Congress’s solution to the debt limit crisis and rising deficits is fully operational, but many are left wondering whether the bipartisan Joint Select Committee on Deficit Reduction (the Deficit Reduction Committee) is capable of fulfilling its mandate when Congress as a whole couldn’t make the hard decisions that were necessary for a long-term solution. And the Deficit Reduction Committee is even more susceptible to deadlock than the full Congress since the Committee is populated by six Republicans and six Democrats.

The super-committee was the end result of months of negotiations between Democrats and Republicans during the debt limit debates. The resulting compromise included $917 billion in discretionary spending cuts over 10 years. The Committee must come up with another $1.2 to $1.5 trillion in cuts.

The Committee must pass a deficit reduction plan by a simple majority vote (7 out of 12). The plan will then go to Congress for a vote. If the Committee fails to reach a compromise proposal or Congress does not adopt the Committee’s proposals, a series of sharp automatic cuts will kick in, slashing budgets across the entire federal government, including the Defense Department.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the debt limit fight and resulting compromise in Advisor’s Journal, see Democrats Call Debt Limit Unconstitutional (CC 11-134), Debt Limit Standoff Boils Over (CC 11-115) and Storm Clouds over U.S. Debt (CC 11-85).

How fast time flies. The one year anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) came and went on July 21^st, and we’re left wondering: Where are we now?

Surprisingly little has changed since the Act was passed on July 21, 2010. The Securities and Exchange Commission (SEC) and other federal agencies charged with implementing Dodd-Frank have struggled to comply with their mandate. The SEC, in particular, has had difficulty meeting its timeline due to funding problems and short staffing.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of Dodd-Frank in Advisor’s Journal, see Dodd-Frank: Dying on the Vine? (CC 11-116), Is Barney Frank’s Resolve to Implement Dodd-Frank Weakening? (CC 11-95), & Republicans Look to Erode Dodd-Frank (CC 11-75).

Despite the best efforts of Congressional Republicans, the ribbon-cutting for the U.S. Consumer Financial Protection Bureau (CFPB) is on schedule for next month. And unlike other Dodd-Frank progeny, this project looks like it’s going to hit the ground running.

The stated mission of the CFPB is to “make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.” After the mortgage debacle of the recent financial crisis and stories about predatory practices in the credit card and pay-day loan industries, who can argue with that mission statement?

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the fight over Dodd-Frank in Advisor’s Journal, see Is Barney Frank’s Resolve to Implement Dodd-Frank Weakening? (CC 11-95) & Republicans Look to Erode Dodd-Frank (CC 11-75).

The August 2 drop-dead date for the debt-ceiling is rapidly approaching, but Congress isn’t phased enough to set aside partisan bickering and solve the Fed’s funding woes.

In a stand against Democratic reticence over deep spending cuts, the Republican-dominated U.S. House of Representatives voted on May 31 to reject a bill that would have raised the debt ceiling. Republicans look to be using the debt ceiling fight to press the President and Congressional Democrats on spending issues.

The administration initially said that the debt-ceiling would be reached on May 16. But when that date passed, Treasury Secretary Timothy Geithner announced that the date could be extended through August 2 using accounting gimmicks and by letting bills go unpaid—for instance, ceasing investments in two government pension plans. The White House has also proposed selling 14,000 pieces of unused federal property to help cut the deficit.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of U.S. debt in Advisor’s Journal, see Debt Ceiling Approaching: Prepare for Impact (CC 11-100) & Storm Clouds over U.S. Debt (CC 11-85).

Congress on both sides of the aisle is playing a game of political chicken with the debt ceiling; but what would impact mean for the markets and the economy in general?

Although the U.S. hit its $14.3 trillion debt ceiling on Monday, May 16, economic Armageddon hasn’t yet rained down on the U.S. economy. Thanks to some slick Treasury Department maneuvering, the date when the U.S. really reaches the limit has been pushed to around August 2.

But instead of breathing a sigh of relief and resolving to engage in a bipartisan effort to resolve the debt ceiling issue in advance of the August drop-dead date, both sides are likely to wait until the last moment to avoid impact—threatening our fragile economic recovery in the process.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of U.S. debt in Advisor’s Journal, see Storm Clouds over U.S. Debt (CC 11-85).

Facing the onslaught of Republican legislative attempts to weaken Dodd Frank, Barney Frank (D-MA) seems unconcerned. His unwillingness to push for the prompt implementation of Dodd-Frank suggests that his resolve is weakening. And in recent weeks, Representatives have used the implementation lull to introduce a handful of bills that, if passed, would repeal or delay parts of the Dodd-Frank Wall Street Reform Act.

Dodd-Frank implementation was originally scheduled for July 21, but Mr. Frank has no problem allowing agencies additional time to translate the hundred-something provisions of the reform into regulations. “There’s no gun at their heads. Nobody gets fired,” he stated.

But delaying implementation could give the Republicans time to repeal Dodd-Frank one provision at a time.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of Dodd-Frank financial reform in Advisor’s Journal, see Republicans Look to Erode Dodd-Frank (CC 11-75).

The downgrade of U.S. debt could soon be more than just a threat. Taking note of the US’s large budget deficits and continually increasing government indebtedness, Standard & Poor’s (S&P) gives mixed signals about the state of reform, having changed its outlook on the U.S. long-term credit rating from “stable” to “negative.”

While talks about debt limit increases are still speculative, S&P believes there is a one-in-three probability it will downgrade the U.S. long-term debt rating within the next two years. Such a downgrade could cause an economic catastrophe by signaling that there is a heightened chance the US will be unable to pay its debts as they come due. A downgrade would likely tank the markets, the federal government would be forced to agree to higher interest payments to sell its debt, and consumers would face an even tougher lending environment.

For previous coverage of the U.S. budget in Advisor’s Journal, see Republican Ryan’s Budget Faces Bipartisan “Gang of Six” (CC 11-80).

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Serious discussion about a federal government shutdown has been circulating through Washington since February 17, but Republicans and Democrats are still unable to pass anything more than a short-term solution. Last week the Senate voted to pass a two-week continuing resolution that averted a shutdown, but shutdown discussions could surface again in the week leading up to that resolution’s expiration on March 18.   Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous Advisor’s Journal coverage of the federal government’s efforts to jump start the economy, see Fed to Purchase $600 Billion in Treasuries in Move to Stimulate Economy (CC 10-94), & Congress Extends Unemployment Insurance for Another Thirteen Months (CC 11-05).

We’re just two weeks into the new Congress and the Republican majority is already causing controversy as it tries to live up to what it perceives as its deficit reduction, tax cut mandate. Republicans promised to cut spending by $100 billion by the end of 2011, but critics say that recent Republican maneuvers will do just the opposite by reducing revenue through new tax cuts and a repeal of the health care reform law.  

The so-called “cut as you go” rules require that every new mandatory spending measure be offset by an equivalent spending cut. Tax cut legislation is exempt from the cut-go rules.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).