I think that this is an option expiration week for stocks, as this Friday will be the 3rd Friday in October.
Stocks went out on their highs today on optimism that a debt ceiling deal will be reached in the Senate and will be accepted by the House.
Just a quick note for our non-US readers. A bill has to be passed by both bodies of the Congress: the House of Representatives and the Senate.
A simple majority does not suffice. In the Senate, because of a rule called the 'filibuster,' a party can demand a 60 vote out of 100 members 'super majority' to override their filibuster which is a means of delaying Senate action on any bill indefinitely. Normally a majority would be 51 votes. The Vice President can vote in case of a tie. There is a so-called 'nuclear option' which would be a rule change that would limit the power of a filibuster to block a vote. Neither party in the Senate favors this, but the use of the filibuster has become controversial because of much more frequent use these days as the politics have become more polarized.
In the House of Representatives it is always a simple majority and no filibuster rule applies there. HOWEVER, the Speaker of the House, who is the head of the majority party, exercises control over any bills which can come to the floor for a vote.
A recent innovation was called 'the Hastert Rule.' Republican House Speaker Dennis Hastert established the political principal that he would not allow any bill to come to the floor for a vote unless there was a simple majority of people from within his own Party (the Republicans) who could pass it without any votes from the opposing party (the Democrats). This is not a law, but a practice within the Republican party in the House. And that practice was tightened just before the government shutdown with a rule change that prohibited a little used exception allowing any member to bring certain categories of bills to the floor. See here.
In the case of the debt ceiling and the government continuing resolution, Speaker Boehner has determined that he will not allow a 'clean bill' to come to the floor for a vote because of the objections of a minority of his party, known as 'the Tea Party.' It is thought that a bill acceptable to both bodies could pass if brought to a House vote because it would gain most if not all of the Democratic votes, and the votes of moderate Republicans.
I just wanted to clarify this impasse for those not familiar with American political customs. The polarization of the parties, together with the abolishment of 'earmarks' which were particular addendums for special state projects which had been used to entice individual Congressional votes, are diminishing the ability of the Congress to gain the consensus to pass laws and budgets.
And it has to be said that although he may be a very nice man, Speaker Boehner has a very tenuous position within his party, and faces a kind of ongoing insurrection by the more vocal minority of conservatives.
Have a pleasant evening.
