“This is the first step to get on the right track, reduce our deficit and get focused on creating better living conditions for our families and children. It’s time to come together and get to work,” said House Majority Leader Eric Cantor (R-Virginia). The political happy-talk may sound like business as usual, but it’s much better than simply holding the threat of default above everybody’s head. This, at least, is actually progress.
It’s unclear how the Democratically-controlled Senate will react to the measure. Democrats have come out saying that Republicans are afraid of being blamed for a possible default, which is probably true. But regardless of why they’re taking steps forward, they’re on the move.
However, market participants have come out saying that they’re afraid that Democrats won’t sit down and take the budget talks seriously. Currently, there is no mechanism to ensure that Congress passes a budget resolution each year. As a result, the last time the Democratic-led Senate adopted a budget was in 2009. Appropriations bills have filled the gap, but the process is obviously messy and indicative of the same kind of behavior that pushed the country to the edge of the cliff.
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