The BDA has refrained from reporting on the debt limit back and forth. Now, however, we are very close to the possibility that the Congress will not pass an increase in the debt limit before the Treasury runs out of cash to pay, not only interest and principal on the debt, but also Social Security benefits, Veterans benefits, payments to state and local governments (such as for Medicaid), payments to federal contractors, salaries to federal employees and other federal payments.
Earlier today, the House passed a bill (by a vote of 218 to 210. The smart money believed that the Senate would quickly both defeat it and then pass a proposal that the President would sign and the House, faced with default, would then pass it. The smart money believed that the Senate Republicans would not oppose this outcome.
The Senate has, in fact, defeated the House bill by a vote of 59 to 41, which included several Republicans voting against the bill. However, the Senate Republican leadership has said that they will filibuster the Reid proposal.
That is a significant development. It will take several days at best to overcome the filibuster. It could take beyond August 2.
The way ahead is very unclear, to say the least. We expect developments throughout the weekend.
