It’s Tuesday, October 5th, and this is your Morning Wire. Listen to the full podcast:
1) Debt Ceiling Faces Gridlock
The Topline: The world’s leading credit agencies have warned that the U.S. credit rating could be downgraded if Congress fails to raise the debt ceiling in the next two weeks.
Quote Of The Day: “In the days ahead, even before the default date, people may see the value of their retirement accounts shrink. They may see interest rates go up, which will ultimately raise their mortgage payments and car payments.”
– President Joe Biden
Congress is gridlocked when it comes to raising the debt ceiling, which authorizes the federal government to borrow more money to pay for previous deficit spending and to finance interest on the national debt.
Senate Minority Leader Mitch McConnell (R-KY) has said since Democrats are content to pass large deficit spending bills on their own, no Republican will join them in voting to raise the debt ceiling this time.
Democrats have talked about eliminating the need for Republican votes by raising the debt ceiling as part of the reconciliation process for their $3.5 trillion social spending package — but they can’t agree amongst themselves about the amount, or the contents, of the bill.
Treasury Secretary Janet Yellen has said the Treasury will run out of cash-on-hand on October 18. Once that happens, the United States would not have enough money to pay all its bills, and would technically default on some of its obligations until there is enough revenue to pay them off.
Credit agencies have threatened to downgrade the U.S. credit rating, something that hasn’t happened since 2013.
The credit agencies say they won’t downgrade the U.S. credit rating until the Treasury defaults on the first payment.
The Federal Reserve Bank of Atlanta announced it’s seeing “sharp accelerations in underlying inflation,” which means the decades-high inflation this year is a systemic problem.
Key Point: Economists call inflation a hidden tax, because it reduces the value of the dollar, shrinks real wages and purchasing power, and punishes savers — especially retirees and people on a fixed income.
2) Monumental Supreme Court Term Begins
The Topline: With a 6-3 conservative majority, the high court is set to rule on the carrying of firearms outside the home, taxpayer support for private religious schools, the role