The political posturing in Washington over a the debt-ceiling debate is reaching new levels of brinkmanship. President Obama last night again pleaded for compromise on a debt deal. Meanwhile, House Speaker John Boehner said the time to compromise has come and gone.
The AP reports if a deal is no reached by August 2nd it will result in catastrophe.
"If an agreement is not reached by Aug. 2, the U.S. won't have enough cash to pay all its bills. That could have a devastating effect on financial markets. The U.S. would likely lose its triple-A credit rating, causing interest rates to soar. Stocks could plunge as investors look for relatively safe places to put their money."
That simply isn't true says today's guest, John Tamny editor of realclearmarkets.com. "There is no drop dead date, so really, what's the rush?"
Tamny is confident the Treasury has enough money to pay interest on debt and make Social Security payments even if a deal isn't reached in the next week. Furthermore, "there is not going to be a default," no matter of the deal's date, he tells Daniel Gross in the accompanying clip.
Rather than force an agreement, Tamny says both sides should focus on cutting spending and reach a deal voters can accept. A political and fiscal conservative, Tamny believes no solution is better than one that is built on funny accounting and political compromise. "I don't see what everyone is so afraid of here," he says. "I kind of like the idea of no solution at all."
Is Tamny right? Let us know what you think.
- drop dead date
- Daniel Gross
- interest rates
- House Speaker John Boehner
- credit rating