Debt Limit: It's Showtime

Successful politicians share a special skill -- they excel in counting votes correctly. The debt
limit / deficit reduction issue poses a difficult challenge. Voters are primarily concerned about
the state of the economy, jobs and whether they can keep their homes. US budget deficit reduction
is an issue of interest, but is not a high priority now. So, the politicos willl use as much of the
remaining time between now and Aug. 2 -- D-day according to Tim Geithner -- to try and glean
the best way to finesse the issue in their favor. Since the markets have been quiet so far, they are in
no hurry to make decisions. They can use the intervening time to gather more intelligence from
voter attitudes and  perhaps force the opposition to "blink" or make a concession or two in their
favor.

The GOP has as its prime objective bringing down the Obama presidency. From their perspective,
the best deal would be to get spending  cuts in 2012 of sufficient magnitude to slow the economy
and boost chances to unseat Obama. The president, in turn, would like to look every bit the prudent
fiduciary, but keep any concessions on spending from being put into place until 2013. There are
many other issues in the mix, but I see the matter of the size and timing of spending cuts as the
crucial ones.

There are a number of new and unseasoned GOP members of the House who have far stronger
demands in place if they are to vote to raise the debt limit. Here is where the main risk is
as it is not clear that Speaker Boehner can really control these folks. That risk doubles because
not only are they pressing an extreme position, but they are trying to extort concessions from
the president, that being a politically dangerous thing to do.

It's showtime!