U.S. Markets closed

Congress Will Play a “Game of Political Chicken” Over Debt Ceiling & Budget: Knox

Daily Ticker
Congress Will Play a “Game of Political Chicken” Over Debt Ceiling & Budget: Knox

Here we go again.

When lawmakers return to Capitol Hill on Sept. 9 after five weeks of summer recess, Americans should brace themselves for a “game of political chicken,” according to Olivier Knox, chief Washington correspondent for Yahoo! News. The two biggest issues facing Congress are raising the nation’s $16.7 trillion borrowing limit and agreeing on a federal budget before Sept. 30. A handful of conservative Republicans led by Senators Mike Lee (R-Utah), Ted Cruz (R-Texas), and Marco Rubio (R-Fla), are threatening a government shutdown if funding for President Obama’s Affordable Care Act is included in a budget resolution. Knox says the Obamacare fight won’t be the issue that will bring Washington to its knees this fall.

“Republicans in Congress are saying quietly that [defunding Obamacare] is a non-starter,” Knox tells The Daily Ticker. “Republicans think an argument about cutting spending even more in return for raising the government’s ability to borrow is a better fight for them then picking one over Obamacare.”

Related: Post Office Will Not Need a Taxpayer Bailout, If Congress Acts: Postmaster General

Congress will likely “kick the can down the road” and pass a continuing budget resolution, or temporary spending bill, that keeps the federal government operating for a few months, Knox predicts. Hyper-partisanship has resulted in serious gridlock and inaction and any hopes that the two political parties can sign off on a grand bargain or a breakthrough budget deal are slim to none.

Republicans are betting that President Obama and Congressional Democrats will eventually capitulate on the spending cuts and tax reform proposals the GOP is pushing in exchange for increasing the debt ceiling. Last month, House Speaker John Boehner (R-Ohio) said no debt ceiling deals would be made “without real cuts in spending” to the federal deficit.

Related: Abolish the IRS and Simplify Tax Code: Steve Forbes

The last time Republicans and the White House battled over the debt ceiling was August 2011 and “no one is eager to repeat that fight,” says Knox. Still, this issue “has a much higher likelihood of generating an actual shutdown… and honestly I’m not sure today who will blink first,” Knox admits.

The non-profit research group Bipartisan Policy Center estimates that the U.S. will no longer be able to pay its bills between mid-October and mid-November unless Congress raises the borrowing limit.

Tell Us What You Think!

Send an email to: thedailyticker@yahoo.com.

You can also look us up on Twitter and Facebook.

More from The Daily Ticker

Detroit Builders Aren't Betting on a Housing Recovery But Investors Are

Why Investors Should Ignore Economists

Forget U.S. Stocks: Why One Investor Is Moving Into Markets That Got "Shellacked"