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July 27, 2011 4:40 PM Wall Street fears ‘short-term deal’

By Steve Benen

With the Republican debt-ceiling crisis lingering, and Congress inching ever-closer to next week’s deadline, it’s been an unpleasant week on Wall Street. The Dow Jones, for example, has lost about 300 points over the last three days.

Note the last line in this NYT excerpt:

Stocks were weighed down again on Wednesday by worries that the United States could default on its debt or see its credit rating cut as lawmakers in the world’s largest economy appeared no nearer to an agreement on raising the borrowing limit.

Though most investors think a last-minute deal to raise the debt limit will eventually emerge, the difficulty of reaching an agreement may leave a lasting impression on investor sentiment, some traders fear…. A worry in the markets is that only a short-term deal will be struck, with a promise to revisit the issue later. [emphasis added]

Just 24 hours ago, congressional Republicans said Democrats only want an extension through the end of next year for political reasons, and there’s no economic justification for this. Today we’re seeing that Wall Street — not exactly a reliable Democratic ally — is so afraid the GOP will get its way on this, it’s actually hurting market performance.

Also today, Sen. Bob Corker, a conservative Tennessee Republican, said the Boehner plan is on the wrong track on this specific point.

In particular, Corker warned that extending the debt ceiling for only six months, as Boehner has proposed, would still risk the nation’s credit rating, and leave lawmakers facing another ugly half a year.

“I know the president has been concerned, candidly, about a short-term extension,” Corker said. “In fairness, I think the business community around our country would be concerned about a long short-term extension.” […]

“To even set up a process that’s short of that doesn’t make any sense to me,” Corker said, referring to the size and duration of a deal. “It’s kind of like, you’ve got to be kidding me. We’ve got to go through the aggravation of the next six months working towards an aspirational goal that we all know doesn’t solve the credit rating issue.”

Dems want one extension, not two. Wall Street wants one extension, not two. The Republican line as recently as last month was one extension, not two, and as Corker helps demonstrate, some in the GOP still want one vote, not two.

Can Boehner and McConnell offer any kind of coherent defense for wanting to put us through this now and again six months from now? How on earth would that benefit anyone?

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • T2 on July 27, 2011 4:43 PM:

    it's not meant to benefit anyone. Voting on this again in 6-8 months is meant to keep the economy in limbo, keep Jobs Programs off the table, and defeat Obama in Fall 2012.
    Anyone who's paid a bit of attention in the last year knows that.

  • sinclair on July 27, 2011 4:46 PM:

    You mean, anyone besides themselves, correct?

  • Anonymous on July 27, 2011 4:46 PM:

    Since when do Boehner and McConnell need to make a coherent defense of anything??

    So long as the media play along with the GOP's version of Calvinball, there's really no incentive for them to worry about making logical, intellectually consistent arguments. The only disincentive I can see is the clips being used in Democratic campaign commercials, but even there Citizen's United insulates them from the fallout.

  • walt on July 27, 2011 4:55 PM:

    At which point do our Galtian overlords wonder if government by the certifiably insane is a good idea? Sure, it was fun at first, monkeywrenching government for fun, profit and lower taxes. But eventually the craziness gets out of hand and there's nothing left but zealots looking for something else to blow up.

    Thanks again, "journalists", for mainstreaming these assholes.

  • Fang on July 27, 2011 5:05 PM:

    Buyer's remorse, apparently.

    As a side note, I think that some of the Galtians had fun paying and playing revolutionary. The fun's over with.

    First they start looking stupid for backing these people. They're losing face.

    They could loose a lot of money, and though they may never be poor, they would loose face, access, and legacy. Old enemies might come a'calling on their profits and companies and businesses. Someone who was king of the world hates being busted down to duke or count.

    Then there's the fear that if it all goes up, there will be pitchforks and torches.

    It's not fun anymore, it's not profitable, and it's not an ego boost.

  • Cybrguy on July 27, 2011 5:08 PM:

    It's easy enough to figure out. The rethugs clearly want to damage the economy any way they can, and forcing us back here in a few months will certainly do that, so that is what they want.
    And walt is right. We can thank the MSM for pushing the meme that the rethugs are just like the Dems. The false equivalency thing is a rethug talking point that the MSM loves to push.
    Liberal press my ass...

  • tom in ma on July 27, 2011 5:28 PM:

    Another debt ceiling vote gives them another opportunity to take the economy hostage - next time they will demand the continuation of the Bush Tax Cuts as the price. The only question is how they will construct talking points that argue that continuing the Bush Tax Cuts is necessary to cut the deficit, but be assured that they will and that Politico and WaPo and CNN will be obligated to give them a "fair hearing".

  • Brenna on July 27, 2011 5:32 PM:

    There are still some sane republicans (Boehner and Cantor are borderline).

    Last night Howard Fineman said he believed this would end up in a clean debt ceiling vote at the very last minute. Today on Chris Matthews, he said this will come down to the Boehner plan with one vote now and another in six months, and a lot of cuts.

    I'm not believing anyone's predictions anymore. The truth is it's a crap shoot how this all will end.

