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Echoes of TARP in Fiscal Fight, but Ties Have Soured

Bill Clark/CQ Roll Call
Tense relationships among leaders, including between McConnell, above, and Reid, as well as Boehner, have made a debt limit deal difficult.

And yet, before the government shut down Oct. 1, there had been a hope among Democrats that some deal-maker would emerge to avoid a calamity — and that, in the end, Boehner won’t let a default happen. So far, that still seems to be the calculus.

“The hope is that cooler heads will prevail, and I believe they will in the end,” said former Reid spokesman Jim Manley.

If they don’t, Gregg sees bad news for the GOP. “All you’ve done is undermine the full faith and credit,” Gregg said of a circumstance in which the nation goes into default.

Regardless of whether the Treasury makes its interest payments but defaults on other payments, Gregg said the impact would be significant.

“That sort of substantive default is dramatic and will have long-term impacts on the cost of our government,” he said.

Emily Pierce contributed to this report.

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