Good morning. Here’s what you need to know:1. Standard & Poor’s managing director John Chambers told Reuters yesterday that the United States would immediately have its top-notch credit rating slashed to “selective default” if it misses a debt payment on August 4th. “If the U.S. government misses a payment, it goes to D,” Chambers said. “That would happen right after August 4, when the bills mature, because they don’t have a grace period.”
2. The Financial Times reports: “The International Monetary Fund has warned of a “severe shock” to global financial markets if the US does not move quickly to increase its borrowing authority, adding pressure on Congress and the White House to clinch a deal on fiscal policy.”
3. President Obama said yesterday that Republican leaders would have to agree to tax increases to help pare down the massive federal budget deficit. Budget cuts alone, he said, would not be sufficient.
4. Republican Congressional leaders say that they will not agree to tax increases to help reduce the federal budget deficit. Meanwhile, The Washington Post reports that Senate Republicans began a push to amend the Constitution to require a balanced budget, insisting that the government cannot get out from under crushing debt without one. The deadline on raising the debt ceiling is now 35 days away.
5. President Obama’s performance at yesterday’s press conference received generally favourable reviews from the national political press corps. They liked the new combative tone and the “Trumanesque” pose.
6. Al Qaeda remains “the preeminent security threat” to the United States of America, according to the President’s annual report on counter-terrorism strategy, which was released yesterday.
7. The IMF is increasingly concerned about the integrity of at least two of Afghanistan’s leading banks. The Wall Street Journal reports: “…the IMF has refused to renew its assistance program to the Afghan government nearly a year after it was suspended. That, in turn, threatens billions of dollars in international donor money, as many countries can’t individually donate funds without an IMF program.” Afghanistan is in danger of regressing into a failed state.
8. The Greek Parliament narrowly approved a stringent austerity plan, calming financial markets. No one thinks the crisis of the eurozone is over by any means. One headline said: “Reckoning Postponed.”
9. Americans remain gloomy about the direction of the country and are sharply more pessimistic about the country’s economic future, according to a new New York Times/CBS News poll. Nearly two-thirds of all Americans think that the country is on the wrong track. Nearly 40 per cent think that the country’s economic decline is “permanent.”
10. Karl Rove thinks that the only way that the Republicans can lose the 2012 presidential election is if they beat themselves. Which they are more than capable of doing. Rove says that the race must always be framed as a referendum on President Obama’s stewardship.
11. “Flight to safety” GOP presidential candidate Mitt Romney is raising money at a furious pace. His fund-raisers say they expect to report as much as $35 million in contributions at the end of the second quarter, further cementing Mr. Romney’s status as the GOP front-runner.
12. The fiscal year in many states and municipalities ends today. Connecticut serves as a kind of metaphor for state and municipal finances. It’s cut spending, raised taxes and it’s still deep in the hole.