Former Senator Judd Gregg (R-NH) says Social Security checks will need to be halted before House Republicans will agree to a deal to raise the debt limit.
A deficit hawk and former Chairman of the Senate Budget Committee, Gregg turned down an offer from President Barack Obama to be his Secretary of Commerce.
Now an analyst with Goldman Sacks, Gregg said on a conference call this morning that there is a better than 50 percent chance that Congress will not reach an agreement before August 2nd.
Gregg said that if that were to happen, it "would put the blame on the Republicans," saying House GOP'ers are the biggest obstacle to a deal.
"In the Senate, you've got a center of 40 members who are willing to sign on to something dramatic AND you have the President endorsing it — that's good news. We have agreement on the problem and a resolution," he said.
"BUT the House is nowhere near an agreement. The Gang of Six plan will not come to fruition in the next few weeks — maybe not even until the next election. The best thing that could happen is that a special committee might be set up to continue to work on the Gang of Six agreement. Ultimately, it won't affect the debt ceiling debate in the short-term."
Pretty sobering assessment, and I don't disagree with him. Some sort of last minute deal will have to be reached, but the deadline now is literally just days away and some put the effective date for a deal as early as Friday. If nothing is reached by then, things could get ugly by Monday, folks.
Real ugly. And Judd Gregg is warning that things could get far worse by the week after that. Still seeing a last minute deal coming through but then again, the GOP could just decide to screw all of us. Meanwhile Treasury is now actively making plans for managing a major government shutdown or even a default...just in case.
Charles Plosser, president of the Philadelphia Federal Reserve Bank, said the U.S. central bank has for the past few months been working closely with Treasury, ironing out what to do if the world's biggest economy runs out of cash on August 2.
"We are in contingency planning mode," Plosser told Reuters in an interview at the regional central bank's headquarters in Philadelphia. "We are all engaged. ... It's a very active process."
Plosser said his "gut feeling" was that President Barack Obama and Congress will come to an agreement to increase the Treasury's borrowing authority in time to avert a default on government obligations.
Obama was due to meet with top Republicans in Congress on Wednesday to discuss the latest attempts to end the dispute over raising the country's debt ceiling, a row which has raised the prospect of the Treasury Department running out of money to pay its bills next month.
The Treasury has repeatedly said default was unthinkable and that there was no alternative to raising the debt ceiling. Plosser's remarks marked the most extensive public comments yet on preparations for a default from a U.S. official.
A Treasury spokesperson could not be immediately reached for comment.
We crossed "This is getting real folks" about a week ago. Now we're into "Holy god, do we get out of this intact?"
Still think we will, but it's now going to cost us. And that cost can be, should be, and will be laid directly at the feet of the GOP's Tea Party whackjobs.
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