For the past few weeks I’ve been focused on news reports about the debt ceiling crisis. Congress finally reached an agreement and President Obama signed off on it, but now what? Is the economy magically fixed? Will the United States still face a credit rating reduction? I have almost as many questions now as I did last week. I’m probably not alone in asking these questions so I thought I’d share with you some of the post-debt ceiling crisis news I’ve been reading.
President Obama’s speech
President Obama addressed the nation from the Rose Garden shortly after the Senate passed the bill. I was able to listen to the speech but in case you missed it, here’s the video:
What’s in the deal?
The Budget Control Act of 2011 is 74 pages long; if you want to get an idea of what was included in the debt deal but don’t want to read the entire document, CNN’s debt deal cheat sheet is a great place to start. Basically, the debt ceiling will be raised by anywhere from $2.1 trillion to $2.4 trillion in two phases.
What is the Gang of 12?
Every time I hear the phrase the “Gang of 12” I think of the movie "Gangs of New York." I don’t know why, but I picture a group of mid-19th century chaps sitting around a table with a tall ale discussing Five Points’ business. However, the Gang of 12 is a group of 12 members of Congress who are tasked with determining how to cut spending.
Unfortunately, the debt ceiling deal isn’t going to magically fix the economy. The July 2011 jobs report is due out on Friday, and experts are prepared for the bad news. Predictions show that job gains could come in below 50,000 for the month. The forthcoming jobs report is just one economic factor that weighed heavily on the stock market today; all major indexes closed down more than 2 percent for the day.
Credit rating downgrade
The good news is that individuals receiving Social Security income, federal employees (except for some unfortunate FAA employees) and the military will all receive their regularly scheduled paychecks. Although the looming crisis was temporarily averted, the problem has yet to be solved and the next few months will prove to be insightful as the Gang of 12 determines how to cut spending.