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Lifting the Curtain on the Debt Ceiling Debate

Breakout

If troubles in Europe and falling markets are giving you a sense of deja vu, things are about to get really weird. House Speaker John Boehner is making noise about reviving last summer's infamous debt ceiling debate prior to November elections.

Before cursing Boehner or blaming Senate Majority Leader Harry Reid, avowed Republican John Mauldin has an anecdote you should hear. In the attached clip Mauldin says he had dinner with Boehner during which, as presumably often happens at Republican dinners, Senator Reid was blamed for last summer's deadlock.

Mauldin says Speaker Boehner was quick to rush to Reid's defense. "Harry?" Mauldin says, in what is presumably his best Boehner impression, "Hell, Harry isn't the problem. If it was me and Harry we'd get it done tomorrow night. It's Obama! He can't make a decision!"

All of the above is obviously hearsay as reported by a sworn Republican "talking his book,". But Mauldin's point is that there's room on the Left and the Right to make a deal on the deficit; it's simply a matter of getting everyone lined up in just the right way.

Mauldin says the clock is ticking on a deficit time bomb. "If we don't deal with it in 2013, we're Spain and Greece." That would be a very bad thing. The fact of the elections coming in November only exacerbates matters.

According to Mauldin, step one is getting both sides to "step up to the plate" and tell the public straight up that the economy, jobs, and markets are all going to unravel unless the country does something to temper its out-of-control spending. A combination of spending cuts and higher taxes could be hammered out—but it better happen soon.

It's going to be a tight window. No one on either side is likely to get cornered into a compromise that will lose them votes this fall, and the period between Thanksgiving and the New Year is famously dead in Washington. Tick tock.

Will all of this swing the Presidential election? Not even Mauldin is willing to say so just yet. "Polls are pointless today," he scoffs. "America doesn't focus on the Presidential election until after Labor Day. Everything else is just noise."