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Investors, Republicans and Democrats All Somehow Cheer the Debt-Limit Deal

TheStreet noted last week that Republicans were serious about defaulting as their Jan. 1 agreement to increase taxes in order to avoid the fiscal cliff could lead constituents in deeply conservative districts to question their representatives' commitment to fulfill campaign promises.

A delay allows the GOP to address issues on which it has better negotiating positions: what cuts should remain in the sequester deal, and what the budget package should look like. In other words, it may be more popular to cut a deal to try and reduce the nation's deficit than to eliminate its ability to pay bills.

Obama's administration released a statement on Tuesday that it would ultimately agree to temporarily extend the debt ceiling, but added that a long-term solution would be critical to increase economic stability.

It would appear that forcing Republicans to debate the debt limit would be an advantage for Democrats. Arnesen said Democrats are notorious for kicking the can down the road, but she said she and other party supporters are hoping Obama will seize the moment to address social issues that may be time sensitive.

"He has the gun issue he needs to deal with, he needs to deal with the immigration issue. Those are high-profile issues that people understand; do most Americans understand the debt ceiling, really? No," said Arnesen.

Americans may soon know more about the sequester, budget, gun laws, immigration and the debt ceiling. But for Wednesday, the stock market was up.

-- Written by Joe Deaux in New York.

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