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US Senate Veto Boehner'S New Debt Ceiling Plan

2011/7/30 9:57:00 43

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US debt ceiling talks take a step forward, US

senate

Voted 59 votes to 41 against House Speaker Boehner's new debt ceiling plan, and plans to vote on next Monday's Senate majority leader Reed's plan.

The house of Representatives passed the new debt ceiling plan of speaker Boehner on Friday afternoon by 218 votes to 216, but as president Obama said earlier Friday, the Senate immediately rejected the plan at around 8 p.m.

According to Boehner's new debt ceiling program, Congress will take two steps to raise the government's debt ceiling. This year, it will increase by 900 billion (US dollars, the same below), while reducing the deficit by 917 billion. Next year, we will discuss the 1 trillion and 600 billion increase in February.

However, Obama pointed out that this short-term increase

debt

The upper limit plan will enable the US economy to be kidnapped again by Washington in a few months.

He called on the two parties to reach a consensus as soon as possible. If the US AAA credit rating is to be downgraded, it will impact the already weak economy.

The US economy grew by only 1.3% in the second quarter, much less than expected.

Compared with Boehner's plan, Reed's biggest difference is that he advocated a one-time increase in the debt ceiling until the end of 2012 to avoid the 2012 presidential election.

According to Bloomberg, the house of representatives will discuss the plan on Sunday, and according to Reuters, the Senate will vote on it at 8 o'clock on Monday.

It is also worth mentioning that White House News speaker Jay Carney said at a press conference on Friday that President Obama was willing to consider signing a short-term agreement to raise the borrowing limit, provided that the agreement would allow members of Congress to have enough time to complete a long-term agreement.

However, Moodie, the international rating agency, warned on Friday that the extension of the debt ceiling negotiations raised the possibility of the US AAA credit rating and rating outlook being downgraded.

Moodie reiterated that once the US debt default occurs, whether or not it will soon be made up or the debt holder does not suffer permanent losses, it will cut down the US rating.

In addition, Karni said on Friday that the Ministry of Finance may announce emergency response plans at the weekend to prevent Congress from raising the debt ceiling in time.

And Moodie believes that the Ministry of finance will choose to give priority to it.

National debt

Holders of interest payments, the earliest maturity of a group of bonds was in August 4th, amounting to 59 billion dollars.

If it can not be paid in time, it will be a breach of contract and a downgrade will follow.

As for the impact of the US AAA rating being downgraded, JP Morgan pointed out earlier that if the rating dropped from AAA to AA, it would have to pay more than $100 billion interest per year.

However, Nomura believes that the global 53%AAA rating assets are concentrated in US Treasury bonds and institutional bonds, and investors do not choose very much.

Fitch also points out that even if the US rating is downgraded, the US Treasury bond is still the benchmark of the global debt market.

The three major indexes of the US stock market fell on Friday after being dragged down by the US economic growth rate in the second quarter and the deadlock in the debt ceiling negotiations.