Wednesday, October 16, 2013

Senate Announces Deal to Avoid Default, House GOP Expected to Bend: Weak Demand? Apple Reportedly Reduces iPhone 5c Orders

Senate leaders announced a bipartisan deal Wednesday to reopen government and raise the debt ceiling, moving the country closer to ending weeks of brinkmanship over Obamacare, federal spending and debt.

"This is not a time for pointing fingers or blame. This is a time for reconciliation," said Senate Majority Leader Harry Reid, in announcing the agreement, which would reopen the government and extend the debt ceiling through early next year. The bill will also appoint Senators to work on a budget agreement over the next two months, in the hopes of avoiding another round of brinkmanship in 2014.

He was followed by Senate minority leader Mitch McConnell who said Republicans would continue to fight for a repeal to Obamacare, but their would be no victory this week. "For today, the relief we hope for is to reopen the government, avoid default and protect the historic cuts we achieved under the budget control act," McConnell said. He later added that he expected to have a vote Wednesday on the measure.

White House Press Secretary Jay Carney said President Barack Obama "applauds" the deal, and encouraged both chambers of Congress to expeditiously pass the legislation.

As the Senate gavelled to order, House Republicans gathered to discuss their path forward. Several staff sources suggested that Speaker John Boehner would move forward with a vote on the Senate measure, which would likely pass with the help of Democratic votes. "Looks like we’ll eat the Reid-McConnell deal," one House GOP source told TIME. "It’ll rely on Democratic votes."

Rep. Jim Jordan, an Ohio Republican, said it was his "understanding" that the House would act on the measure first, thereby avoiding time-consuming procedural hurdles in the Senate hours before Treasury runs out of borrowing authority. But House Republican leadership did not confirm the order of events. "No decision has been made yet," said Rep. Kevin McCarthy, the House GOP whip before the meeting.

Multiple Republican Senators, including Kentucky’s Rand Paul, said they expect the Senate plan to pass with a strong majority of Republican votes. Texas Sen. Ted Cruz, one of the original proponents of the failed plan to shut down the government to defund Obamacare, said he would not vote for the deal, but would also not try to block the Senate from moving forward.

The emerging agreement isn’t sitting well with some Republicans. Sen. Lindsay Graham, who has long argued for a grand bargain to address long-term fiscal issues, called it a "joke. "We took some breadcrumbs and left the whole meal on the table," he said.

Graham continued to criticize the tactics the House Republicans have behaved over recent weeks. "The way we’re behaving and the path we’ve taken over the past couple of weeks leads to a marginalized party in the eyes of the American people," he said. "It has been the best two weeks for the Democratic Party in recent times because they were out of the spotlight and didn’t have to showcase their ideas."

Sen. Kelly Ayotte expressed hope that more conservative colleagues will not repeat their mistakes of the last month. "We’ve been asking from the beginning how does this end, how do you achieve what you’re purporting to achieve on defunding Obamacare," she said. "And I never got an answer to that. I don’t think there still is an answer to that. So if we have learned nothing else from this whole exercise I hope we learn that we shouldn’t get behind a strategy that cannot succeed."

According to a Senate Republican leadership aide, under the agreement, the government would be funded through Jan. 15, 2014 unless a budget agreement is reached sooner, while the debt limit would be raised through Feb. 7. The extraordinary accounting measures used to keep the government under the borrowing cap would not be prohibited under the deal. An anti-fraud measure will be added to Obamacare, requiring income verification for those receiving subsidies to purchase insurance under the law.
The Wall Street Journal reports that Apple has asked the two companies it contracts with to produce iPhones — Hon Hai and Pegatron — to scale back on production of the iPhone 5c model.

This news comes from unnamed sources, so take it with a grain of salt. Pegatron was apparently ordered to cut production by less than a fifth, while Hon Hai was apparently told to cut production by a third.

It wouldn’t be incredibly out of the ordinary to scale back on production after an initial launch period winds down, but these reports of Apple scaling back production coupled with recent price cuts of the iPhone 5c have been, according to the Journal, "raising concerns about weaker-than-expected demand and its pricing strategy for the device."