    If the republicans are not punished for this in the next election, then we deserve what we get.

  • danimal on July 27, 2011 5:32 PM:

    Obama wants a long term extension. Therefore, the GOP wants a short-term extension. It really isn't that complicated.

    They just want the win.

  • Brenna on July 27, 2011 5:39 PM:

    One more thing: I blame Obama for this. Meeting these tea party jihadists on there terms was a huge mistake he should have seen coming. He should have stayed firm.

    And second: it's been revealed he was going to make huge cuts and changes in the three entitlement programs. IMO, he was selling us out. Yes, he wanted revenues, but the middle class and poor have already been badly hurt and couldn't afford the cuts. WTF was he thinking? At least Reid and Pelosi are trying to protect us.

    Sure, we have to vote for again because the republicans are bat sh!t crazy!!!

  • SYSPROG on July 27, 2011 5:44 PM:

    'Just 24 hours ago, congressional Republicans said Democrats only want an extension through the end of next year for political reasons'...and the GOP wants the opposite for...political reasons. They REALLY piss me off. And Brenna? I'm sorry you blame Obama for 'meeting these tea party...' but WTF was he SUPPOSED to do? He is the PRESIDENT...not the head of the ward...

  • Redshift on July 27, 2011 5:46 PM:

    On Stephanie Miller this morning, Christine Romans, a CNN Business Correspondent, in explaining why this isn't only the fault of one side, said that she had talked to Republicans who say they have to use the debt as leverage because if they let it go they "won't get anything done." Unless I misunderstood, this was offered as evidence that this was partially the fault of Democrats, rather than evidence that today's Republicans are certifiably insane. It's amazing how far they have to reach to sustain the "both sides" narrative.

    But the key point in relation to this post is that the TPers consider the debt ceiling something that's valuable to the other side, not something that's necessary for the country, hence their otherwise bizarre negotiating position that merely agreeing to raise it counts as a compromise they should "get" something for in return. If they can turn that into the gift that keeps on giving (since they're sure that failing to raise it will have no bad consequences and refuse to listen to anyone who says otherwise), why not?

    Is there a Greek word for "rule by the insane?"...

  • Varecia on July 27, 2011 5:54 PM:

    Brenna, since the GOP rejects everything, it doesn't matter at face value what Obama "planned" or didn't plan. I don't think we can take anything literally.

  • bdop4 on July 27, 2011 6:03 PM:

    Sysprog - "WTF was he SUPPOSED to do? He is the PRESIDENT...not the head of the ward..."

    He was supposed to point at 50+ years of precedent and demand a clean bill. Instead, he became head of the ward by AGREEING to the notion that deficit reduction has to be a condition precedent to any meaningful economic reform.

    The guy has bought into the GOP meme hook, line and sinker.

  • Michael on July 27, 2011 6:29 PM:

    Remember when "uncertainty" was the worst thing ever for American business and Obama's policies were undermining "confidence?"

    Good times.

  • walt on July 27, 2011 6:32 PM:

    Obama is president, not a traffic cop. By accepting the Tea Party framing that the deficits (not job creation, not the economy, not investments) are the key issue, he made their case for them. He then ceded to them 80% of their demands, which afterwards suddenly became even more extreme. Imagine that.

    I appreciate the team spirit here but Democrats have been ill-served by this president. Maybe it is our fault that we don't have the institutional apparatus to make our clout felt. Maybe it's that the media are completely in the pocket of the right. But Obama's strategy (appeal to "centrist independents") is worse than craven. It's political malpractice of the highest order. If you're not leading from your convictions, you're not leading period. That's why Democrats are so dispirited. We have honestly no idea whose side Obama is on.

  • Anonymous on July 27, 2011 6:52 PM:

    They already gave their "defense". By the infallible principle of Republican projection, accusing Obama of wanting a long-term extension for purely political reasons is as good as a confession that they want a short-term extension for purely political reasons.

  • Zorro on July 27, 2011 9:26 PM:

    1) Crash the economy
    2) ???
    3) PROFIT!!!

    -Z

  • Doug on July 27, 2011 9:29 PM:

    "By accepting the Tea Party framing that the deficits (not job creation, not the economy, not investments) are the key issue, he made their case for them." walt @ 6:32 PM

