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Reactions? The Congressional Black Caucus wasted no time making its feelings known, characterizing the deal as a “sugar-coated Satan sandwich.” “We all may not be able to support it or none of us may be able to support it,” said Nancy Pelosi. House Rep. Tom Graves (R-GA), who told Fox News he would likely oppose the latest offer, countered. “We need a balanced-budget amendment sent to the states,” he warned. “This is the time. If we’re going to get it done, we’ve got to do it now,” he added. The president also weighed in, reiterating his desire for tax hikes on Americans making more than $200,000, saying he would push for a “special committee” to come up with such increases.
Will the deal go down? While it is likely to be a tougher sell in the House, due in large part to the strong convictions of Tea Partiers, the real key likely remains, not how many votes each side can garner from its respective members, but how many they can get from the other party. Thus, even as Mr. Reid and Mr. Boehner will do their utmost to convince Senate Democrats and House Republicans respectively to jump on board, both men may need members of the opposition party to reach the threshold number of votes for approval in both chambers. CNN is reporting that the Senate will vote first this afternoon, and if that vote survives an expected Republican filibuster, it will move to the House for a vote tonight.
All well and good—as far as it goes, along with the political analysis of who the winners and losers are. But once again, Americans must remember that it is not the debt ceiling that constitutes the major threat to the American economy, but the debt itself. Although Moody’s has not weighed in on this particular proposal, last Friday the ratings agency noted that the “limited magnitude” of the current debt reduction proposals “would likely lead Moody’s to adopt a negative outlook on the AAA rating,” of the United States. “The chances of a significant improvement in the long-term credit profile of the government coming from deficit reductions of the magnitude proposed in either plan are not high.” Deal or no deal, that outlook remains the same. It is an outlook which, were it to come to pass and the country’s credit rating is lowered, it would make a virtual mockery of the deal currently on the table.
That is the big picture. And it will remain the big picture until both parties in Congress and the president get their respective acts together and address it.
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