Senate Deal Expected This Morning
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A debt-ceiling, government shutdown deal is expected to emerge from the Senate as soon as this morning, according to Compass Points' Isaac Boltansky.
The deal will likely include: (1) a continuing resolution which would reopen the federal government through mid-January; (2) an extension of the debt ceiling to at least early February; and (3) the inclusion of a mechanism for expedited consideration of a budget resolution through a conference committee.
On why a deal didn't materialize Monday night, Boltansky notes: Senate Republicans were originally scheduled to meet and review the Reid/McConnell plan on Monday at 5:45pmET but that meeting was delayed until Tuesday morning due in part to the fact that not all of the members of the Senate had returned to Washington at that point.
Commenting on what's next, Boltansky notes: the Senate will convene at 10:00amET at which point we expect both Senators Reid and McConnell to address the chamber. As a reminder, there was a positive market reaction following the kumbaya moment the two leaders shared on the floor Monday afternoon. The event of the morning, however, will be at 11:00amET as the Senate GOP caucus is scheduled to meet and review the Reid/McConnell plan. The House Republican caucus is also scheduled to meet but the time of that meeting has fluctuated.
Commenting on what will happen on October 17, the strategist notes: The U.S. actually "hit" the debt ceiling on May 19. Since then, the Treasury Department has been using "extraordinary measures" such as borrowing from government employee retirement funds, in addition to regular revenues, to fully fund the federal government. On October 17 the U.S. Treasury exhausts those “extraordinary measures” and will only have $30 billion of cash on hand in addition to the regular flow of revenues. Estimates by the CBO and BPC state that first day the U.S. Treasury could be unable to pay the entirety of its obligations could come between October 22 and 31. Point being, October 17 is an important date – especially since the Treasury Department is scheduled to rollover $100B+ in debt – but October 22 is far more important from a practical perspective.
Commenting on if the House will pass a Senate deal, he said: There is justifiable concern that a Senate-backed compromise may face stiff opposition in the House. This opposition could result in the House either amending the Senate package or passing its own "clean" debt limit extension. Still, the political dynamics of this situation lead us to believe that Speaker Boehner will ultimately be politically unable to prevent a Senate-passed compromise measure from coming to the floor at which point it will become law. Congressional Republicans are already losing the public perception battle regarding the current fiscal battle – as evidenced by the polling data charted below – and this pressure will only increase if a broad, bipartisan package emerges from the Senate.
The deal will likely include: (1) a continuing resolution which would reopen the federal government through mid-January; (2) an extension of the debt ceiling to at least early February; and (3) the inclusion of a mechanism for expedited consideration of a budget resolution through a conference committee.
On why a deal didn't materialize Monday night, Boltansky notes: Senate Republicans were originally scheduled to meet and review the Reid/McConnell plan on Monday at 5:45pmET but that meeting was delayed until Tuesday morning due in part to the fact that not all of the members of the Senate had returned to Washington at that point.
Commenting on what's next, Boltansky notes: the Senate will convene at 10:00amET at which point we expect both Senators Reid and McConnell to address the chamber. As a reminder, there was a positive market reaction following the kumbaya moment the two leaders shared on the floor Monday afternoon. The event of the morning, however, will be at 11:00amET as the Senate GOP caucus is scheduled to meet and review the Reid/McConnell plan. The House Republican caucus is also scheduled to meet but the time of that meeting has fluctuated.
Commenting on what will happen on October 17, the strategist notes: The U.S. actually "hit" the debt ceiling on May 19. Since then, the Treasury Department has been using "extraordinary measures" such as borrowing from government employee retirement funds, in addition to regular revenues, to fully fund the federal government. On October 17 the U.S. Treasury exhausts those “extraordinary measures” and will only have $30 billion of cash on hand in addition to the regular flow of revenues. Estimates by the CBO and BPC state that first day the U.S. Treasury could be unable to pay the entirety of its obligations could come between October 22 and 31. Point being, October 17 is an important date – especially since the Treasury Department is scheduled to rollover $100B+ in debt – but October 22 is far more important from a practical perspective.
Commenting on if the House will pass a Senate deal, he said: There is justifiable concern that a Senate-backed compromise may face stiff opposition in the House. This opposition could result in the House either amending the Senate package or passing its own "clean" debt limit extension. Still, the political dynamics of this situation lead us to believe that Speaker Boehner will ultimately be politically unable to prevent a Senate-passed compromise measure from coming to the floor at which point it will become law. Congressional Republicans are already losing the public perception battle regarding the current fiscal battle – as evidenced by the polling data charted below – and this pressure will only increase if a broad, bipartisan package emerges from the Senate.
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