Photo: Lori Greg via flickr
Good morning! It’s hot out there. Here’s what you need to know:1. The Wall Street Journal reports: “President Barack Obama and House Speaker John Boehner are moving toward a deficit-reduction deal that could cut as much as $3 trillion in spending and overhaul the tax code by the end of next year to raise up to $1 trillion, according to people familiar with the talks.”
2. Congressional Democrats are in a sour mood. Sen. Barbara Mikulski (D-MD) said she and her colleagues were “volcanic” with anger about the prospect of a $3,000bn deal to cut deficits and raise the debt ceiling that did not include any higher taxes.
3. Meanwhile, the credit ratings agencies continued their lobbying campaign for raising the debt ceiling. Politico reports: “House Republicans were cautioned Thursday in a closed door meeting with credit rating agency officials that a “death spiral” in the bond market was one of the possible outcomes in the event of default.“
4. Washington Post columnist George Will gives a full-throated endorsement fo his friend Sen. Mitch McConnell’s debt ceiling/deficit reduction proposal, saying that it’s the best available option and that it will increase unit cohesion amongst Republicans and Tea Party activists.
5. The management of state and local governments is dependent, to varying degrees, on federal aid and funding for specific programs. If the debt ceiling is not raised, much of that aid and funding will stop. State and local government officials are scrambling to prepare for that eventuality.
6. The FT reports: “European leaders have agreed upon a new €109bn bail-out of Greece under which private bondholders will be called on to participate for the first time, contributing a target of a further €37bn. The deal was a political victory for Angela Merkel, Germany’s chancellor, but one that will almost certainly lead to the first default on eurozone bonds since the creation of the single currency.”
7. All three of the main rating agencies are expected to determine that Greece has defaulted, because bondholders will suffer losses regardless of whatever plan policymakers decide to adopt involving private creditors. Fitch just did, announcing that it was placing Greece into “restrictive default.”
8. Governor Rick Perry (R-TX) is rising fast in the GOP preference polls. Two polls now show him running second to GOP front-runner Mitt Romney. Perry is drawing strong support from newly engaged evangelical Christian voters.
9. The campaign manager for GOP presidential candidate Jon Huntsman resigned yesterday. She said it was time. The campaign is about a month old.
10. It’s hot out there.
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