    Sorry walt, but politics doesn't work that way; which is why we're in the mess we're in, because ONE party isn't engaging in politics.
    Politics is about compromising to attain SOME of one's goals. When the political party controlling the chamber that HAS to originate funding legislation says no to job creation, no to the economy and not to investments, that doesn't mean you spend fruitless hours informing them they need to "do something" about jobs, the economy and investments. It may make "some" people feel better, but it accomplishes nothing else.
    Also, politically it's a lose-lose situation. For President Obama to continually demand action on jobs, etc, while knowing full well nothing will be done, would only result in him being potrayed as "dogmatic", "inconsequential", "rigid" or "partisan", aided and abetted by our culpably complaisant MSM. By refusing to use Republican/Teabagger "framing", the President would, properly, stand accused of being a full partner in the resulting gridlock. The result would be that the public, basing it's opinions on what "information" it can get from the MSM, would, truthfully, be able to say "A plague on BOTH your houses!" Instead, Republican/Teabaggers are desperately searching to find some way, any way, to force the Democrats to share the blame for this mess. That wouldn't be happening had President Obama followed your advice.
    In case you haven't been watching cable news, it doesn't matter WHAT the President says or HOW he says it. What matters is how it fits into the current Republican talking point(s) as regurgitated by the MSM. If President Obama were to give a one-on-one interview and spoke about NOTHING but jobs, the economy and investments, he would be reported as "evading" or "ignoring" the really vital issues; ie, whatever clap-trap Boehner, McConnell, Cantor or Ryan were were feeding "journalists" that week.
    It is NEVER a bad thing for a politician to support "trimming" or "cutting waste", what DOES matter is WHAT is trimmed or cut and HOW. The political reality is that cuts were going to take place whether Democrats wanted them or not. There simply is NO way to get anything through the Republican-controlled House without agreeing to make "cuts".
    The devil is in the details, however, and none of the "cuts" President Obama agreed to affected vital social programs, with the possible exception of Medicare and even THOSE cuts may not be as bad as imagined, depending on WHEN those cuts take place. If they occur AFTER the ACA mandates go into effect, then quite a few people now relying on Medicare probably will qualify for government subsidies to buy HCI. So fine, cut Medicaid starting in 2014 and shift X number of Medicaid recipients into a program under ACA. Perfect, no, but certainly not a "sell-out", either.
    The Same applies to SS/Medicare. Any changes would have to first be approved by a committee and we saw how well THAT worked out with Bowles-Simpson. THEN, if there are any proposals, they would have to pass BOTH chambers and be signed into law by the President. As long as Rep. Pelosi is House Minority Leader no changes in benefits will take place in either SS or Medicare. Even should she be replaced and those changes get through the House, as long as there are 41 Democratic Senators I can't see such changes passing THAT chamber. Nor can I imagine President Obama signing such legislation, but then I don't worry about "what ifs" that have a snow-ball's chance in H*ll of occuring, either.
    Your entire second paragraph is nothing less than a "pity party". Because President Obama has the gall to presume that people who call themselves Democrats will support a Democrat, will try to empathize with the problems currently facing Democratic politicians and will recognize that, as in ALL poltical battles, noone comes away with everything one wants, because he presumes those things, you think he's not "leading from his convictions"? Did it EVER occur to you, that out of the millions of Democrats in this country, it is very possible that most of THEM don't have the same "convictions" as you? I didn't think so.
    YOU many think you've been "ill-served" by Mr. Obama, but DO NOT lump me and all other Democrats in with yourself! I've watched as President Obama and the Democratic leaders on Capitol Hill have passed some of the most "progressive" legislation since LBJ and you think we've been "ill-served"? I've watched as a once-respected poltical party has descended into being nothing more than an ideologically right-wing gang of thugs and seen the President and Democrats on Capitol Hill out-flank, out-manouver, and, easiest of all, out-smart them. That's being "ill-served"?
    I don't think that word means what you think it does, walt...

  • Elie on July 27, 2011 10:17 PM:

    Yay Doug! You say it all well, from my perspective...

    walt and those who share his beliefs are both incredibly naive, inaccurate and ultimately destructive to progressive goals. They will never see it, of course.

    walt -- you are the one serving progressives poorly. YOU

  • walt on July 28, 2011 12:04 AM:

    Elie (and Doug) why even bother calling yourselves progressives if you simply forfeit your principles for some kind of moral victory devoid of any political substance? There was never any necessity for Obama to compromise in advance of negotiations, which themselves were utterly toxic given the blackmail underwriting them. So, here we're on the doorstep of an unprecedented extortion by Republicans, one enabled by Obama's cowardly acquiescence to their demands, in which trillions in spending will be cut while not a dime in extra revenue will be raised. Am I supposed to get up each morning and salute a white flag while praising the leader who capitulated without ever bothering to fight?

    Until progressives grow a pair and decide to hold their leadership responsible, we'll make up stories about our valiant defeats and pretend they were really victories. And as the safety net is shredded in the name of pragmatism, and as this country sinks even more deeply into extreme inequality, we'll console ourselves with the thought that we're the high-minded and virtuous ones. It's this kind of delusional thinking from well-meaning progressives that shows how liberalism is little more than a lifestyle boutique divorced from the lives of the working poor and beleaguered middle class. Until you're willing to fight - and even die - for this cause, your words are empty slogans and bloated rhetoric.

  • Varecia on July 28, 2011 12:14 AM:

    Doug: "...Also, politically it's a lose-lose situation. For President Obama to continually demand action on jobs, etc, while knowing full well nothing will be done, would only result in him being potrayed as "dogmatic", "inconsequential", "rigid" or "partisan", aided and abetted by our culpably complaisant MSM..."

    Hmmm. I'm not following you. Employment is a big issue for a lot of people, so I'm not sure how Obama could lose in the eyes of Americans by appearing to find it as urgent as Americans think it is.

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