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Can markets push Congress towards a deal?

President Barack Obama speaks on the debt ceiling and deficit reduction during a news conference.

President Obama and congressional leaders from both parties had scheduled a meeting Monday to discuss the debt ceiling and government shutdown, but the meeting was postponed amidst news of progress towards a deal.

For the public, the vague news coming out of Washington is getting old. 

Sudeep Reddy, reporter for the Wall Street Journal, says that although we don't know much detail about progress, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell are expressing confidence.

The alternative would cause an economic panic.

"That's the game here that they're all playing," Reddy says. "Markets are testing Congress right now. They don't believe Congress is going to allow a devastating default and don't want to get involved in a trade and be on the wrong side of it. Congress is testing markets because they don't want to be beholden to Wall Street and they still want to get their political goals accomplished here."

Reddy says most investors aren't prepared for a situation where the U.S. can't pay its bills. And major investment firms and money market funds are continuing to pull out of treasuries, just because of the risk of a default -- and that comes with dangerous consequences. 

"There will be damage in the end regardless," he says. 

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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The impact of the Federal Gov shutdown as compared to the pending BART shutdown is puny, paltry and leftest news media, trumped up-hype, East-coast blather... Now a BART shutdown and strike - that will have an immediate, Massive and Potential Long-term Impact on The 3rd Largest Economy In The World. Where all Federal workers will be paid and all bond obligations made whole... The BART shutdown will result in real-loss in income by the strikers themselves, by the entire bay-area economy, and massive disruption to the daily lives of families. Federal Gov shutdown - little or no effect; BART shutdown - massive impact. KAI - WHERE'S ALL THE HYPER VENTILATION? No Tea Party to bash? )

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