Five things to watch as the debt-ceiling fight comes to a head

The drama in Washington over the partial government shutdown and debt-ceiling deadline is coming to a head today. Here’s a look at the key moments to look for in this ongoing story.

Senator Harry Reid To recap: The Senate and House are racing to finalize the language on a deal to extend funding for the government and raise the debt ceiling. A proposed deal will move these deadlines back to January 2014 and February 2014, and put a new “supercommittee” in place to negotiate a long-term deal. Some minor concessions will also be included in the short-term deal, but there will be no major changes to the Affordable Care Act.

First thing to watch: The markets

Dow Jones and S&P futures were up on Wednesday, as investors seemingly expected a tentative deal today—based on signals from Senate leaders on Tuesday night. The Dow Jones Industrial Average was up in triple-digit territory on Wednesday.

Since investors are assuming a deal will get done in Washington, any delay that pushes a deal back or causes uncertainty could force investors to change their minds in a big way.

One thing to watch after the stock market’s close at 4 p.m. is the reaction of stock futures. If they swing wildly or head down sharply, it will be a signal to Congress that will be noticed.

Second thing to watch: A vote first

Reports were afoot on Wednesday morning that House Speaker John Boehner would allow any budget deal cut by Senate leaders Harry Reid and Mitch McConnell to be put before a House vote before it goes to the Senate. One House member told Bloomberg News that Boehner would bring the bill to a House vote first, but Boehner’s spokesman later said the order of voting wasn’t officially settled.

On Wednesday afternoon, the Senate moved to vote of the bill first, after it got assurances from conservatives like Ted Cruz and Mike Lee that they wouldn’t block a vote. The final Senate vote was expected early Wednesday evening.

Politico says there will be one procedural cloture vote to advance the bill to a final vote, with 60 votes needed to move the bill along. The cloture vote effectively overrides any filibuster attempts.

Assuming the Senate can get the bill to the floor and pull off the two votes, the bill then moves to the House later on Wednesday evening  for a vote.

Third thing to watch: How long will the bill be in the House?

Assuming the bill makes it to the House, the next question is, how easily will it pass?

While there is no guarantee the bill will pass the House, Speaker Boehner needs to get 218 votes to pass the bill. With 200 Democrats in the House, at least 17 Republicans would need to join the Democrats in passing the bill. But the House has something called the Hastert rule, which is an unwritten rule that only allows Boehner to bring a bill up for a vote if the majority of his party supports it.

There were indications on Wednesday afternoon that the bill would be introduced and passed with lukewarm Republican support. Once that happens, the bill goes to President Barack Obama for his signature.

Fourth thing to watch: Global markets

The credit agency Fitch issued a stern warning that it was considering a downgrade for the United States if the debt-ceiling drama dragged on. It said political brinkmanship in the discussions in Washington was the cause of the warning.

In 2011, another credit agency, Standard & Poor’s, downgraded U.S. debt for the first time ever—and that was after a deal was reached to avoid hitting the debt ceiling.

A third agency, Moody’s Investors Service, is also watching the situation closely. So the economy and investors won’t be entirely out of the woods in the short term.

So while investors may be satisfied to watch the debt drama end, it’s unknown how the credit rating agencies will react in the long run.

Fifth thing to watch: When will this all end?

A deal could be reached as soon as late Wednesday night if the House gets the bill in time. That would easily avert a default.

The Bipartisan Policy Center estimates that the dates between October 22 and November 1 are the most likely ones when the government won’t have enough cash to pay all its bills.

With an estimated $30 billion of cash on hand on Thursday, the Treasury Department should be able to pay its bills for a few days without needing to borrow money.

But it’s important to remember that any deal this week is a short-term deal, and the government and taxpayers could face a repeat of the same scenario in January and February.

It is expected that once the president signs the bill, the government shutdown would end immediately and the debt ceiling will be raised quickly.

Scott Bomboy is the editor in chief of the National Constitution Center.

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