I often disagree with Walter Shapiro, but not today. Here is what I anticipate happening. Joe Biden will make concessions that will cut spending, probably by a lot and in some areas that will make progressives howl. Republicans will counter that Biden’s offer isn’t even one one-hundredth the size of what is needed to avoid fiscal armageddon. Speaker Boehner will hold another test vote to prove that no Republicans are willing to settle for anything less than huge cuts to Medicare. Boehner needs the Democrats to vote for Medicare cuts to get himself out of the jam he created when he let Paul Ryan offer his gonorrhea to the nation as a serious budget plan. The Democrats will not oblige him. At some point, Wall Street is going to freak out and the stock market will plummet by a thousand points or so.
It will only be after a ton of wealth has been destroyed that the Republicans will realize that they are going to get blamed for thinking they run the government and for taking their brinksmanship too far. Yet, they’ll remember what happened to a lot of Republicans (see Sen. Bob Bennett of Utah) who voted for TARP. They may fail to find the 80-90 members they need to pass an increase in the debt ceiling even after the market begins to collapse.
We may default on our debts. It’s hard to see how we avoid it. I definitely don’t see the Republicans caving in prior to a major dip in the stock market, although that dip will probably come prior to the actual August 2nd cut-off date.
It’s time to get a broker, or call one if you already have one.
