate are moving separately and willfully ignoring the peculiar politics of each chamber. A House bill is likely to be posted Monday with debate beginning Wednesday. The Senate may have its own bill by Monday as well. The chances of them being compatible are worse than Treasury issuing dollar bills made of rubber.

    The 11th-hour arrival (deus ex machina comes to mind) of debt-ceiling proposals is meant to calm markets in Asia, Europe and America. What the political class seems to under-appreciate (or miss entirely) is that traders don't traffic in spin,

    Read More »from Everybody says they want to avoid default, but there’s still no legislation

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