Debt ceiling…what’s the deal?

House Speaker Kevin McCarthy, Senate leaders Mitch McConnell and  Chuck Schumer and Vice President Kamala Harris all joined President Biden at the White House Tuesday to discuss the looming problem of the debt ceiling.

Politicians are back at it and according to some of them, sometime in the next two weeks the U.S. could default on its debt, supposedly rendering the nation in the eyes of the world an unsafe trading partner, a pariah in the world community, a nation in decline. Fire and brimstone coming down from the skies, rivers and seas boiling, there will be plagues and mass hysteria ... real end-of-the-world stuff.

Donald Trump, in his recent CNN town hall publicly endorsed such a juvenile gesture. We might just have to "do a default," Trump who does have a reputation for not paying his bills, exclaimed. 

There is Kevin McCarthy, the Republican who is predicting the end of the world while trying to manage the issues in his own party and then there is Joe Biden, awkwardly pretending that this is just a biscuit and tea get together.  

McCarthy claims that the government has 15 days to avoid disaster but never once mentioned that it was the Republican majority in Congress that put the country on the brink of default. He blamed Democrats but neglected to mention that the tax breaks Republicans gave to the richest Americans are a major part of the problem. Maybe he thought no one would figure that out. Then again, maybe he doesn't understand it himself. Someone who actually does understand, is Mitch McConnell, the Senate Republican leader. He walked up to the reporters gathered outside the West Wing and made quick work of the controversy. "We're not going to default. We know it. They know it," he said.

So, what are they doing then? 

Political leaders are scaring the country for two weeks while wrangling over budget cuts that could have been avoided if Congress had acted responsibly in the first place. For the next two weeks the White House and Congress will do this dance, with each side hoping not to give up too much before they cut a last-minute deal to keep the store open.

McConnell and Biden are veteran dealmakers, while McCarthy is there to mouth the talking points of the fanatics. McConnell simply said he'll back whatever deal is made.

Childs play at it’s best, a political spectacle that mocks reality and the media plays right into it.

There was a recent revelation that a member of the White House press corps supplied questions to the president ahead of a recent press conference, thereby turning the event into a scripted reality show.

Wednesday morning reporters were asking meaningless questions about "red lines" in the negotiations. No one asked the obvious question: If both the president and the Senate minority leader say that defaulting on the debt is not an option, then what game are they playing? We keep hearing how failure to reach an accord will be disastrous, while both sides say, that such a failure simply won't occur. So, the induced fear of economic collapse is a diversion. But to what end?

Biden headed to Japan for the G7 annual summit. He's gotten criticism for leaving the U.S. while negotiating the debt ceiling crisis, but National Security Council spokesman John Kirby told reporters on Tuesday that the president can walk, talk and chew bubble gum at the same time. So, he's apparently capable of handling both the G7 summit and looming global threats from Russia and China, while simultaneously working the debt ceiling talks from the other side of the world.

It's the usual game playing in D.C. Negotiating with a common goal in mind does not seem to be an option. They don’t agree on anything, well except on that there will be no default. The fun for them is in arguing the fine details — not the big picture.

While the US debt is certainly a serious issue, the current events in Washington are theater and neither of the two parties has credible intention of solving the actual issue, which is an alarmingly growing amount of debt. Parties always seem to remember financial prudence when they are the opposition, no issues when their own guy is in power. There will be short term volatility in the markets, depending on headlines. When Biden announced his departure to the G7 meeting, markets went up because it was assumed that they are close to a deal. Today, markets are down because they walked out of the negotiations. However, long and mid term implications are unlikely. The FED continues to be the main generator of market direction, at least for the next few month.