Monday, October 14, 2013

 

Are You Prepared For When You Need Credit?"With shutdown and default clocks ticking"

Reviewing and verifying your credit is a good start to knowing how risky may look to lenders–they look at the same type of data when making decisions.

Shutdown Hits U.S. Global Economic Reputation 


With shutdown and default clocks ticking, lawmakers hit an impasse.

Four days before a possible US government default on its debt, lawmakers failed to reach agreement. That, says a European central banker, could be 'very negative for the US economy and the world economy and could certainly harm the recovery.'

As the day wore on Sunday, the Senate was starting to seem schizophrenic about the prospects for a breakthrough on the government shutdown (13 days and counting) and the threat of government default (as soon as this coming Thursday, according to the Treasury Department).

As usual, the venues for political discourse this day were the TV news shows.

"We will have decided as a Congress that we need to avoid going over the debt limit and we'll figure it out," Sen. Rob Portman (R) of Ohio said on NBC’s "Meet the Press.”

Sen. Dick Durbin (D) of Illinois, the Senate majority whip (second in command), was sanguine as well.
"I'm a hopeful person and I believe we can do it," he said, also speaking on “Meet the Press.”

But many of the predictions were far gloomier.

David Plouffe, a former senior adviser to President Obama, says the odds of a breakthrough are "no better than 50/50.”

"I think the notion that somehow this is going to be easily solved this week is completely false," Mr. Plouffe said on ABC’s “This Week.” “So I think the country needs to prepare that this could go on for a while."

For many Republicans, a key stumbling block is any Democratic effort to increase spending beyond the automatic limits set by sequestration.

"If you break spending caps you're not going to get any Republicans in the Senate,” Sen. Lindsey Graham (R) of South Carolina said on ABC.

"Now they want a spending bill that increases spending and dramatically will increase the debt," Sen. Rand Paul (R) of Kentucky said on CNN's “State of the Union.” "It's a non-starter."

Democrats Saturday rejected Sen. Susan Collins’ plan for getting beyond the current impasse.

That includes a six-month stopgap funding bill through March and a debt ceiling increase through January. 

Regarding the Affordable Care Act (“Obamacare”), the Collins proposal also would delay for two years a tax on medical devices, and it includes stronger income verification for those deemed eligible for insurance subsidies under the new law.

Democrats saw that as merely delaying the debt ceiling fight for three months. But the moderate Republican from Maine still sees it as a useful point of discussion.

"We're continuing to talk," Sen. Collins said on CNN. "And I'm still hopeful that at least we sparked a dialogue that did not exist before we put out a plan."

"I see this as a positive framework going forward," agreed Sen. Amy Klobuchar (D) of Minnesota. "And we need that right now."

When (or if) anything gets hammered out in the Senate – where discussions continue between Majority Leader Harry Reid (D) of Nevada and Minority Leader Mitch McConnell (R) of Kentucky – it still would have to be agreed to by the much more fractious House, where Speaker John Boehner barely has things under control and indeed his speakership may be in jeopardy.

"Here's what I'm worried about," Sen. Graham said on ABC. "A deal coming out of the Senate, that a majority of Republicans can't vote for in the House, that really does compromise Speaker Boehner's leadership. After all this mess is over, do we really want to compromise John Boehner as leader of the House? I don't think so."

Well, sure, Democrats certainly would like to compromise Boehner’s speakership – right out of existence with a party turnover in next year’s election. But probably not at the expense of a political debacle that could end up harming the national economy and making markets nervous around the world.

"If this situation were to last a long time, it would be very negative for the US economy and the world economy and could certainly harm the recovery,” Mario Draghi, head of the European Central Bank, said Saturday.

"We trust the US authorities will find a way out of this complex situation," Russian Finance Minister Anton Siluanov said at a three-day meeting of finance ministers in Washington.



At this point, it’s unclear what that trust is based upon.

World financial leaders converging on Washington for a high-level economic summit are getting a closer look at the US stalemate as talks resolving the shutdown inch closer. 

Economists say the budget fight has already hurt the US economy. (Oct. 10)
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