Good morning. Here’s what you need to know:1. The Financial Times reports: “Egan-Jones has become the first US rating agency to downgrade the country’s sovereign credit rating from triple A to double A plus as it focuses on the rapid rise in outstanding debt over the past five years.”
2. The Washington Post reports: “If the United States defaults and its top-notch credit rating is downgraded, European banks may have to add to the reserves they set aside as a safeguard because of the heightened risk they would lose money on the U.S. bonds. European banks hold nearly half a trillion dollars in U.S. debt.”
3. Gerald Seib of The Wall Street Journal predicts: “What’s now most likely to unfold in the next two weeks is a series of symbolic votes on partisan proposals that will fail, merely illustrating the capital’s inability to come together in the crunch, followed by the passage of a plan that may end up amounting to the bare minimum necessary to get past a crisis point.”
4. The plan that “may end up amounting to the bare minimum necessary to get past a crisis point” is the McConnell proposal, which would raise the debt ceiling in three installments and be matched by spending cuts to be named later. Carl Hulse reports on this “legislative magic trick.”
5. Senator Tom Coburn (R-OK) yesterday unveiled a 600-page budget proposal that would cut $9 trillion from the federal budget deficit over 10 years. Today, the so-called Gang of Five (a bipartisan group of five US Senators) will officially unveil its proposal to cut $4 trillion from the federal budget deficit over 10 years.
6. China holds about $1.5 trillion in US debt instruments. Its holdings are so large, in fact, that they have become “too big to fail.”
7. “I have seen no evidence yet in terms of hard changes on the ground that the Syrian government is willing to reform at anything like the speed demanded by the street protestors. If it doesn’t start moving with far greater alacrity, the street will wash them away.” Thus spake US Ambassador to Syria Robert Ford, in a telephone interview with Foreign Policy.
8. The US-India nuclear deal, signed in 2008, has stalled. The agreement was supposed to allow the sale of nuclear reactors and fuel to India and cement relations between the two countries. It hasn’t worked out that way.
9. Al Qaeda, under new leadership, is said to be shifting its targeting away from the US homeland. Al Qaeda is now placing a higher priority on attacking the U.S. and Western targets overseas, US officials say.
10. USA Today reports: “Half of those surveyed in a USA TODAY/Gallup Poll say President Obama and Congress are doing a worse job than their predecessors in dealing with the nation’s problems. Four in 10 call it the worst they’ve seen in their lifetimes.”
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