The game of debt-ceiling chicken
Over the last week the news has been dominated by Rep. Anthony Weiner's sexting, Newt Gingrich's staff defection, Sarah Palin's correspondence, Defense Secretary Gates parting words for NATO and the struggling Arab Spring.
The U.S. economy has also been a major story. The jittery stock market dipped below 12,000, spooked by the soft job market, depressed home sales and flagging consumer confidence. And, looming over the American economy like a dark cloud is the impending debt-ceiling deadline.
According to the U.S. Treasury, the $14.3 trillion debt ceiling was exceeded in April, but accounting procedures will finance obligations through Aug. 2. Moody's Investors Service and other ratings agencies are considering a downgrade of the United States credit rating if Congress doesn't find a way to increase the debt ceiling.
Laurence Meyer, a former member of the Federal Reserve Board of Governors, told CBS News, "It's playing with fire because we know that the markets are going to get more and more concerned and there is going to be more turbulence, there is going to be more impact on equities and rates etc."
In the midst of this growing uncertainty, Congress is playing a game of chicken with the debt ceiling, waiting until the last minute to resolve the impasse. As CBS News' Nancy Cordes reported, "It's not that Congress doesn't understand the urgency--it's that Congress is conditioned into waiting until the 11th hour. Back in April, Congressional leaders averted a government shutdown by mere minutes - but not before leaving tens of thousands of federal workers in the lurch."
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