I made a mistake in my analysis of the budget yesterday. I considered the problem entirely incorrectly. Basically, we ran a budget deficit of more than 1-trillion dollars in 2012. So using 2012 numbers, if we don’t raise the debt ceiling then we need to balance the budget instantly. That would require that we reduce spending by 1-trillion dollars. To avoid cutting entitlements (social security, Medicare, etc.), available funds would have to come from 2-sources: (1) discretionary spending ($615-billion) and (2) Defense spending ($670-billion). Even if we eliminate ALL discretionary spending, to make up the shortfall we’d need to cut the Defense expenditures in half. Now, the numbers are a little better than 2012, because revenues are higher today than they were, so the budget isn't quite as bad as it looks in my quick analysis, but the point is clear. If the debt limit isn’t raised, it would be a calamity…no bull.
Wednesday, the S&P finished up 0.1% (1-pt) to 1656 (rounded) at the close.