Debt Deal 'Not Close' Boehner says

Analysis

House Speaker John Boehner, R-Ohio, sent a shudder of caution to those anticipating a debt deal agreement between the Obama administration and Congressional Republicans anytime soon.

There is no agreement in prviate, on raising the debt ceiling, Boehner said, Bloomberg News reported Friday afternoon, adding that negotiators are not close to an agreement.

Boehner spoke after the U.S. Senate, as expected, defeated 51-46, a Republican-backed bill to make deep cuts in federal spending and require a balanced budget amendment.

Prior to Boehner's comments, he and President Barack Obama were believed to be nearing a deal that would cut $3 trillion in federal spending over 10 years, while raising the debt ceiling.

One analytical lens argues Boehner's statement throws in to doubt the probability of a breakthrough soon -- bipartisan agreement between the Speaker and President Obama, to both cut the budget deficit and raise the debt ceiling in time to avert an a U.S. Government default on Aug. 2.

An alternate analytical lens argues that the two sides, the Boehner-led Republicans and the Obama-led Democrats, are in fact close to an historic agreement -- i.e. what's occurring now is that old Washington game of 'rhetoric for dollars.'

That's because inside the beltway comments indicated one of the major unresolved issues in thedebt talks is the matter of when the revenue increase component would take affect: now or in a year etc.

Further, the U.S. bond market didn't react Friday as if the deal had collapsed: yields on the benchmark 10-year U.S. Treasury bill fell five basis points to 2.97%. The average yield for the past 10 years is 3.06%.

Political/Public Policy Analysis: To the novice, it sounds like Boehner has thrown a lot of cold water on the deal.

But to the experienced, it sounds like 'rhetoric of dollars' and we're putting Boehner's comments in the category of angling for political territory on the last major point of contention in the debt deal talks: when the new revenue component of the debt deal would begin.

Hence, with the above in mind, the risk barometer, on a scale of 0 to 100 percent, of the likelihood of a U.S. Government default, remained at 20 percent on Friday afternoon, the same as Friday morning.