News
NY Times | China Urges U.S. to Protect Creditors by Raising Debt
China, one of the United States’s biggest creditors, urged American policy makers on Thursday to act to protect investors’ interests, highlighting rising concerns around the globe about the protracted budget talks taking place in Washington.
WSJ | J.P. Morgan's Dimon: U.S. Default Would Cause 'Catastrophe'
The head of J.P. Morgan Chase & Co. issued the loudest warning yet from Wall Street to U.S. politicians about the economic impact of the stalemate over raising the U.S. debt ceiling.
Washington Times | Bernanke: Default on debt would increase deficit
Federal Reserve Chairman Ben S. Bernanke warned U.S. lawmakers Thursday that they would deliver a “self-inflicted” wound to the nation’s economy by holding up efforts to raise the government’s borrowing limit.
WSJ | Plan B Emerges on Debt
Sens. Reid, McConnell Quietly Discuss Way to Keep Government From Default.
NY Times | Deal Is Made for Ending Shutdown in Minnesota
The governor of Minnesota and the state’s Republican lawmakers announced on Thursday that they had, at last, reached a deal on the state’s budget, bringing what is expected to be a swift reopening of government services.
Econ Comments
Washington Times | LAMBRO: High-stakes dealing on debt ceiling
The gulf between President Obama and a divided Congress grows ever wider as the debt limit crisis stumbles toward a potentially catastrophic deadline.
Washington Post | Call Obama’s bluff
President Obama is demanding a big long-term budget deal. He won’t sign anything less, he warns, asking, “If not now, when?”
Daily Caller | Debt or default: A false choice
There’s a third option: Washington can cut spending.
WSJ | The Obama Downgrade
The real reason the U.S. could lose its AAA rating.
USA TODAY | If U.S. defaults on debt: How to protect your investments
You're walking across the street, minding your own business, when you look up and see a tractor-trailer bearing down on you. It should stop, you think. Suddenly, you realize that there's a good chance it won't stop. What do you do?
WSJ | Can Obama Pull a 'Clinton' on the GOP?
He's following the budget-showdown script Bill Clinton used to win re-election. But the economy added 434,000 new jobs in February 1996.
Blogs
Atlantic: McArdle | Federal-Debt Downgrade Would Affect Muni Market
In part that's because there's no way of foreseeing all the fallout of such a disaster--the economy is too interlinked, too complicated. But we are starting to see the outlines of some of the potential results...
ThinkMarkets | The Current Debt and Budgetary Impasse
One of the most important, but frequently ignored, aspects of the current negotiations about raising the debt ceiling is the lack of credible commitment on each side.
EconLog | Clarity on the Budget Debate
Most of the media have done a worse job than usual of reporting on the debt ceiling/budget debate.
Daily Capitalist | U.S. Default? Why Are We Surprised?
It always takes a crisis for politicians to act. Years of reckless spending are starting to run into a wall of huge debt, voter resistance to new taxes, and the realities of the bond markets.
Mercatus Center: Neighborhood Effects | “It’s a very messy time.”
So says Veronique De Rugy in this elucidating discussion of the debt-limit and options to deal with it.
Reports
Heritage Foundation | The House and Senate Balanced Budget Amendments: Not All Balanced Budget Amendments Are Created Equal
Republicans in the House and Senate have announced that they will force votes on balanced budget constitutional amendments. While the Senate and House versions of the current BBA are similar, there are some important differences that Members of Congress and the American people need to understand. For example, the Senate version makes it more difficult to enact revenue-neutral tax reform, while the House version would waive its tax limitation in times of military conflict. How Congress resolves these differences could determine whether future Congresses and Presidents balance the budget without increasing taxes.
CBO | The Macroeconomic and Budgetary Effects of an Illustrative Policy for Reducing the Federal Budget Deficit
If debt held by the public continues to expand faster than the economy—as it has since 2007—the growth of people's incomes will slow, the share of federal spending devoted to paying interest on the debt will rise more quickly, and the risk of a fiscal crisis will increase. At the same time, the recovery from the recent recession has been anemic, and the economy remains in a severe slump. CBO and many private forecasters expect that the unemployment rate will remain high, and that output will remain well below the economy's potential, for a number of years.
