Thursday, January 3, 2013

Bracing for the Next Political Standoff

From Dealbook: One fiscal showdown drew to a close this week, as the president signed a bill to raise taxes on the wealthiest Americans. But the sense of relief among businesses was tempered by the anticipation of political battles to come. Next month, Congress is set to negotiate over raising the debt ceiling.

 “We’re in for another round of brinkmanship and uncertainty,” said Mark Zandi, the chief economist at Moody’s Analytics. “I don’t think the economy can really find its footing and jump to a higher level of growth until we get to the other side of this.” President Obama has vowed to stay out of the debt ceiling debate, but his position “sets the stage for a nail-biting standoff that economists warn could lead to a damaging financial default and doubt from investors about the ability of the country to pay its obligations,” The New York Times writes. The ratings agency Moody’s issued a warning on Wednesday, saying a “lack of further deficit reduction measures could affect the rating negatively,” and that the “need to raise the debt limit may affect the outcome of future budget negotiations….

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