House Republicans and Wall Street don't always see eye to eye these days, and House Speaker John Boehner will go to New York City tonight to make his case for some of the fiscal gamesmanship that some investment firms fear.
Last month, financial executives reportedly warned House Speaker John Boehner not to push his luck with the federal debt ceiling, as he sought to attach spending reforms to any measure to raise it. Days later, Standard & Poor's last month revised its long-term outlook on U.S. sovereign debt from "stable" to "negative," a move taken by some as a hyperbolic warning about America's global credit rating.
Tonight, Boehner will speak to Wall Street execs at the Economic Club of New York, seemingly attempting both to win them over and to give them some tough talk about the debt ceiling and what he'll demand as part of any increase.
From excerpts of his prepared remarks, Boehner plans to make it clear that he won't raise the debt ceiling without budget cuts equal to or greater than the value of the debt-ceiling increase:
It's true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process. To increase the debt limit without simultaneously addressing the drivers of our debt -- in defiance of the will of our people -- would be monumentally arrogant and massively irresponsible. It would send a signal to investors and entrepreneurs everywhere that America still is not serious about dealing with our spending addiction. It would erode confidence in our economy and reduce certainty for small businesses. And this would destroy even more American jobs. ...
Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase. And the cuts should be greater than the accompanying increase in debt authority the president is given. We should be talking about cuts of trillions, not just billions.
That could elicit some groans.
If there's genuine concern that the U.S. could default on its debt without a hike in the ceiling, or if there's concern that investors will be scared off and the stock market will sink in reaction to a protracted, down-to-the-wire political fight over whether or not the ceiling will be raised -- then Boehner's words aren't exactly music to financial ears.
While Boehner says he's not willing to let the U.S. default, just as he said he wasn't willing to let the federal government shut down, his speech tonight will signal that he's not going to sign off on a debt-ceiling increase without extracting some concessions at which Democrats will almost surely balk.
Drop-down image credit: Reuters