House, Senate working on competing plans to end shutdown, lift debt ceiling
Comment of the Day

October 15 2013

Commentary by Eoin Treacy

House, Senate working on competing plans to end shutdown, lift debt ceiling

This article by By Lori Montgomery and Rosalind S. Helderman for the Washington Post may be of interest to subscribers. Here is a section
House Republican leaders plan to put forward their own plan on Tuesday to reopen the federal government and raise the debt ceiling, casting new doubts on efforts by a bipartisan group of Senate lawmakers as they tried to finalize a deal that could be approved by both houses of Congress and the White House.

With just two days until the deadline for the government to extend its borrowing authority, and more than two weeks into a federal government shutdown, the nation’s lawmakers appear poised to propose two competing solutions.

The plan being formulated by House Republicans would include more extensive changes and restrictions on President Obama’s signature health-care law. Those changes have been repeatedly rejected in recent weeks by Democrats, who say they will not consider major changes in existing law in order to fund the government and address the nation’s borrowing authority.

Rep. Darrell Issa (R-Calif,) said the new House plan was designed to be attractive to Democrats, because it would follow key timelines that have been established in the Senate negotiations — funding government agencies until Jan. 15, for example, and raising the debt ceiling until Feb. 7.

Eoin Treacy's view One might sardonically conclude that two plans are better than none but realistically all this suggests is that the wrangling which has been so damaging to confidence in the United States’ political apparatus is likely to continue. There will be no grand bargain that takes the bold steps needed to reaffirm faith in the political process but it remains likely that some form of agreement will be reached and a default avoided.

Against a background where 800,000 public employees have been on enforced vacation, the Fed is unlikely to initiate tapering in December, The S&P 500 has been pricing in the continuation of a monetary tailwind and found support last week in the region of the progression of higher reaction lows. A sustained move below 1650 would now be required to question potential for continued higher to lateral ranging.

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