Global economic update

Déjà vu : The U.S. budget debate will continue

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The good news about the agreement that passed a budget is the federal government is now working and the U.S. will not default on its debt. The bad news is we get to do this all over again in three months. The current budget funds the government through Jan. 15, 2014 and raises the debt ceiling until Feb. 7, 2014. House and Senate negotiators are ordered under this deal to come to a budget resolution by mid- December.

The issues the negotiators need to address are tax and spending policies for the current fiscal year. If they do not reach agreement, more spending cuts, known as sequesters willautomatically go into effect on Jan. 15. The spectre of further sequestration is seen as an incentive to force an agreement, but we have already seen such deadlines come and go with no resolution. Last spring the threat of sequestration was supposed to force a deal, and when it did not, the sequester went into effect. While further cuts from current levels may lead to enough pain to push congressional negotiators to an agreement, we shouldn’t hold our breath.

Source : Cushman & Wakefield

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Mots-clés : Cushman & Wakefield