A couple of things jump out at you from this Gallup poll on raising the debt ceiling. Besides the lopsided opposition to adding to our debt, there is the surprising breakdown by party; only 33% of Democrats support their own president.
Also, while 57% of Americans are paying close attention to the debate, Republicans are far more interested than Democrats. 66% of GOP voters are following the debate "very closely" or "somewhat closely" while only 41% of Democrats can say the same.
If ever there was a popular backstop for John Boehner and Mitch McConnell to get something done on the deficit, this is the time:
In one sense, this is more of a political than a financial issue. As former Federal Reserve Chairman Alan Greenspan noted, the Congress has already passed legislation spending the money at stake, so there seems to be little choice but to allow the Treasury to raise the funds it needs to meet the government's obligations. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner have also noted that raising the debt ceiling is financially essential. In this same vein, many on Wall Street and many investors around the world seem confident that after the required political battling, the Congress will raise the U.S. debt ceiling.
Americans conditioned by so much news coverage of the enormous federal budget deficit may be reacting to the idea of raising the debt ceiling more in the context of a political deficit discussion as opposed to a financial market implications context. Nevertheless, the public's perceptions are clearly negative, suggesting the debt ceiling vote is a political hurdle lawmakers will need to overcome.
Probably anticipating that eventuality, the Treasury seems to be working on plans to extend its financing efforts so that it will be Aug. 2 before default potentially becomes a reality. In turn, this lag time could create considerable uncertainty in the global financial markets as the summer progresses.
Regardless, it may be worthwhile to think back to what happened with the financial bailout legislation -- the so-called TARP -- in 2008. This was another unpopular piece of financial legislation that the president, the Treasury secretary, and the Fed chairman all supported, saying it was essential for global stability. After first voting this legislation down and watching the markets plunge, the Congress passed TARP. Efforts to pass unpopular legislation to raise the debt ceiling could create similar challenges.
That's a pretty good analysis from Gallup. I expect at least one and perhaps two failed votes to raise the ceiling before a deal is reached at the 11th hour.