“More remains to be done to put U.S. public finances back on a sustainable path without harming the still-fragile recovery,” IMF spokesman Gerry Rice said.
“This bill does nothing to address the long-term budget problems facing the U.S.,” said Tom Porcelli, an economist at RBC Capital Markets, noting that the deal included none of the reforms in entitlements, such as Social Security, Medicare and Medicaid, sought by Republicans.
“The fact that Republicans were willing to take a deal with no net spending reductions suggests to us that this group will now push hard for spending cuts in the upcoming showdown on the debt ceiling,” he said. “So while the market breathed a big sigh of relief in the aftermath of the cliff deal, increased contentiousness in D.C. could soon take the bloom off the rose.”
But J.P. Morgan’s Mr. Kelly said Congress and the White House should get credit for at least eating away at the deficit problem, especially when the tax increases are combined with $1 trillion in across-the-board spending cuts that remain in law even though they were postponed until March 1.
He estimates that the combined anti-deficit measures will reduce the budget deficit from a high of 10 percent of economic output in 2009 to 4.2 percent by 2014 — not far above the 4 percent level at which debt payments stop escalating and start to stabilize, he said.
“This tax increase will make a big dent in the deficit, assuming that some other spending cuts more or less replace the much-hated sequester,” he said.
Wall Street agencies, which have warned that they will downgrade U.S. credit ratings this year unless Congress enacts measures that stabilize the debt, were mostly quiet Wednesday. Only Standard & Poor’s Corp., which has already withdrawn the nation’s top AAA rating, commented that the deal does little to change the credit outlook even as it improves prospects for the economy this year.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
Independent voices from the TWT Communities
Entertainment News and Reviews from Washington, D.C. and beyond.
A carefully guided tour through the confusing world of modern bookselling and publishing.
Empowering mind/body/spirit and health dialogue along with cutting-edge, conscious social, political, and world commentary with Adam Omkara. Join the Evolution!
A politically conservative and morally liberal Hebrew alpha male hunts left-wing viper
World's Ugliest Dog Contest
Spelling Bee finale
Marines train Afghan soldiers
Rolling Thunder 2013
Benghazi: The anatomy of a scandal