We could be less than 48 hours away from a deal to raise the debt ceiling in exchange for between $2 trillion and $4 trillion in deficit reduction over ten years. House Speaker John Boehner and Republican Reps. Peter King and Billy Long have said that if the parties don't reach an agreement this weekend, they might not have a deal "for a long time."
Not getting a deal would be a big deal. A technical default on August 2 would make it illegal for the United States to borrow money from foreign markets. The federal government would have to rely on day-to-day cash flow or creative accounting to pay for all its obligations. The first casualties could include federal contractors, employees, and pension payments. Default could also send U.S. borrowing rates skyrocketing, as investors feared that Washington dysfunction would result in missed debt payments. Higher interest rates at the federal level could trickle down into higher borrowing rates for homeowners, car buyers, and small businesses.
Here are five things we (think we) know about the negotiations at the end of the work day on Thursday:
1) Everything Means Everything. When lawmakers say everything is on the table, everything means "Social Security, Medicare,
Medicaid, spending cuts, user fees, broadband spectrum auctions,
recalculations of the Consumer Price Index, tax reform, corporate tax
subsidies and other tax preferences." [NJ] Short of selling Alaska and adding a millionaire tax bracket, it really does seem like almost everything in the budget is being negotiated.