HOUSE TO VOTE ON DEBT CEILING TODAY When theHouse votes to suspend the debt ceiling through May 18, remember that lawmakers aren’t fixing the problem. They’re just prolonging an ugly battle and pushing off the looming threat of a default, credit downgrade and government shutdown for a few more months. Republicans indicated yesterday that think the additional months will play to their advantage, even if it doesn’t ease any of the ideological tension. There’s still the question about whether Senate pay gets suspended as stipulated by the bill, if the chamber doesn’t pass a budget by April 15. It depends on how you interpret the Constitution’s ban on “varying” of compensation, since what’s being proposed by House Republicans actually involved putting the salaries in escrow. But the White House sees no threat from the measure, saying Obama would sign the bill if it gets through Congress.. - Read more at The Fiscal Times
MARKETS CAUTIOUS AHEAD OF VOTE Stock traders are nervous ahead of an anticipated House debt ceiling vote. S&P 500 futures were down 0.1 percent.
The AP quoted a Credit Agricole CIB market commentary saying the tension should fade if the measure passes: "A vote is expected today, and if it is passed as expected it should clear the very short term obstacles for risk appetite, although battles on automatic spending cuts and the budget itself are not so long away.” - Read more here at The Associated Press
SHORT-TERM DEBT FIX HURTS ECONOMY MIT’s Simon Johnson warned at the House Ways and Means Committee hearing Tuesday that “If the debt ceiling is only increased in short bursts, the economy will continue to experience large spikes in uncertainty that "undermine" business investment and job growth, and will have a ripple effect that will stymie economic growth.” - Read more at The Hill
ARMY BRACES FOR CUTS Delaying the debt ceiling debate should give lawmakers time to focus on the more than $50 billion in automatic budget cuts slated for the Pentagon’s budget. The Army issued memos to commanders in recent days outlining cost-cutting measures to absorb the cuts, including a 30 percent cut for its base operations, personnel reductions and curtailing non- critical personnel trainings. - Read the memo here
