Countdown to Default: The Latest Debt-Ceiling News

What's the debt ceiling? ... What happens if we don't raise it by August 2? ... Is it even constitutional? ... Do we have to have this debate every year? ... Why do we have a debt ceiling to begin with?... What's the "McConnell Proposal"? ...

Tracking debt-ceiling developments as they break

1:17pm - Deal still unlikely; Fallback option moves to fore
"Mr. Obama signaled that he would support the fallback plan, proposed by Senator Mitch McConnell of Kentucky, the Republican minority leader, which would allow for the debt limit to be raised and defer the bigger budget fight." [New York Times]



11:50am - OBAMA PRESSER: Prez sez he's reluctant to accept McConnell Proposal, would prefer to make progress on deficit
Think of this comment along the same lines as Boehner's statement that he's not sure if McConnell's deal can pass the House. Boehner doesn't want to give up on a trillion dollars in spending cuts, and the president doesn't want to give up on a deal that would mitigate the deficit issue in 2012. Both sides would prefer a fallback option to raise the ceiling over a default, but both sides know there is political advantage, perhaps for both sides, in budget cuts. [Read more from Chris Good]

11:47am - OBAMA PRESSER: "We're running out of time." Also says he supports means-testing Medicare

10:07am - No new negotiations today; Obama presser at 11

President Obama will hold a news conference on Friday at 11 a.m. to talk about what the White House describes as "the status of efforts to find a balanced approach to deficit reduction." Hoping to edge closer to a tentative debt-ceiling deficit-reduction deal, Obama urged House and Senate leaders on Thursday to work "over the next 24 to 36 hours" toward finding a path forward, according to congressional aides. [Atlantic]

12:20am - PLAN B: $1 trillion in cuts, $40 billion in unemployment insurance
"What is emerging as the most likely outcome is a plan based on Messrs. McConnell and Reid's work, a Democratic official familiar with negotiations said. It would include roughly $1 trillion in deficit reduction, but would not come with tax increases or Medicare savings, the official said. It could include an extension of unemployment insurance, the official said, which costs $40 billion and would be offset by spending cuts." [WSJ]

12:10am - REPORTS: GOP rejected payroll tax cuts in exchange for ending energy subsidies


10:24pm - REPORTS: White House deal fails; McConnell Proposal considered likely

White House talks failed yet again to produce a bipartisan solution. Speaker John Boehner signaled late Thursday that he's open to new options to avert a default next month, including the controversial McConnell Proposal, which would allow the president to unilaterally raise the debt ceiling without cutting spending [Politico]

6:11pm - Obama to Congress: YOU HAVE 24 HOURS
The president told congressional leaders a deal must be in place before the weekend, or else he'll seek a clean debt limit increase without spending cuts [Politico]

2:50pm - China begs U.S. to raise debt ceiling
"We hope that the U.S. government adopts responsible policies and measures to guarantee the interests of investors," Hong Lei, a Foreign Ministry spokesman, said. China holds more than $1 trillion in United States Treasury securities. [NYT]

1:38pm - Boehner: "I have no idea" if McConnell proposal can pass House
Three ways to see this: (1) He legitimately doesn't know; (2)  He's suspects it won't pass and needs to get a deal with spending cuts attached; (3) He suspects it would pass but he doesn't want to say so, because he'd prefer a few trillion in cuts.

11:35am - Camp David weekend? Not likely.
After reports Thursday morning that President Obama may invite congressional leaders to Camp David for the weekend if they can't reach a deal by Friday, John Boehner spokesman Michael Steel emailed reporters, saying, "The Speaker has told the White House he sees no need to go to Camp David this weekend."

10:35am - S&P: We'll downgrade, too
Standard & Poor's has warned lawmakers privately that it would downgrade the country's debt if the Treasury Department is forced to prioritize payments because Congress does not raise the debt limit, a congressional aide said on Thursday [HuffPo]

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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